Trump eliminates tariff exemption for inexpensive web goods imported from China
Here's a reimagined spin on the topic:
Trump Cracks Down on Chinese Retail Giants with Tariff Move
President Donald Trump makes a bold move, nailing the coffin on a loophole exploited by e-commerce titans like Shein and Temu.
In a move that'll shake up the retail landscape, Donald Trump has shut down a tariff loophole that permitted these Chinese e-commerce powerhouses to flood the American market with affordable goods, all without paying a dime in tariffs or going through rigorous customs checkpoints.
The loophole, known as the "de minimis" exemption, allowed items valued at under $800 from China and Hong Kong to bypass tariffs and evade thorough customs checks. Critics have long condemned this exemption for its role in enabling the illicit trafficking of fentanyl precursors.
This change takes effect just a month after Trump signed an executive order abolishing the exemption, a rule that's been in place since 1938. With this move, goods now face a whopping 145% tax rate or a flat fee, which will inevitably trickle down to the consumer.
President Trump aims for tighter control over imports, putting Chinese e-commerce giants like Shein and Temu in the crosshairs. (Davide Bonaldo/SOPA Images/LightRocket via Getty Images | Jakub Porzycki/NurPhoto / Fox News)
*THE NITTY-GRITTY OF TRUMP'S TARIFF CRACKDOWN**
New research by UCLA and Yale economists reveals some interesting statistics: nearly half (48%) of de minimis shipments from these retail giants hit the poorest U.S. zip codes, while only 22% land in wealthier areas. The White House asserts that this move is a monumental step to counter the ongoing opioid crisis, as many Chinese-based shippers allegedly exploit the de minimis exemption to smuggle illicit substances, including synthetic opioids, into the country.
The Centers for Disease Control and Prevention (CDC) estimate a staggering 107,543 drug overdose deaths in the U.S. during 2023, making it all the more crucial to combat this illicit trade.
Prior to the axing of the loophole, Customs and Border Patrol (CBP) processed over 4 million de minimis shipments daily, with the White House reporting that last fiscal year, they apprehensioned more than 21,000 pounds of fentanyl at the borders, enough to potentially end the lives of over 4 billion people.
Shein and Temu brace for impact as President Trump turns up the heat on Chinese retailers. (Getty Images)
*WILL THESE RETAIL GIANTS SURVIVE THE TARIFF ONSLAUGHT?**
An investigation by Reuters revealed that these companies relied heavily on the de minimis loophole to import the precursor chemicals for at least 3 million fentanyl tablets, thanks to overseas shippers intentionally mislabeling packages as electronics.
Fast fashion retail giant Shein attempted to reassure customers via its U.S. Instagram account, asserting that while some products may cost more, the majority of their collections remain budget-friendly. Shein primarily sources its clothing from China, and the U.S. represents their biggest market.
Temu, the international arm of Chinese e-commerce giant PDD Holdings, advertised goods already in U.S. warehouses on its website as "Local," with a pop-up informing customers there would be no import charges for local warehouse items. Temu claimed that their pricing for U.S. customers remains unchanged, while items in stock before May 2 would eventually run out.
Both companies have slashed their U.S. digital advertising spending in recent weeks, as they prepare to face the fallout from the loophole closure that could hit their sales hard.
The rise of Shein and Temu has been a major factor in the surge of U.S. retail store closures, according to a report by Coresight Research. They expect approximately 15,000 additional closures in 2025, after seeing 7,323 closures in 2024 – the highest number since 2020, when nearly 10,000 stores shut down.
Some experts believe that this crackdown on the loophole will empower American manufacturers to compete more effectively vs e-commerce titans. Kim Glas, president of the National Council of Textile Organizations, which represents American textile makers, stated that the loophole had "devastated the U.S. textile industry."
FOX Business' Eric Revell and Reuters contributed to this report..
- The tariff move by President Donald Trump is aimed at curbing the use of the de minimis exemption, a loophole exploited by e-commerce giants like Shein and Temu, which has allowed them to evade tariffs and customs checks.
- The elimination of this loophole will affect businesses like Shein and Temu, as goods will now face a 145% tax rate or a flat fee, which will increase their prices.
- Studies by UCLA and Yale economists suggest that de minimis shipments from these retail giants disproportionately target poorer U.S. zip codes, fuelling concerns about the ongoing opioid crisis, as such loopholes have been used to traffic illicit substances like fentanyl.
- The Centers for Disease Control and Prevention (CDC) estimate that 107,543 drug overdose deaths may occur in the U.S. during 2023, emphasizing the need to combat illicit trade.
- As a result of the loophole closure, companies like Shein and Temu, which heavily relied on the de minimis exemption, could experience significant decreases in sales, potentially leading to store closures and impacting the economy.
- The closure of this loophole could benefit American manufacturers, as the increased costs for e-commerce giants may make it more challenging for them to compete with domestic industries, especially in the finance and business sectors, and could lead to a shift in politics and general-news discussions surrounding trade and industry.
