The U.S.-China agreement announced Monday to roll back tariffs by up to 115% omitted a key provision that has reshaped American e-commerce: the de minimis exemption for low-value imports. Trade experts and industry executives noted the absence of any mention of the small-package rule, which allowed duty-free entry for individual shipments valued under $800.
The Trump administration ended that exemption on May 2, imposing a 120% tariff on small parcels shipped from China and Hong Kong. The policy reversal disrupted business models that powered rapid growth for fast-fashion and discount e-commerce platforms such as Shein and Temu, which relied on the de minimis channel to reach U.S. consumers with low-cost goods shipped directly from Chinese warehouses.
"There is no clarity on de minimis at all," said Martin Palmer, co-founder of Hurricane Modular Commerce, according to REUTERS. "Logic says that if you cut tariffs for everything else, then it should mirror into de minimis because that's such a sizeable part of the imports into the U.S. from China."
Temu, owned by China-based PDD Holdings, halted shipments from China to the U.S. following the change. Shares of PDD Holdings rose 7% Monday on optimism from the broader tariff reprieve, though the de minimis exemption remains suspended. Both PDD and Shein declined to comment.
The de minimis rule had facilitated the tariff-free entry of more than a billion packages annually, reshaping U.S. retail logistics and fueling a surge in cross-border e-commerce. The rule was especially advantageous for sellers leveraging public postal services, as the U.S. Postal Service could ship goods internationally at rates lower than private carriers.
Critics of the exemption argued that it gave foreign sellers an unfair edge. Former President Donald Trump called the provision a "great scam against our country," and cited its role in enabling the flow of chemical precursors used in fentanyl production.
Kim Glas, president of the National Council of Textile Organizations, said the loophole devastated the U.S. textile industry by allowing duty-free entry of unsafe products, giving China a privileged market access.
The Trump administration has expanded the policy beyond China, targeting other nations that previously benefited from the rule. Trade analysts warn this could escalate friction in global commerce and prompt retaliation from affected countries.
