Trump imposes 10% tariff, eliminates de minimis on Chinese exports
US consumers imported close to $48B in de minimis shipments in 1H24
The United States today applied a 10% tariff against China, ending de minimis exemptions for the country.
Under de minimis regulations, companies shipping goods into the United States are not required to pay tariffs on shipments valued at less than $800.
De minimis exceptions have, in part, helped international e-commerce flourish, as companies like Temu and Shein were able to offer low-cost goods duty-free.
China is the largest provider of e-commerce goods, according to data platform Statista. Chinese exports of low-value packages rose to $66 billion in 2023 from $5.3 billion in 2018, according to the Congressional Research Service.
American consumers imported about $48 billion worth of shipments under the de minimis exception in the first nine months of 2024, according to U.S. Customs and Border Protection.
President Donald Trump’s efforts to close what is often called the “de minimis loophole” continues those of the previous administration. Former President Joe Biden issued an executive action in September calling for Congress to pass legislation to exclude shipments containing certain products from de minimis and strengthen information collection requirements to ensure compliance.
Eliminating de minimis
Removing de minimis exceptions also heightens the level of documentation needed for these shipments.
“The elimination of the de minimis rule may be highly disruptive for many companies,” Brian L. Whitlock, senior director and analyst at consultancy Gartner, said in a Feb. 2 post on LinkedIn. “Logistics leaders impacted by these changes need to work quickly with your business partners to execute your mitigation plans and ensure you know how you will execute logistics processes following Tuesday’s implementation.”
Companies like Temu and Shein have been preparing for this eventuality by shipping larger volumes to the U.S. And China has a more diverse supply chain than the North American countries, Douglas Kent, executive vice president of sales and alliances at the Association for Supply Chain Management, said in a webinar today.
Also, the 10% tariff is not exorbitant, Fisher told Cargo Facts.
An item from Temu or Shein that previously cost $10 will now cost $11, which is still cheaper than competitors, he said.
“Adding 10% to Shein’s costs, I don’t think they’re going to miss a beat,” Fisher said.
However, the uncertainty alone created by the threats of tariffs and eliminated de minimis against Canada and Mexico could result in higher costs, as shippers become hesitant to transport goods to the U.S.
“When the flow of goods doesn’t keep up, that means it becomes more costly, and you’re going to see not only the cost of goods potentially increasing as a result of tariffs, but the cost of transportation, the uncertainty of transportation,” Kent said.
Canada and Mexico tariffs
Meanwhile, the proposed 25% tariffs against Canada and Mexico, which were walked back on Feb. 3 and paused for a month, could harm North America’s economies and trade but not affect air cargo heavily, Stan Wraight, president and chief executive of Canada-based consultancy SASI World, previously told Cargo Facts. De minimis exemptions remain in effect for the countries for now.
There will be “zero effect [on air cargo] as 99% moves by truck, factory to factory, not via airfreight,” he said. “Any trans-border airfreight is mostly the integrators, and that’s traffic usually not for the USA but for international destinations.”
And while the tariffs may not go into effect, the anti-U.S. sentiment they have engendered may remain, supply chain expert Alastair Charatan said in a webinar today.
“The tariff might go away within a day, but you’ve caused a lot of upset and insult, frankly, and that’s going to be damaging,” Charatan said.
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