Trump Shuts Down Postage Loophole – Prices Rise for Shein and Temu Shoppers in the US
In a move that could significantly reshape online shopping trends in the United States, former US President Donald Trump has ordered the closure of a longstanding duty-free loophole used by major Chinese e-commerce platforms like Shein and Temu. The action, aimed at cracking down on illegal imports, is already causing price hikes for millions of American consumers.
What Was the Loophole?
The now-closed “de minimis” exemption was a trade rule dating back to 1938, allowing imported packages worth less than $800 to enter the US without customs duties or taxes. Over the past decade, this provision enabled a surge in low-cost shipments from Chinese retailers, who shipped directly to American customers under this threshold.
With the growth of fast-fashion and low-cost marketplaces, companies like Shein and Temu flourished. Their ability to keep prices ultra-low depended heavily on this rule. According to US Customs and Border Protection (CBP), over 90% of all parcels entering the US fell under this exemption—many of them originating from China.
Why Has Trump Acted Now?
Although both Trump and President Biden had earlier criticized the loophole for damaging American businesses and being misused, Trump’s latest executive order has now permanently shut it down.
The administration cited the loophole’s role in facilitating illegal drug imports, especially fentanyl, as a major concern. Trump’s order notes that some Chinese suppliers use deceptive methods to smuggle synthetic opioids in packages that fall under the $800 limit, exploiting the exemption.
“This is not just about trade. It’s about American lives,” the order said, referencing the 75,000+ fentanyl-related deaths reported annually in the US.
During an earlier attempt to pause the exemption in February, logistical chaos ensued. The US Postal Service temporarily suspended parcels from China and Hong Kong, and many shipping services struggled to adapt. Now, with the closure finalised, changes are being rapidly enforced at US borders.
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How Are Retailers Reacting?
Both Shein and Temu issued near-identical statements last month, acknowledging the financial impact. They confirmed that operational costs have increased due to “recent changes in global trade rules and tariffs” and that price adjustments would take effect from 25 April.
True to their word, American customers are now facing higher prices, even for basic, low-cost items. In some cases, products once available for $5 or $6 are now priced significantly higher, reflecting new taxes and fees.
What’s the New Cost for Shoppers?
Any package from mainland China or Hong Kong now valued under $800 is subject to either a 120% tax rate or a flat fee, which started at $100 and is scheduled to rise to $200 by June.
Analysts at the American Action Forum estimate the policy change could lead to $8 billion to $30 billion in additional annual costs—much of which will be passed directly to consumers.
And this shift isn’t just limited to the US. Similar reviews are underway in the UK and the European Union, where Shein and Temu have also enjoyed duty-free exemptions. In the UK, for instance, goods under £135 currently avoid import taxes. But with British retailers claiming that they are being “undercut”, the government is now re-evaluating its stance.
Meanwhile, the European Union is proposing to eliminate the €150 duty-free threshold, hinting that global online shopping could become more expensive for millions of customers.
Does It Help Border Security?
Interestingly, while the move is justified as a crackdown on illegal drug shipments, critics argue it may not be as effective as intended. Data from US border authorities suggest that most synthetic opioids still enter via the southern land border with Mexico, not through small packages.
Trade associations like the National Foreign Trade Council (NFTC) have raised concerns. They warn that ending the exemption will divert CBP’s already limited resources from where the real enforcement is needed—the land border.
“There’s a real risk that CBP will be forced to hire new staff or reassign agents from the overstretched southern border, which may reduce their ability to intercept large drug shipments,” the NFTC said in a statement.
Final Thoughts
The closure of the de minimis loophole marks a major turning point in US-China trade, especially in the realm of e-commerce. For retailers like Shein and Temu, this could mean higher operating costs and potentially fewer sales. For consumers, the era of rock-bottom prices on imported fashion and gadgets might be coming to an end.
As the Trump administration continues to pursue aggressive trade protectionist policies, this development also sends a broader message about the future of cross-border commerce and the cost of convenience.
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