There are many reasons why you might want to start spending less money online: It can be bad for the environment, it can be bad for your quality of life, it’s bad for your wallet, and, with the ‘de minimis’ import rule changing, it will soon be extra bad for your wallet.
On Friday, May 2, packages worth less than $800 entering the U.S. from China will no longer be tax-exempt. President Donald Trump announced he would be pull the de minimise exemption in April, and now the change is set to take effect. His official reasoning is that Chinese-based shippers use the de minimis exemption to ship illicit substances like fentanyl in low-value packages. Lawmakers on both sides of the aisle agree that a reform on the de minimis provision could slow the spread of drug trafficking in the U.S., but slashing the exemption will have lasting effects on other spaces within the economy, particularly the world of e-commerce.
So, online shoppers, businesses, and retailers who rely on low-cost imported Chinese goods should brace for impact. According to U.S. Customs and Border Protection, fully 92 percent of all cargo entering the U.S. fall under the de minimis exception, with the CBP processing “approximately 4 million de minimis shipments a day.” And according to Reuters, more than 60 percent of those packages come from China, which faces additional tariffs as high as 145 percent. Many of those shipments are bound for Temu and Shein shoppers.
The May 2 deadline approaches in the midst of a trade war between the U.S. and, well, most other countries, and as fears of a recession spread.
So, what does the expiring de minimis exception mean for you?
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If you like shopping for inexpensive items on Temu or Shein…
Chances are, cheaper items will become significantly more expensive due to taxes. This includes the bulk of items you’d buy on TikTok Shop, Temu, Shein, and other online retailers that rely on inexpensive labor in China to lower the cost of items.
If you like to shop on Amazon…
One survey found that up to 70 percent of brands selling products on Amazon source products or parts from China. And when a rumor spread this week that Amazon might show a tariff surcharge to shoppers, The White House accused the company of a politically motivated “hostile act” against the administration. So, expect even more brands to raise prices on Amazon in the weeks ahead.
If you own a business that relies on Chinese-made goods…
Chances are, you’ll have to spend a whole lot more money up front before you can start selling those goods. You’ll have to make a tough decision: increase the prices of your goods and risk losing customers or somehow pay the difference yourself.
Expect even more surprises…
On Thursday, the smart home company Wyze shared a message on X about the impacts of Chinese tariffs on their products. According to the company’s figures, an order of $167,000 resulted in tariffs of $255,000 — 153 percent more than the products themselves.
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While a large $167,000 order doesn’t fall under the de minimis rule, it shows just how high costs are getting for businesses. And since we’ve already seen tariff-related price increases on tech gadgets and sex toys, we expect to see higher import taxes passed on to customers after the May 2 deadline passes.
