Amid the all-out trade war between the US and China, President Donald Trump has also taken aim at the huge amount of small packages that are entering the US from China.
These are typically small in value and these low-value goods have flowed into the US in the past decade without much scrutiny (or taxes) attached. The growth in the overall value of these low-value imports has been phenomenal.
But that is set to change with the tweaking of the “de minimis” rule, especially as it relates to imports from China. But what exactly is this obscure import rule and why is the US so intent on changing it for Chinese imports?
What’s The De Minimis Rule
In the US, the de minimis rule refers to a nominal threshold that exempts low-value imports from customs duties and rigorous inspection from authorities. Currently, the de minimis threshold is a relatively high US$800.
That basically means that any shipment entering the US, that’s valued under this threshold, can enter the country completely duty-free. As a result, they’re not subject to the typical import tariffs and can avoid customs declaration completely.
In fact, the US is an outlier in this respect as most countries globally have a far lower de minimis threshold of US$200 or less. The current US$800 threshold in the US was updated in 2016 under the Trade Facilitation and Trade Enforcement Act, which saw the minimum being raised from US$200 up to US$800.
That was done to ease the administrative burden of US customs and to help streamline cross-border e-commerce for American consumers that were increasingly accustomed to buying online.
Why Is The US Changing It Now?
It’s really down to trade and the ongoing trade war with China that President Trump has launched. De minimis shipments from China have exploded in recent years in the US. In 2024, total de minimis shipments into the country were worth just shy of US$80 billion, up from US$50 million in late 2012.
They make up around 20% of America’s e-commerce market and 7% of all imported goods into the country. It’s no surprise that many of these packages come from China.
Within President Trump’s launching of sky-high 145% tariffs imposed on China post-Liberation Day, there was also a 120% tariff on “de minimis” shipments from China.
However, with the recent pause on those tariffs and a return to a flat 30% tariff on all Chinese imports, any de minimis shipments from China will see a reduction in tariffs but this will be at a higher level of 54%.
A flat fee of US$100 per parcel will apply, which will still hugely impact many low-cost packages given the average value of a de minimis shipment during fiscal year 2023 was just US$54.
Chinese Online Retailers Dominate
Beyond trying to crack down on this trade loophole, there’s also the added fact that many online Chinese retailers ship vast amounts of goods to America.
Within the de minimis space, low-cost clothing, accessories, and electronic goods dominate and these mainly come from Chinese companies that have grabbed market share in the US.
Companies such as Shein – a huge fast-fashion brand that can sell dresses and t-shirts for as low as US$2 to US$3 each – and Temu, a low-cost retailer backed by China-based PDD Holdings Inc (NASDAQ: PDD), have risen in popularity with consumers in America.
Going from basically no presence in the US a few years ago, today both Shein and Temu have a 1-2% share of the US e-commerce retail market, which is enormous given the overall size of the US e-commerce market was estimated to be US$1.2 trillion in 2024.
Stopping The Growth
While there has been a temporary pause in trade tariffs between the US and China, this doesn’t mean they can’t go back up after the 90-day reprieve. Indeed, for now, consumers will still be impacted by the 54% tariff on de minimis shipments from China to the US.
While the flat fee of US$100 is certainly painful, a planned minimum US$200 flat fee – scheduled to be implemented on 1 June – was cancelled after the trade tariff pause was agreed between the two countries.
Whatever happens from here between the two economic superpowers, the relatively high tariff in place on de minimis shipments from China is likely to remain and could mean that low-cost goods from China are re-routed into the US via other countries to avoid the tariff.
At the end of the day, it’s clear that US President Trump wants to limit the amount of small packages entering the US from China and imposing a high tariff on de minimis shipments is one of the best ways to do that in his eyes.
Read Also: How Trump’s Tariffs Hurt Everyone. A Look Through The Lens Of Singapore & Johor
