Small-value packages shipped from China and Hong Kong will no longer be exempt from U.S. tariffs starting Friday, as President Donald Trump’s latest trade policy move takes effect.

The decision targets the long-standing de minimis rule, a provision Trump has denounced as a “big scam”, which has allowed low-cost goods worth under $800 to enter the United States duty-free. Its removal marks a sweeping change not only for American consumers but for the global flow of cheap goods that has defined e-commerce in recent years.

While U.S. shoppers can still order from platforms like Temu and Shein, they’ll now pay significantly more, as retailers adjust to the new tariffs. Items from China and Hong Kong will be taxed at 120% of their value or face a flat fee starting at $100, increasing to $200 by June. That policy, the Trump administration says, is designed to stop a loophole that allegedly helped conceal ingredients used in illicit fentanyl shipments — but the economic fallout of this decision is expected to go far beyond customs checks.

Impact on Chinese Exports and U.S. Inflation

The end of de minimis is expected to hurt both the Chinese and American economies in different ways. For China, it deals a blow to a growing segment of its export economy — one that’s been booming through direct-to-consumer platforms like Shein, Temu, and AliExpress. These platforms have surged in popularity across the U.S. by offering ultra-low-cost goods, made possible by cheap labor and the tariff loophole. With the new U.S. import fees, Chinese exporters will likely see a sharp drop in shipments, particularly of lower-margin goods like fashion, homeware, and accessories.

For the U.S., the consequences could be inflationary. Many low-income and middle-class Americans have relied on these discount platforms to access affordable products. With prices now climbing, in some cases more than doubling, purchasing power is set to decline further. Analysts warn this could drive up inflation, particularly in categories like clothing, small electronics, toys, and household items, where Chinese platforms have captured a significant market share.

Already, Shein has begun hiking prices ahead of the tariff’s effective date. Data from the company’s top 100 beauty and health products show an average price increase of 51%, while Temu is passing most of the tax burden directly onto buyers, resulting in similar jumps across its marketplace.

A Trade Standoff Between the World’s Largest Economies

The move further underscores a deepening trade standoff between the world’s two largest economies. The U.S. and China have continued imposing restrictions and retaliatory measures on each other’s industries, with both governments now appearing locked in a pattern of economic defiance. Economists warn that this tit-for-tat strategy risks dragging down global growth — particularly at a time when economic recovery from the pandemic and inflation shocks remains uneven.

Despite Trump’s claims that discussions with Beijing are ongoing, there’s little public evidence that high-level trade talks have resumed or that any significant progress is being made. The White House has offered no timeline for negotiation or de-escalation. The only visible shift has been a handful of exemptions granted by China on certain American goods, but these are seen by analysts as largely symbolic.

As of now, the Trump administration continues to maintain — and in some areas expand — the array of tariffs, export controls, and investment restrictions introduced during the previous trade wars. The de minimis overhaul adds a new layer of friction to U.S.-China commerce, targeting a volume-driven sector that handled over 1 billion individual shipments into the U.S. last year.

The de minimis threshold has long given foreign sellers, especially Chinese e-commerce firms, a competitive advantage. Introduced in 1938 and raised to $800 during the Obama administration, the exemption allows individual shipments valued below that amount to enter the U.S. without customs duties or formal paperwork. That’s considerably more generous than in most developed economies — Canada caps its threshold at $40, while the European Union sets it at around $150.

For years, Chinese platforms have used this to avoid the kind of regulatory scrutiny American retailers must endure. U.S. businesses importing the same goods must pay tariffs, fill out documentation, and endure customs clearance. Meanwhile, Chinese companies have been able to ship items directly to U.S. homes using logistics services like Yanwen, Cainiao, and cross-border couriers, bypassing much of the red tape.

Trump’s executive order signed last month reverses that equation. While it initially applies to China and Hong Kong, the administration has made it clear that the exemption will eventually be eliminated for all countries, once a system is in place to “expeditiously process and collect” duties on small parcels.

The Business Uncertainty Fallout

The change also creates uncertainty across logistics networks, especially for carriers that process large volumes of international parcels. DHL Group CEO Tobias Meyer said the impact depends on how the U.S. enforces the new system, particularly in terms of defining what constitutes formal versus informal clearance.

“For a formal clearance into the United States, you need additional data items,” Meyer told Bloomberg Television. That means more paperwork, higher compliance costs, and potentially slower deliveries for millions of packages.

The implications are vast. Independent U.S. sellers using Chinese suppliers via platforms like Amazon, Etsy, or eBay may struggle to maintain their margins. Drop shippers who rely on just-in-time imports from China now face steep duties, and some may be pushed out of the market entirely.

Trump has attempted to frame the move as a blow to fairness, saying the exemption has undercut American small businesses.

“It’s a big scam going on against our country, against, really, small businesses — and we’ve ended it,” he said at a cabinet meeting Wednesday.

But for consumers, the shift may feel more like a penalty. Trump acknowledged this recently, stating that kids might now have “two dolls instead of 30” and that “maybe the two dolls will cost a couple of bucks more than they would normally.”

A New Chapter in U.S.-China Trade

The removal of de minimis signals that Washington is shifting to a more aggressive stance in enforcing trade fairness — even if it means short-term disruption. But with no clear plan for negotiations with China, and both sides showing little willingness to compromise, the world’s two largest economies are veering toward a prolonged standoff.

Economists say the defiance game, each country escalating measures with no sign of retreat, carries long-term risks. It could stall investment, worsen inflation, and choke the flow of affordable goods that consumers have come to rely on.

In this new phase of economic nationalism, the question is no longer just about who wins or loses — but how much pain both sides are willing to endure.

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