US To Slash ‘De Minimis’ Tariff On Chinese Shipments; Flat Fee Of $100 Introduced

This development follows recent trade discussions between the US and China in Geneva, where both nations agreed to a 90-day suspension of previously imposed tariffs.

In February, the de minimis exemption was revoked after President Donald Trump mandated a 120 per cent tax on these shipments, or an alternative flat fee of $200, with enforcement initially planned for June.

Source : Freepik

Starting May 14, the United States will significantly scale back the 'de minimis' tariff on shipments from China—from 120 per cent to 54 per cent—as outlined in a White House executive order released on Monday. The policy change will also implement a flat fee of $100 per package.

This development follows recent trade discussions between the US and China in Geneva, where both nations agreed to a 90-day suspension of previously imposed tariffs. As part of the new arrangement, the US reduced its tariff on Chinese imports from 145 per cent to 30 per cent, while China lowered tariffs on American goods from 125 per cent to 10 per cent. The joint move is intended to ease escalating trade tensions and marks a step toward resolving long-standing economic friction, reported Business Standard.

End of Duty-Free Privileges Under De Minimis Rule

Until recently, shipments valued up to $800 that were sent via postal services from China could enter the US without paying duties, thanks to the longstanding de minimis rule. This provision, rooted in Section 321 of the Tariff Act of 1930 and established in 1938, allowed for the duty-free import of low-value items and helped simplify customs procedures.

However, in February, the de minimis exemption was revoked after President Donald Trump mandated a 120 per cent tax on these shipments, or an alternative flat fee of $200, with enforcement initially planned for June.

Reports from Reuters indicated that Chinese retailers such as Shein and Temu leveraged this loophole to penetrate the US market with ultra-competitive prices. The exemption was also reportedly exploited by illicit actors, including traffickers of fentanyl.

Shein and Temu Adapt to Tariff Shifts

In response to mounting tariffs and regulatory changes, major Chinese e-commerce players have been adjusting their operations. Shein and Temu, in particular, shifted away from their traditional model of direct factory-to-consumer shipping. Instead, they started shipping goods in bulk to US warehouses to circumvent high shipping and customs costs.

"Temu has been featuring products already in US warehouses," according to a Reuters report, indicating a major shift from its earlier logistics strategy. As of May 2, Temu has transitioned all US-based sales to sellers operating from within the country.

Faced with rising operational costs and decreased margins, both companies have also reduced their advertising efforts in the US. They are now expanding into new international markets such as Europe. In parallel, Amazon has launched its own version of a budget shopping platform, Amazon Haul, which went live last week in the UK and Saudi Arabia.

Meanwhile, air cargo volumes between the US and China have been on a decline, highlighting the broader impact of these tariff adjustments on cross-border trade logistics.