Inside e-commerce’s week of whiplash after Trump delays de minimis cancellation, tariffs

On Feb. 1, President Donald Trump imposed new tariffs that include a 10% tax on Chinese goods, as well as a clause that canceled the de minimis trade exemption, a trade rule that lets companies import goods valued under $800 duty-free.

Less than a week later, on Feb. 7, Trump backtracked and delayed his suspension of the de minimis trade loophole until “adequate systems are in place to fully and expediently process and collect tariff revenue,” according to an executive order. Trump has also paused tariffs that would have slapped a 25% tax on imports from Mexico and Canada. 

The Trump administration’s unpredictability over its own trade policies has made preparing for the future feel like trying to hit a moving target, according to executives at Kuru who spoke to Modern Retail for this story. While President Donald Trump has paused the suspension of de minimis imports from Canada, Mexico and China, brands like Kuru are nevertheless racing to overhaul their supply chains, even as deadlines remain murky. All told, it underscores the volatility facing retailers as the Trump administration dramatically upends how brands do business. 

“You have to change your business model, or you die. And there will be companies that will die because of this,” said Tyler Christensen, Kuru’s COO. 

Although the de minimis exemption has become synonymous with Shein and Temu, American companies that manufacture overseas have in recent years embraced the controversial loophole to bypass import tariffs. Founded in 2008, Kuru has taken advantage of de minimis since 2022, saving the company $2 million in duties annually. Now, taxes for a pair of shoes will increase from $5 to $30. It’s a double whammy on Kuru’s margins, as the company will have to pay a 10% tax on top of the existing duties it was dodging thanks to de minimis. 

In a bright spot, the delay over de minimis “buys us some time to restructure our supply chain and fulfillment capabilities in the U.S.,” Kuru’s CEO Bret Rasmussen said. 

‘It’s been a dramatic disruption’ 

Under Trump’s provision suspending de minimis shipments, such packages will have to go through a traditional customs inspection process, which has more stringent data requirements. That has already forced logistics companies like Flexport to go back to their brand clients and ask them to track down the necessary information for customs to approve incoming shipments through the formal entry filing process, according to Angela Lewis, the company’s head of global customs.

Some clients of Flexport’s are choosing to outright cancel shipments that would have been transported under de minimis via air cargo until there’s more clarity around the trade policy, Lewis said. Flexport is also seeing clients moving their warehousing out of Canada and back into the U.S.

“When Trump got re-elected, we knew it would come fast and hard, and it absolutely has,” Lewis said. 

When Trump signed his executive orders suspending de minimis shipments, Kuru went into crisis management mode. Kuru manufactures 70% of its shoes in China and the rest in Vietnam. Last week, Kuru took down the majority of its SKUs from its website because the brand said it couldn’t profitably sell those goods with its current fulfillment solution. Since then, Kuru has put its China-made products back on its website for sale to take advantage of the pause of de minimis. But Kuru executives know it’s only a matter of time until the trade rule is canceled once again. 

“The order does not tell you if it is expected to be three days, three weeks or three months to get U.S. Customs to the point that they can handle the volume of shipments,” Christensen said. “There is still significant confusion.”

Kuru uses de minimis to ship orders out of warehouses located just across the border in Canada, allowing the company to avoid tariffs. But now the company has been working around the clock to bring truckloads of inventory to warehouses in the U.S. to ship products to customers as soon as possible. 

Still, it will be easier said than done for Kuru to reduce its reliance on China. That’s because shoe factories that are best able to produce footwear, particularly athletic styles like sneakers, are in China, according to Rasmussen. Even if brands wanted to relocate all of their production to Vietnam, which is the second-most advanced country for shoe production, the country doesn’t have the infrastructure, such as port capacity, to meet the demand, he added.

“Businesses depend on consistency and advanced knowledge of information to prepare their supply chains,” said Christensen. “Those are things that can’t be changed overnight, so it’s been a dramatic disruption for us.”

Price hikes are still on the table, though Kuru has no plans to do so immediately. “We said priority No. 1 is to just get a solution in place for our supply chain. And then, No. 2, once we understand our new cost structure, we’re going to revisit our pricing to see what we need to do to stay in business,” Rasmussen said. 

Skylight, which sells digital picture frames, is in a similar bind. The company manufactures its goods in China and was considering incorporating the de minimis exemption into its operations in order to help mitigate the impact of tariffs. The brand was in for a surprise when Trump’s executive orders announcing the tariffs each included a provision suspending de minimis shipments from Canada, Mexico and China. 

“The option to reduce our tariffs and potentially drive down costs for our end customers and make our goods more affordable got taken off the table,” Skylight’s COO and CFO Chia Chung said. “It’s really hard to try and predict what’s going to happen from a policy perspective, so we’re in ‘wait and see’ mode, for now.” 

De minimis aside, Skylight has been laser-focused on diversifying its manufacturing beyond China, where the vast majority of its components for consumer electronics are made.

“Moving to a different country would mean we would have to ship components from China to wherever we’re going to manufacture,” Chung said. “This has taught us that, unfortunately, having all your eggs in one manufacturing or supply chain basket is not the way to go.”