President Donald Trump’s executive order ends the de minimis exemption, impacting businesses globally. Shipments under $800 will now be tariffed and processed like larger packages, causing pandemonium in supply chains worldwide. Consumers may face higher prices on goods. The exemption’s end could cost U.S. consumers $10.9 billion. Former President Joe Biden and Trump sought to end the exemption due to abuse and safety concerns. The exemption allowed goods made with forced labor and synthetic opioids to enter the U.S. without proper scrutiny. The exemption threshold was raised from $200 to $800 in 2016, leading to unintended consequences for businesses. Retail industry impacted by sudden change in regulations. The House Select Committee on the Chinese Communist Party reported that Shein and Temu are responsible for over 30% of U.S. daily packages under the de minimis provision, leading to backlash from retail executives and lobbyists. Many companies copied the model to reduce costs, impacting profitability. Tapestry estimates a 30% tariff increase, causing a $160 million profit hit. Lululemon’s earnings per share could be affected by up to $1.10 due to the end of de minimis. The National Retail Federation hasn’t taken a stance on the exemption, but retailers are concerned about increased costs for consumers. Online marketplaces like Etsy and eBay used de minimis to reduce costs, but now American shoppers could face higher prices and limited selections. Etsy and eBay are working to navigate the shifting trade environment, with some sellers temporarily closing their businesses to the U.S. due to higher tariffs. The end of the de minimis provision is causing turmoil for Canadian businesses shipping to the U.S., with potential price hikes and customer responsibility for duties. Artists like Alexandra Birchmore are contemplating raising prices on platforms like Etsy by 10% to cover upfront duties, leading to chaos in small business forums.
Major retailers like Amazon and Walmart could benefit from the disruption, as consumers may turn to them for lower prices and faster shipping. Amazon’s sales increased 13% after the U.S. axed the de minimis provision for China and Hong Kong, with both companies ramping up fulfillment operations in the U.S. due to rising tariffs.
Chinese businesses like Shein and Temu have been hit hard by the end of the de minimis exemption, forcing them to adjust business models, raise prices, and cut advertising spend. Temu has resumed shipping goods from Chinese factories to the U.S. following a “truce” between Washington and Beijing, but both platforms have seen a decline in daily active users in the U.S. since the loophole closure.
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1. The U.S. economy added 943,000 jobs in July, exceeding expectations of 870,000, with the unemployment rate dropping to 5.4%.
2. Apple became the first U.S. company to reach a market cap of $2 trillion, fueled by strong demand for its products and services.
3. The Federal Reserve is set to start tapering its bond-buying program later this year, as inflation continues to rise.: ‘De minimis’ exemption ends globally