The US–China tariff deal announced May 12, did not address the status of the de minimis rule, a key issue for low-value ecommerce shipments from China, according to a source familiar with the discussions.

Under this policy, packages under US$800 can enter the US duty-free, a benefit that has fueled the rise of retailers like Temu and Shein.

But on May 2, the US imposed a steep 120% tariff on such shipments, casting doubt on the rule’s future.

“There is no clarity on de minimis at all,” said Martin Palmer, co-founder of Hurricane Modular Commerce,

Following the tariff reduction news, shares of Temu’s parent company, PDD Holdings, jumped 7%.

Neither PDD nor Shein commented on the matter.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ The de minimis loophole transformed global e-commerce before becoming a trade war target

The $800 de minimis threshold, quadrupled from $200 in 2016, created a significant competitive advantage for Chinese e-commerce platforms by allowing duty-free entry of low-value shipments to the US 1.

This policy change led to a 50% increase in international packages and a 300% increase in international mail, fundamentally reshaping cross-border e-commerce economics 1.

Ultra-cheap retailers like Temu and Shein built their entire business models around this threshold, shipping millions of individual packages directly to US consumers while bypassing traditional import duties 2.

By specifically excluding de minimis packages from the recent tariff relief agreement, the US maintains pressure on what has become one of China’s most effective export channels while providing relief in other sectors.

The 120% tariff on these packages represents a dramatic policy reversal that could significantly impact Chinese e-commerce platforms that have relied on this duty-free channel 3.

2️⃣ De minimis policies create complex economic trade-offs beyond tariff revenue

Research indicates that processing costs for low-value shipments can exceed the revenue generated from duties, creating administrative inefficiencies that cost governments money 4.