Chinese tariffs have closed an import loophole

The new tariff President Trump has placed on Chinese imports also closes a loophole that has exempted lower-value goods from duties and taxes.

As part of the recent executive order issued by Trump which placed a 10% tariff on imports from China beginning Tuesday, Feb. 4, no shipments from China will be eligible for the de minimis exception, which exempts imported shipments with an aggregate value of less than $800 from having to pay tariffs.

The exception also allows these shipments to enter the U.S. while revealing less information about the contents than other imported shipments.

According to an official White House fact sheet, during the last 10 years, the number of shipments entering the U.S. claiming the de minimis exemption has grown from roughly 140 million per year to more than one billion per year, largely originating from “several China-founded e-commerce platforms.”

Two of the most popular e-commerce platforms largely selling imported Chinese goods to U.S. consumers are Shein and Temu. While Shein is based in Singapore and Temu has headquarters in Boston, both have close ties with vendors on the Chinese mainland. Both companies have been able to expand their market share largely by exporting goods into the United States without being subject to duties, according to the New York Times.

CNBC previously reported that Shein and Temu paid no import duties in 2022 due to de minimis exemption claims, and a 2023 report from the House Select Committee on the Chinese Communist Party found that the two companies likely generate almost half of all de minimis shipments to the U.S. from China.

Trump’s executive order builds on an executive order issued by President Biden in September 2024. The Biden administration used executive authority to exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. 

[READ MORE: Biden targets Temu and Shein with action on low-cost Chinese shipments]