Trump Removes 'De Minimis' Rule, Temu Need Not Panic

[This article originally appeared on China’s largest political website “Guancha.cn”, authored by Na Yijia, translated by AI]

On February 1, Trump dropped a bombshell by announcing a 10% tariff on Chinese imports to take effect on February 4 and revoked the “De Minimis” exemption for goods valued under $800. This policy was previously a “green channel” for Chinese cross-border e-commerce platforms like Temu and Shein, estimated to have shipped goods worth $46 billion to the US through this channel. The situation changed rapidly within a few days.
On February 4, the United States Postal Service (USPS) temporarily suspended acceptance of packages from Mainland China and Hong Kong, only to resume in less than 12 hours while stating they would cooperate with customs to ensure the implementation of the new tariff policy.
On February 7, the White House followed up, stating that the Trump Administration temporarily reinstated the “De Minimis” exemption to give the US Department of Commerce time to make the order feasible.
While policies changed frequently, the underlying tough message was consistent.
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The USPS immediately halted package acceptance from Mainland China and Hong Kong. AP
During this time, signals of stricter measures from the Trump Administration emerged, suggesting that Temu and Shein might be placed on the so-called “forced labor” list by the US Department of Homeland Security (DHS). If true, these platforms would face stricter import restrictions.
The sudden end of “duty-free bonuses,” increased tariff barriers, and regulatory uncertainties are impacting the global competitiveness of Chinese cross-border e-commerce. How can cross-border e-commerce survive the storm amid tightening policies?
Early Signs: Why Did the “De Minimis” Become a Target?
The cancellation of the “De Minimis” exemption for Chinese goods by Trump seemed sudden, but there were early signs. There has been long-standing debate over the “De Minimis” rule within US politics, especially as platforms like Temu and Shein rapidly emerged, making the exemption a crucial lever for penetrating the US market.
The “De Minimis” clause, under Section 321 of the Tariff Act of 1930, was initially intended to allow American tourists to bring foreign purchases into the U.S. duty-free. The duty-free threshold was increased from $200 to $800 with the enactment of the Trade Facilitation and Trade Enforcement Act (TFTEA) in 2016. However, with the rapid growth of Chinese cross-border e-commerce, this exemption became a main channel for Temu, Shein, and others to send goods to the US. According to data from the US Congressional Research Service, the value of Chinese exports affected by the “De Minimis” spiked from $5.3 billion in 2018 to $66 billion by 2023. As Chinese e-commerce’s overseas business flourished, criticism within US political circles against the rule intensified.
In 2022, Democratic Congressman Blumenauer proposed the “Import Security and Fairness Act,” aiming to restrict certain countries from exporting large quantities of low-cost goods to the US using the exemption rule. Although the bill was shelved, skepticism within Congress over the “De Minimis” did not fade. The following year, then-Florida Senator Rubio and other senators proposed legislation to abolish duty-free eligibility for Chinese and Russian goods. Concurrently, reports from the congressional “US-China Economic and Security Review Commission” and House “Special Committee on US-China Strategic Competition” targeted Chinese cross-border platforms like Temu and Shein, accusing them of exploiting loopholes to avoid tariffs and customs checks.
By 2024, both legislative and administrative actions in the US had escalated. The House Ways and Means Committee passed the “End China’s Abuse of the ‘De Minimis’ Rule Act” in April, raising the thresholds for applying the rule to Chinese goods; the Department of Homeland Security simultaneously announced stricter scrutiny of “De Minimis” package. In September, Biden preemptively announced efforts to curb the overuse and misuse of the exemption in a situational brief. Before his term ended, Biden proposed a rule to exclude low-value goods, subject to specific trade and national security actions, from the “De Minimis” conditions.
The pace of policy advancement accelerated sharply after Trump took office. On his first day, he issued a memorandum on “America First Trade Policy,” calling for an assessment of tariff revenue losses under “De Minimis” and risks of importing counterfeit goods and controlled substances like fentanyl; On February 1, he rapidly issued an executive order to revoke the “De Minimis” exemption for Chinese goods.
Traditionally, under the Federal Rules of Process, there would be a few months to adjust supply chain operations in response to any potential changes. Yet this “shock therapy” of Trump’s evidently caught all parties off guard. The “Lianhe Zaobao” pointed out that the USPS’s abrupt reversal might have stemmed from its underestimation of the immense impacts on regular parcel exchanges due to unpreparedness for the enactment of bans. Many customs and courier companies faced chaos amidst the sudden policy shift, struggling to handle the massive ramifications of this change. Some exporters claimed to have stopped accepting and sending orders, waiting for clearer updates.
“Catfish Effect” Reemerges: How Can Chinese Cross-border E-commerce Reshape the US Market Landscape?
The debates around the “De Minimis” in US politics reflect the increasing influence of Chinese e-commerce in the American market. According to the 2024 data from Apple’s App Store, the Chinese cross-border e-commerce platform Temu remained the most downloaded app in the US for two consecutive years. Behind this phenomenon, platforms like Temu and Shein are innovatively disrupting the Amazon-dominated US e-commerce system, triggering profound changes in the industry structure.
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Package from Temu on the web
Shein launched in the US in 2017, rapidly gaining favor among young budget-conscious consumers with its fast-updating fashion trends and highly competitive pricing. Collaborating with platforms like Google and Facebook for heavy advertising investments, its valuation has soared to $66 billion. Temu appeared in the US market in 2022, quickly gaining traction through billions of marketing expenditures, notably featuring “Shop like a Billionaire” TV advertisements during the Super Bowl, further boosting brand exposure.
The success of these Chinese cross-border e-commerce platforms is inseparable from their unique business models. Both Temu and Shein have built a strong cost barrier through direct factory sales and minimal circulation, eliminating numerous middlemen and associated costs. Temu employs a fully managed approach where merchants only pay the platform commission, while the platform covers logistics and marketing expenses. Shein’s flexible supply chain management reduces storage and logistics costs, offering products priced significantly lower than traditional platforms.
Consequently, even with the longer time taken by cross-border direct mailing, they continue to attract a vast number of price-sensitive consumers. The implementation of the “De Minimis” policy, combined with the Chinese factory direct shipping model, helped platforms lower operational costs and further solidified their unique price advantages. According to the US House Committee on China, reports indicate that over 30% of the daily cross-border parcel volume in the US was from these two platforms, leveraging the “De Minimis” policy.
A report by e-commerce market research firm Marketplace Pulse highlights that the rise of Temu is changing US consumers’ expectations for Chinese direct-selling products. Although Amazon has long held market dominance through convenient shopping experiences and efficient logistics services, Temu demonstrates that consumers are willing to accept longer delivery times in exchange for lower prices. This presents a significant challenge to Amazon, forcing the company to launch the “Amazon Haul” service in November last year, attempting to mimic the Temu model by focusing on delivering low-cost fashion, home goods, and other products directly from China to customers to compete with Temu.
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Amazon haul video screenshot
The Trump administration’s decision to cancel the “De Minimis” policy on Chinese goods not only directly impacts Chinese cross-border e-commerce companies but also affects strategic layouts of local US e-commerce platforms. Yet, despite policy volatility, Temu and Shein can still retain a position in the US e-commerce market due to their innovative business models, strong market influence, and price advantages, spurring fundamental industry changes.
With the End of Benefits: Crisis and Opportunity Coexist
Trump’s move is partially aimed at recovering lost tariff revenues for the US and partially at curtailing the influx of fentanyl. Some analyses point out that the policy’s actual impact on tackling fentanyl smuggling is limited, appearing more as a “bargaining tool” to maximize US interests.

Despite the lengthy preparations by Congress and successive presidential executive orders, the reform of the “de minimis” policy is imperative. However, considering this change is directly enacted by a presidential executive order and invokes the U.S. International Emergency Economic Powers Act (IEEPA) to manage import trade within a certain period, it complicates the process. Notably, the “de minimis” rule is part of the Tariff Act of 1930, and its total repeal still requires legislative action by Congress.
Meanwhile, Trump’s executive order might merely be a short-term policy adjustment, and detailed regulations may be slow to materialize. There are significant uncertainties at the customs enforcement level, and its effectiveness remains to be further observed. Therefore, this move does not signify the final settlement of the policy, but rather lays a foundation for future renegotiations and framework adjustments.
In fact, during Biden’s tenure, the reform direction gradually became apparent, including raising thresholds, excluding low-value goods similar to those bound by Section 301 tariffs, enhancing information collection requirements, and increasing visibility on minimal shipments. This, to a certain extent, provides clues for understanding the possible direction of subsequent policies, indicating that the cross-border e-commerce sector may undergo stricter adjustments and reforms in the future.
Additionally, the challenges faced by Chinese cross-border e-commerce are not limited to the “de minimis” policy. According to Reuters citing Semafor, the U.S. government may include Shein and Temu in the Department of Homeland Security’s “forced labor” list. This list is determined by the so-called Uyghur Forced Labor Prevention Act (UFLPA) passed by the U.S. Congress. If included, these companies could face severe consequences such as being unable to export products to the U.S.
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Screenshot from Semafor
The crisis for Temu and Shein is not limited to the U.S. either. On February 5, the EU announced it would strengthen customs inspections on direct-shipped goods from e-commerce platforms like Temu and Shein, seeking to impose parcel handling fees and cancel the tax exemption policy for parcels valued below 150 euros. The next day, the EU, under the Digital Services Act (DSA), required Shein to provide information on the risks of illegal products, their recommendation system, and user data protection by February 27, while an investigation into Temu, initiated in October of the previous year, is still ongoing.
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The EU will strengthen checks on cheap goods from sites like Temu and Shein, screenshot from Reuters
Clearly, the challenges faced by Chinese cross-border e-commerce platforms extend beyond the cancellation of the “de minimis” policy, and include escalating regulatory scrutiny from the U.S. and EU. The immediate dilemma of the “de minimis” windfall ending is the primary issue Chinese cross-border e-commerce platforms need to resolve. Although some believe these platforms will retain a price advantage even with increased tariffs, the challenges they face are far more complex.
The foremost change is cost. With the U.S. imposing increased tariffs and eliminating the de minimis tax exemption, tariff rates on low-value parcels from China to the U.S. will significantly rise. Furthermore, various logistics providers are adjusting prices, thus sharply increasing logistics costs—be it through a customs clearing surcharge of 20 yuan per shipment, a 30% pre-collected tariff deposit, or a consolidated tariff based on 35% of the declared parcel value. Although current policies remain unclear, new mechanisms may need to be introduced between logistics companies, sellers, and platforms to clearly share logistics costs in the future.
Secondly, the mode of customs clearance has changed according to the executive order. Previously, with the 800 USD de minimis exemption, these low-cost goods typically used the “informal customs clearance” method (Entry Type 86) for quick entry into the U.S. The abolition of the tax-exempt policy requires low-value parcels to switch to formal customs declarations and submit detailed documentation. The additional paperwork and compliance requirements not only increase the burden on U.S. customs but also pose challenges to the operational strategies of Chinese e-commerce platforms.
Lastly, because of the more complex customs clearance process and extended timing, the difficulty and cost of service will rise, and platforms may face the risk of losing consumers. The removal of the de minimis policy might not lead to a substantial price increase in low-cost items on platforms like Shein, but according to a study cited by The New York Times, this policy change is expected to cost U.S. consumers between $11 billion and $13 billion, disproportionately affecting poor and minority households.
Of course, Shein and Temu are not unprepared for this seemingly sudden executive order. With early signs of tightening de minimis policies during the Biden administration, both platforms have already started reducing reliance on this rule.
Temu has actively explored new models over the past year, such as semi-managed pre-stock, local sellers, allowing sellers with warehouses in the U.S. to independently handle order fulfillment and logistics. This move has increased the promotion of locally warehoused items on the platform in the U.S., marked with a green “local” badge and appearing in search results and listings. Marketplace Pulse estimates that about 20% of Temu’s sales in the U.S. are currently fulfilled by local sellers. In addition, Temu has increased the proportion of sea freight goods to reduce imports under the de minimis threshold.
In contrast to Temu’s transformation strategy, while Shein still relies heavily on air transport in its global supply chain, it has stepped up its localization efforts in the U.S. Since 2022, Shein has set up multiple warehousing and distribution centers in Indiana, Illinois, and California; and plans to open a supply chain center in Seattle in 2024 as a hub for its U.S. distribution and logistics operations. Through this approach, Shein has further expanded its reach in the U.S. market and is committed to shortening delivery times for consumers. It is also exploring supply chain diversification to gradually increase suppliers from countries like Brazil and Turkey to address challenges posed by new tariffs and regulations.
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Shein has established warehousing centers in the United States
While the tightening of the de minimis policy will have real impacts on both platforms, particularly in logistics and tariffs, given China’s robust competitiveness in global e-commerce and supply chains, Shein and Temu are likely to quickly adapt and resolve these issues.
This policy change itself may also lead to a new round of iterations in cross-border e-commerce platforms’ overseas models, with non-core, spread-oriented sellers and low-profit sellers potentially accelerating their exit from the market. Sellers once reliant on the de minimis will face increased cost pressures, squeezed profit margins, and rising costs and risks of switching to overseas warehousing. As these less competitive sellers gradually exit, cross-border e-commerce platforms will transition from a fully managed “small parcel direct mail” model to a semi-managed “bulk sea freight + localized operations” model.
The journey of China’s cross-border e-commerce riding the waves is essentially an innovative practice in restructuring the global supply chain in the digital economy era. As noted by He Yousheng, spokesperson of China’s Ministry of Commerce, at a regular press conference on February 6, “Cross-border e-commerce directly meets consumers’ personalized demands, speeds up delivery, saves costs, and has unique advantages, representing an important trend in international trade development.” The success of Temu and Shein is not a result of policy arbitrage but their flexible manufacturing model, which is the core competitiveness of their overseas endeavors.
“No matter how a country’s trade policies adjust, the advantages and characteristics of cross-border e-commerce itself haven’t disappeared and still hold strong competitiveness, and the digital development trend of international trade won’t change.” Hence, although current challenges exist, the trend of cross-border e-commerce expansion will remain unchanged, as they continue to adapt, adjust, and rise with the changing tides to seize future opportunities and challenges.

Editor: Zhongxiaowen