President Trump issued a new executive order on Wednesday aimed at shutting down a trade loophole that has allowed inexpensive goods from China to bypass tariffs for years.
The 78-year-old president took aim at what’s known as the “de minimis” exemption, claiming it gave companies in China and Hong Kong a way to smuggle illegal drugs into the country under the radar.
“These shippers often avoid detection due to administration of the de minimis exemption,” the president wrote, asserting that the flood of duty-free Chinese goods “play a significant role in the synthetic opioid crisis in the United States.”
Under current rules, items valued below $800 are eligible for the de minimis exemption and enter the U.S. tariff-free.
E-commerce giants like Shein and Temu have relied on this provision to offer rock-bottom prices to American shoppers, but the new measures could significantly impact their operations.
Back in February, Trump paused the exemption temporarily before reinstating it to allow the Commerce Department more time to put systems in place for handling the change.
“The Secretary of Commerce has notified me that adequate systems are now in place to process and collect tariff revenue for covered goods from the PRC otherwise eligible for duty-free de minimis treatment,” Trump wrote.
The updated rule means these items will now face new fees instead of other existing tariffs, including the 20% import duty Trump had previously implemented on Chinese goods.
Starting May 2, any qualifying shipment under $800 will be charged a 30% ad valorem duty or a flat $25 fee—whichever is greater. That flat rate jumps to $50 beginning June 1.
Trump’s directive also mandates that carriers moving international packages from China or Hong Kong into the U.S. post a bond as a guarantee for the duty payments.
In recent years, Chinese fast-fashion brands have aggressively exploited the decades-old trade provision to scale up exports of inexpensive goods.
According to the Congressional Research Service, the value of these small shipments surged to $66 billion in 2023—up sharply from $5.3 billion just five years earlier.
Originally, the de minimis rule was intended to let travelers bring back souvenirs without going through customs or paying tariffs.
However, the Cato Institute, a libertarian-leaning policy group, contends that the exemption is a vital tool for streamlining trade and is particularly helpful to lower-income families.
They cite data showing that areas with lower average incomes receive more de minimis shipments—especially from China—than wealthier neighborhoods.
One of the studies the think tank references suggests that eliminating the exemption could cost American consumers between $11 billion and $13 billion a year, translating to a personal cost of $35 to $80 annually.
Trump signed the executive order on the same day he unveiled a new set of reciprocal tariffs targeting dozens of foreign nations.
{Matzav.com}