Despite a new temporary trade agreement between the United States and China that has reduced many tariffs, a significant levy remains in place on low-value goods imported from China and Hong Kong.
Small packages from these regions continue to face tariffs of “120%” or a substantial flat fee, a White House official confirmed to Axios. This continuation of high duties, following the end of the long-standing $800 de minimis import exception rule effective since May 2, represents a major blow for U.S. consumers seeking cheap goods from e-commerce retailers like Shein and Temu, and poses ongoing operational and cost challenges for the online sellers who source products from these areas.
The temporary trade deal, announced today, agreed to a 90-day reduction in additional tariffs, lowering US duties on many Chinese goods from as high as 145% to 30%, while China will reduce its tariffs on American products from 125% to 10% during this period.
Both countries will maintain a baseline 10% tariff. However, the 120% tariff rate on shipments valued at less than $800, or a flat $100 fee per postal item, was explicitly left out of that deal and the “tariff rate on shipments valued at less than $800, or a flat $100 fee per postal item” remain in place. This suggests these levies appear to be “the new normal.” for cheap goods entering the US. The flat fee for postal items is scheduled to increase further to $200 on June 1.
Impact of the De Minimis Exemption’s End
The end of the de minimis exemption for China and Hong Kong, ordered by President Trump in early April, means goods valued at $800 or less from these locations no longer enter the U.S. duty-free effective May 2, 2025. This policy change was linked to combating fentanyl flows and addressing complaints from larger U.S. retailers about competition from sites like Shein and Temu.
Non-postal shipments from China and Hong Kong under $800 now require formal customs entry, a more complex process involving duties and fees, as confirmed by a U.S. Customs and Border Protection notice.
Items arriving via express carriers could face tariffs reaching 145%. Goods sent through the U.S. Postal Service are subject to a different, rapidly escalating structure: initially set at 30% or a $25 fee in early April, the charge was raised to 120% of the item’s value or a $100 fee per package starting May 2nd, with the fee scheduled to increase again to $200 on June 1st.
The de minimis provision, which allowed packages worth up to $800 to enter the US without tariffs, was originally intended to facilitate the flow of small packages valued at no more than $5 in 1938, the equivalent of about $109 today.
The threshold was raised to $800 in 2016. But the rapid rise of cross-border e-commerce, driven by China, has challenged the intent of this decades-old rule. Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a February report by the Congressional Research Service. The U.S. market has been a major destination.
Over 1.3 billion de minimis shipments entered the US in 2023, equating to around 40 packages per second, with the vast majority from China, according to customs data cited by The Times of India.
Challenges for Sellers and Consumers
The termination of the duty-free allowance presents immediate challenges for small e-commerce businesses, many operating on platforms like Etsy or eBay, that source materials or finished products directly from China.
Kelly Kendall, whose Chicago-area business sells craft kits made with supplies mostly imported under the $800 threshold, anticipates needing to raise her prices significantly once her current inventory runs out. She told The New York Times that finding domestic textile manufacturers has been difficult due to her small order volumes, as “A lot of factories, if I try to go directly to them, won’t deal with me because I don’t have a large amount of business for them,” she explained.
Sellers outside the U.S. shipping Chinese-made goods to American buyers are also caught in the crossfire. Justin Crowder, owner of Cafuné Boutique in Montreal, experienced chaos during a brief, similar suspension of the rule in February, with customers unexpectedly facing import fees ranging erratically from $38 to $159 for the same item due to apparent customs processing issues.
He absorbed these costs but expressed concern about the lack of predictability, stating “My heart sank when I realized that a number of our customers would be impacted by this,” when he realized customers would be impacted and that “We’ve just been in a hamster wheel chasing down as much information as possible.”
Émile Arsalane, an eBay and Poshmark seller in Quebec, preemptively halted about 70% of his sales to the U.S. last Friday – those involving Chinese goods or items without clear origin documentation – fearing the impact. He observed that “Tariffs on China are affecting Canadian sellers more than tariffs on Canada,” calling it “It’s the heart of the issue for small sellers.”
The general anxiety among e-commerce operators was reflected in an April survey from Passport Shipping, which found 81% believed shifting tariff regulations could put their global strategy at risk. Consumers can expect higher prices and delivery delays as shipping carriers and sellers adjust for new import taxes.
Logistics and Platform Responses
The U.S. import system and the companies navigating it were already under pressure before this latest change. In early April, U.S. Customs began requiring formal entry processing for all imports valued above $800, a move separate from the de minimis tariff change but one that created immediate backlogs.
Citing these delays, DHL temporarily stopped accepting U.S.-bound B2C shipments over $800 on April 21st. Canadian shippers also reported significant disruptions and returned packages during the brief February de minimis pause, according to company blog posts. Kensen Wah, Stallion Express’s chief revenue officer, advised clients then, “I don’t think it’s safe for businesses to rely on the de minimis now.” Experts have expressed concerns that the surge in the workload for customs could be a serious challenge.
Major e-commerce platforms have reacted differently. While Amazon denied reports on April 29 that it planned to display tariff costs on its main product pages, clarifying the consideration was only for its budget-focused Amazon Haul store, competitors like Temu and Shein began adding explicit import charges or raising prices around April 25th.
Temu sometimes drastically increased item costs, while Shein also raised prices, attributing it to included tariffs. Some Shein items reportedly saw increases over 300%. Shein is also reportedly considering restructuring its U.S. supply chain by shifting production away from China.
Amazon CEO Andy Jassy had previously acknowledged expecting third-party sellers on Amazon.com – the group most affected by the de minimis change – would likely pass tariff costs onto consumers. Temu, however, said it would abandon a model centered on cheap Chinese imports, shifting instead to “local fulfillment” by recruiting US merchants to sell locally based merchandise to sidestep tariffs. The company intends to keep prices for Americans unchanged.
Broader Trade Context and Future Uncertainty
The de minimis change is part of a wider, assertive trade policy stance enacted by the Trump administration. On April 2nd, new global tariffs were announced based on a formula some linked to AI chatbot output, leading to levies like 34% on many Chinese goods.
While a 90-day pause on most reciprocal tariffs (excluding China’s) began April 10th, the baseline tariffs and the specific de minimis elimination for China and Hong Kong remain. This environment spurred preemptive actions, like Apple airlifting iPhones in late March, and retaliatory measures, such as China imposing its own tariffs and export controls on critical rare earth minerals on April 4th. The policy shifts have created what Wedbush analyst Dan Ives described in mid-April as “massive uncertainty and chaos for companies trying to plan their supply chain, inventory, and demand.””.
Large corporations also took measures to navigate the high tariff environment. Apple, for instance, is expanding iPhone assembly in Brazil to bypass new U.S. duties that could have led to price hikes of up to 40% for American consumers on some iPhone models. This move is part of Apple’s broader strategy to diversify its supply chain beyond Asia, with aims to manufacture up to 25% of its iPhones in India by 2027.
The Trump administration has advocated for increased U.S.-based tech manufacturing, with the White House Press Secretary citing Apple’s $500 billion U.S. investment plan as a sign of confidence in domestic capabilities. Commerce Secretary Howard Lutnick also pointed to highly automated U.S. factories in a CBS News appearance and Apple’s prior $430 billion U.S. investment plan from 2021.
However, Apple executives and even Co-Founder Steve Jobs had long expressed skepticism about replicating their vast Asian manufacturing ecosystem in the U.S., citing a shortage of specialized engineering talent.
The temporary pause in other tariffs is “breath of fresh air for companies struggling with supply chain uncertainty,” a spokesperson for the National Retail Federation told the Associated Press.
The American Chamber of Commerce in Shanghai also welcomed the move, stating it provides needed predictability for businesses. The U.S. and China also agreed to work constructively together on the issue of fentanyl flows, according to U.S. Trade Representative Jamieson Greer.
Following the agreement, the parties will establish a mechanism for continued discussions on economic and trade relations. Both sides are committed to achieving “more balanced trade,” saying that “neither side wants a decoupling.” Scott Bessent stated in Geneva.
China’s ministry of commerce echoed this sentiment, stating the move “meets the expectations of producers and consumers . . . aligning with the interests of both nations and the common global interest,” expressing hope “that the United States will continue to work with China . . . and jointly inject more certainty and stability into the world economy.””
The temporary tariff reduction is seen as “a first step towards a more permanent deal.” However, trade experts say the future of the de minimis policy is unclear since it was absent from the temporary tariff reduction agreement.
