The United States has slashed the “de minimis” tariff on low-value items imported from China, a move that is expected to have significant implications for e-commerce giants like Shein and Temu. This change, announced through a White House executive order, comes as part of a broader de-escalation of the trade war between the world’s two largest economies. The tariff will be reduced to 54% from 120% for goods valued up to $800, with a flat fee of $100 remaining in place, effective from May 14, 2025.
The de minimis rule has been a point of contention, as it allowed cheap imports from China to enter the US with minimal duties, which critics argued undermined American industries and facilitated illegal smuggling. The tariff cut follows the Geneva trade talks, where both China and the US agreed to reduce certain trade barriers. The reduction in tariffs is seen as a temporary reprieve for companies heavily reliant on the de minimis rule, such as Shein and Temu, which have experienced rapid growth due to this exemption.
Impact on E-commerce Giants
Chinese e-commerce players like Shein, Temu, and Alibaba’s AliExpress have benefitted significantly from the de minimis rule, allowing them to ship low-cost products directly to US consumers without incurring tariffs. With the new tariff of 54%, these companies will still face higher costs, potentially impacting their business models. According to experts, this shift may prompt businesses to adapt their supply chains to avoid the US market or shift to bulk shipping to mitigate the tariff’s effects.
Criticism and Controversy
The de minimis rule has faced criticism from lawmakers on both sides of the aisle. Some argue that it has led to a flood of cheap Chinese goods undermining domestic manufacturers, while others claim that the rule has allowed illegal goods, such as fentanyl and precursor chemicals, to bypass customs checks. In response to these concerns, President Donald Trump initially proposed a 120% tariff on de minimis items, a move that has now been scaled back following the recent trade agreement.
Global Trade Deal and the Broader Implications
The tariff reduction is part of a larger package of measures aimed at easing tensions between the US and China. The Geneva talks, which took place over the weekend, resulted in an agreement to reduce tariffs on both sides. This truce is expected to provide temporary relief to retailers and give them time to adjust their strategies in the face of changing trade policies.
The US has long been critical of China’s trade practices, and while the reduction in de minimis tariffs marks a significant shift, it is likely that broader trade negotiations will continue to evolve as both countries navigate their complex economic relationship. For more on the ongoing US-China trade developments, visit [Nomura’s website](https://www.nomura.com/).
Conclusion
As the US and China continue their negotiations, the recent tariff reduction offers some breathing room for online retailers, but the long-term impact on businesses like Shein and Temu remains uncertain. Companies are likely to diversify their markets to mitigate the risks associated with heavy reliance on the US market, especially given the changing trade landscape. For additional insights into global trade, explore our recent analysis on Trump’s Drug Price Policy and International Trade Relations.
