How Trump’s suspension of de minimis will impact e-commerce companies

The U.S. trade rule known as de minimis has been instrumental in the rapid growth of “direct-from-China” e-commerce companies like Temu and Shein. But President Donald Trump’s new tariffs against China, Canada and Mexico pose an existential threat to imports shipped directly to U.S. consumers.
On Saturday, Trump signed three executive orders imposing tariffs on the country’s three biggest trading partners. Effective Feb. 4, the U.S. will impose 10% on Chinese goods. Imports from Canada and Mexico were also supposed to be hit with a 25% tax, but the U.S. agreed on Monday to delay tariffs on the countries by a month.
Additionally, the orders include a provision that suspends the de minimis trade rule for shipments that originate from China, Canada or Mexico. De minimis, which was originally intended for U.S. tourists traveling abroad, allows exporters to ship packages worth less than $800 into the U.S. duty-free.
The implications of both tariffs and the end of de minimis could be far-reaching for e-commerce. For the Sheins and Temus of the world, restrictions on de minimis threaten their “direct-from China” business model. Unlike traditional retailers, which import products that are manufactured overseas in bulk to their local U.S. warehouses, companies like Shein and Temu ship millions of low-cost parcels directly to consumers, allowing them to bypass tariffs. The crackdown on de minimis is potentially good news for e-commerce companies and retailers based in the U.S. that have lost market share to China-founded e-tailers. As for brands, Trump’s new tariffs mean many will end up paying higher manufacturing costs to keep their businesses going and passing those along to the consumer.
‘Level the playing field’
Overseas online platforms like Shein and Temu have become synonymous with de minimis. The nearly 100-year-old trade law helps them offer bargain prices on their wares, like $5 baseball caps and $8 Apple AirPod dupes. Because of this, Shein and Temu have surged in popularity in the U.S. But changes to de minimis will likely force these companies to raise their prices to offset the cost of duties, experts previously told Modern Retail.
New Jersey-based Judah Bergman, the founder and CEO of baby products brand Jool Baby, says he’s glad to see shipments curtailed. That’s because he sells his wares on Amazon, which directly competes with China-founded platforms that leverage de minimis. Sellers like Bergman manufacture their products overseas and then import them to Amazon, which uses its vast network of warehouses and fulfillment centers to deliver products to customers’ doorsteps at lightning-fast delivery speeds. In Bergman’s view, the de minimis exemption unfairly puts U.S. companies at a competitive disadvantage.
“I think this is going to level the playing field a lot,” Bergman said.
But Temu and Shein aren’t the only ones who use de minimis. Many brands based in the U.S. fulfill orders in China and ship them directly to customers, according to Phil Masiello, the CEO of revenue acceleration agency Crunchgrowth. He cited a client who runs a business selling electric razors as an example. Without de minimis, the company will likely have to manufacture in the U.S., which will drive up its costs.
“Temu and Shein have an unfair advantage because of de minimis, so if you want to go after that, that’s fine,” Masiello said. “But there’s a lot of sellers that do use it, and it works for them.”
Twenty-five percent of the largest Shopify stores take advantage of the de minimis exemption for a portion of their business, particularly to avoid high tariffs on imports from China, according to Aaron Rubin, the founder and CEO of ShipHero, a warehouse management software company that serves 10% of all Shopify Plus stores globally.
Rubin said the sudden nature of Trump’s executive orders caught many brands and logistics providers by surprise, as they expected more time for changes to be rolled out. “Traditionally, tariff and and customs clearance changes are fairly slow to roll out because the electronic process has to change. The physical process has to change,” he said. “I think the shock to everyone is like, ‘Oh, we thought we had more time.'”
Ironically, Trump’s tariffs on Chinese consumer products during his first term have helped exacerbate the number of de minimis shipments entering the U.S. since they did not include a stipulation for the de minimis loophole. Over the past decade, the number of de minimis packages entering the U.S. has swelled from about 140 million to more than a billion in 2023, according to the White House.
Amazon has apparently noticed. The e-commerce giant launched its Temu-like discount store, Haul, last year just in time for the holiday season. Amazon reportedly leverages de minimis to import items sold on Haul to bypass duties, according to The Information. But Haul remains a small part of the company’s sprawling e-commerce business. It is only available on mobile, and its product assortment isn’t as vast. An Amazon spokesperson didn’t respond to Modern Retail’s request for comment.
Both Temu and Shein have onboarded more sellers with a physical presence in the U.S. to mitigate the impact of de minimis restrictions. Both companies have also expanded their warehouses and distribution facilities beyond China. Temu, for its part, is wading into the advertising business, per The Information, further buffering it against the impact of a de minimis crackdown and tariffs.
Temu and Shein did not respond to Modern Retail’s request for comment, but both platforms have previously said that their businesses are not dependent on de minimis.
Rising costs
For sellers like Bergman, changes to de minimis are a double-edged sword, as they come attached to expensive tariffs on foreign imports from the U.S.’s top trading partners. Although Jool Baby is an American brand, all of its products are manufactured in China and then shipped overseas to warehouses in the U.S.
Bergman said he isn’t planning to raise prices just yet. First, he’ll try to renegotiate with his factory partners to mitigate the impact of tariffs, although he admitted he wasn’t sure how much latitude he would be given.
“We really don’t want to increase our costs to customers and retailers,” he said.
Still, costs could rise on marketplaces such as Amazon. Merchants based in China make up a significant share of the company’s marketplace, representing nearly half of the top 10,000 sellers on Amazon in the U.S., per Marketplace Pulse, and driving nearly half of the third-party gross merchandise volume.
In an annual filing last year, Amazon said China-based sellers account for “significant portions” of its revenue from third-party services. As such, Amazon also said its regulatory and trade restrictions “could adversely affect our operating results.”
Some of Masiello’s clients, particularly those that sell apparel and electronics, have already raised prices by as much as 15% because of the threat of tariffs. And he expects more to follow, even if they manufacture goods in the U.S. That’s because raw materials will still likely be sourced from China, and the increased costs will impact everyone in the supply chain.
“It doesn’t matter whether you manufacture here or not,” Masiello said. “In some way, you’re going to be impacted by the tariffs. The cost of everything’s going to go up.”