[WORLD] An agreement between the US and China to temporarily reduce tariffs has stopped short of reinstating the US "de minimis" duty exemption for e-commerce packages from China, but it still provides online retailers like Shein and Temu with a brief window to adjust their operations.
These Chinese companies, which have rapidly gained market share, overtaking dollar stores and mall competitors to rank among the top ten most downloaded apps in the US, will likely use the 90-day tariff break to import bulk shipments and replenish their US warehouses, according to trade experts.
This temporary tariff reduction comes amid ongoing trade tensions between the US and China, which have intensified in recent years due to disputes over technology, national security concerns, and other issues. While this agreement offers short-term relief, experts warn that the long-term trade policy landscape remains unpredictable, particularly as the US presidential election nears. Both leading candidates have adopted hardline positions on China, indicating that further trade changes could be on the way.
The Trump administration ended the "de minimis" policy on May 2, which had allowed e-commerce packages valued under US$800 from China and Hong Kong to enter the US duty-free.
This exemption had been crucial to the success of Temu and Shein, which capitalized on the ability to ship low-cost gadgets, clothes, and accessories from Chinese factories directly to US consumers without paying tariffs. Their rapid rise prompted Amazon to launch a competing service, Amazon Haul, which also benefited from the de minimis policy.
The expansion of Shein and Temu has prompted concern among US lawmakers, who argue that the de minimis exemption enabled Chinese firms to bypass customs checks and undercut American businesses. A bipartisan group in Congress has proposed legislation to eliminate the exemption for China, citing concerns over forced labor and intellectual property violations. These regulatory pressures add complexity to the shifting trade environment for e-commerce platforms.
The removal of the de minimis exemption has exposed packages to steep tariffs of up to 145% on many Chinese goods, threatening the low-price business models of Shein and Temu. This has led both companies to cut advertising expenditures in the US and focus more on European markets. Amazon Haul has also expanded into the UK and Saudi Arabia.
Since the recent announcement did not address the de minimis exemption, trade experts believe it is unlikely to be reinstated. Nevertheless, the temporary tariff reduction from 145% to 30% over the next 90 days will allow Shein and Temu to restock their US warehouses at a lower cost.
Industry insiders note that the shift toward bulk shipments may put additional pressure on US port logistics, particularly at major hubs like Los Angeles and Long Beach, which have struggled with congestion. If Shein and Temu rush to import large quantities before the tariff reprieve ends, this could result in delays and higher shipping costs, which may ultimately affect consumers.
"This is beneficial for Shein and Temu, allowing them to replenish their US inventory," said Yao Jin, associate professor of supply chain management at Miami University of Ohio.
Instead of shipping individual items by air, Shein and Temu are expected to switch to bulk shipments via container ships to the US over the next 90 days, in order to stock up ahead of a potential tariff increase, Jin added. Representatives from Temu, Shein, and Amazon did not immediately respond to requests for comment.
On its US website, Temu has already been promoting products from its US warehouses, as it shifts its business model away from direct factory-to-consumer shipments. On May 2, Temu announced that all US sales would now be handled by locally based sellers.
Before the removal of the de minimis exemption, roughly 50% of air cargo shipments from China to the US were low-value e-commerce packages, according to Niall van de Wouw, chief air freight officer at pricing platform Xeneta. Since May 2, daily average freighter capacity on this air route has decreased by 39%, citing data from consultancy Rotate.
Hugo Pakula, a customs expert and CEO of trade automation platform Tru Identity, explained that Shein and Temu could adjust their strategies by sending some products directly to consumers from China, while others may be imported via bulk shipments, depending on pricing considerations.
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