It’s official: As part of President Donald Trump’s roller-coaster trade war, the de minimis exemption no longer applies to packages arriving to the United States from China as of Friday, May 2. The provision previously allowed Chinese ecommerce giants like Temu, Shein, and AliExpress, as well as American companies like Amazon, to send goods valued at less than $800 to US customers duty-free.
Those same goods are now subject to tariffs as high as 145 percent. In response to the change, Shein announced it would begin adjusting prices starting on April 25. Temu, meanwhile, is currently blocking US shoppers from seeing products shipped from China, effectively narrowing the number of goods for Americans to choose from. Other retailers have started displaying tariff surcharges in their online shopping carts to help consumers make sense of where added fees are coming from.
What will the end of de minimis mean for American businesses and consumers? Will China’s ecommerce giants stop shipping to the United States altogether? WIRED senior business editor Louise Matsakis and senior China writer Zeyi Yang joined chatted with readers during a Reddit AMA this week to answer these questions and many others. Here’s what to know:
What’s the difference between the regular tariffs and the de minimis exemption?
Trump’s blanket 145 percent tariffs on Chinese imports are having wide impacts on almost every industry, whereas the change to de minimis specifically hurts platforms like Temu and Shein. It’s not wrong to say Temu was invented, in part, because of the de minimis exemption. It made shipping small packages directly from China affordable and fast, thus making Temu’s original business model viable. With that gone, Temu will have to transition to a different business model in the US (which it has been trying already, and that’s what’s going on with the local warehouse products you are seeing now).
If the recent tariffs aren’t removed, will Temu and other Chinese ecommerce sites eventually close down their operations in the US?
At this point, we really don’t know, and Temu might not have made a decision one way or another. What we do know for now is that the American version of Temu has started showing only “local” products. But one important piece of context that might be helpful to consider is that Temu is owned by a Chinese company, Pinduoduo, which is already one of the largest online shopping platforms in China.
So unlike, say, Amazon, it doesn’t need the United States to survive in the long-term, and it might be willing to walk away if the business environment becomes untenable. Pinduoduo has invested pretty heavily in Temu’s American business (it has spent billions on advertising to US consumers, for example), but it wouldn’t be an existential loss if it chose to pull out and focus instead on other markets.
I have heard that ports in the US are starting to receive less shipments as tariffs take full effect. How long do you think it will take for this to affect the average American consumer and brick-and-mortar stores?
We have been talking to US retailers who don’t sell on ecommerce websites, meaning they have their own stores or are suppliers to Walmart, Target, etc. These companies are also freaking out because many of them have complex supply chains in China and can’t easily move their manufacturing operations to other countries.
From what we’ve seen, retailers usually have stockpiles of inventory that should last at least the next few months in the US already. If the tariffs don’t come down to an acceptable level soon, however, shortages will start to become much more apparent maybe in the summer or early fall, depending on how prepared individual stores are. US retailers of Christmas ornaments and toys, for example, are really concerned right now even though the holiday is seven months away. Perhaps December is when some American consumers will eventually find out the impacts of these policies!
Would it be possible for Trump to give an exception to Amazon for tariffs and not other retailers? Could he do this without anyone knowing?
Even if Trump were to try to spare Amazon from his tariffs, it would be pretty difficult logistically. Amazon’s marketplace has millions of third-party sellers that each operate their own businesses, and they’re responsible for bringing in goods to the US and clearing the customs process. But Trump could offer Amazon and other retailers tax breaks, subsidies, or other economic benefits to help offset the impacts of the tariffs. That hasn’t happened yet, but there have reportedly been discussions among Trump administration officials about potentially giving American farmers subsidies.
What percentage of sellers on Amazon are importing goods from China?
It’s hard to say how many Amazon sellers import things from China, but estimates suggest that more than 50 percent of Amazon’s top-selling independent merchants are based in China.
Are there actually enough custom agents to verify that things imported from other countries actually didn’t originate from China? If so, how will they do this?
Trump’s tariffs are definitely going to stretch the capabilities of US Customs and Border Protection (CBP) to inspect packages and where the goods inside them originated from. The US Postal Service actually stopped accepting packages from China for about a day earlier this year because they were so overwhelmed when Trump initially tried to end de minimis overnight. His administration later delayed the policy for several weeks, giving CBP more time to prepare.
How has the tariff situation affected the actual vendors making products?
Factories in China are being hit hard by the tariffs, and some are considering laying off workers. They all want to pivot to other markets like Brazil, Russia, and the European Union, but the reality is that consumers in these regions simply don’t have nearly as much disposable income as Americans do. Factories will be able to make up some of their sales, but those alternative markets are also now going to be hypercompetitive.
Small business owners say they are getting hurt because of tariffs, so who is winning here?
Honestly, we can think of very few parties that are winning here, at least right now. Even if you want to manufacture in the US, you almost certainly will need to import machinery and raw materials from either China or another country—meaning you will have to pay these new tariffs, too. One winner, perhaps, is the environment. Higher prices will likely result in people buying less, and this could be a moment when consumers start to reflect on their consumption habits. But if that happens, it will also be bad news for the US economy.
What if Chinese goods are sold to a third party (such as Canada) and then resold to the US, would Trump figure it out?
This would be an example of tariff evasion and is illegal. Going through an intermediary country in this manner is known as “transshipment” and it does happen from time to time, but if a manufacturer or retailer gets caught, they can be subject to pretty steep fines.
