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Peter Hoskins
Business reporter
Business reporter
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<p class="sc-9a00e533-0 hxuGS">A duty-free loophole for low-value packages is about to be closed by President Donald Trump, pushing up prices for US customers of firms like Shein and Temu.</p>
<p class="sc-9a00e533-0 hxuGS">The Chinese online retail giants relied on the so-called "de minimis" exemption to sell and ship low-value items directly to the US without having to pay duties or import taxes.</p>
<p class="sc-9a00e533-0 hxuGS">Supporters of the loophole, which applied to parcels worth less than $800 (£600), argue it helped streamline the customs process.</p>
<p class="sc-9a00e533-0 hxuGS">But both Trump and his predecessor, Joe Biden, said it damaged American businesses and was used to smuggle illegal goods, including drugs.</p>
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<h2 class="sc-737179d2-0 erjHHi">What is the de minimis exemption?</h2>
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<p class="sc-9a00e533-0 hxuGS">De minimis is a Latin term, which literally translates to "of the smallest".</p>
<p class="sc-9a00e533-0 hxuGS">In this context it refers to a US trade rule enacted in 1938 to allow tourists returning to the US to bring souvenirs worth up to $5 (about $112 in today's money) from abroad without declaring them to customs.</p>
<p class="sc-9a00e533-0 hxuGS">In the 21st Century, it allowed retailers to ship packages worth less than $800 to US customers without having to pay duties or taxes.</p>
<p class="sc-9a00e533-0 hxuGS">Shipments under the exemption account for more than 90% of all the cargo entering the US, according to the country's Customs and Border Patrol.</p>
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<p class="sc-9a00e533-0 hxuGS">Chinese online retailers like Shein and Temu have benefited greatly from the loophole.</p>
<p class="sc-9a00e533-0 hxuGS">Both platforms have attracted millions of US customers with marketing blitzes that showcased their ultra-low prices</p>
<p class="sc-9a00e533-0 hxuGS">And it was the de minimis exemption that helped them offer those deals so cheaply.</p>
<p class="sc-9a00e533-0 hxuGS">Shein and Temu did not immediately respond to BBC requests for comment.</p>
<p class="sc-9a00e533-0 hxuGS">However last month, in almost identical statements, the rival companies said they have seen operating expenses rise "due to recent changes in global trade rules and tariffs", adding they will make "price adjustments" from 25 April.</p>
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<h2 class="sc-737179d2-0 erjHHi">Why has Trump closed the loophole?</h2>
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<p class="sc-9a00e533-0 hxuGS">In February, Trump briefly closed the loophole.</p>
<p class="sc-9a00e533-0 hxuGS">The suspension was quickly paused as customs inspectors, delivery firms and online retailers struggled to adapt to such a major change at short notice.</p>
<p class="sc-9a00e533-0 hxuGS">During the initial suspension of the exemption the <a target="_self" href="https://www.bbc.com/news/articles/c3w83x38zvwo" class="sc-f9178328-0 bGFWdi">US Postal Service temporarily stopped accepting parcels from mainland China and Hong Kong</a>.</p>
<p class="sc-9a00e533-0 hxuGS"><a target="_blank" href="https://www.whitehouse.gov/presidential-actions/2025/04/further-amendment-to-duties-addressing-the-synthetic-opioid-supply-chain-in-the-peoples-republic-of-china-as-applied-to-low-value-imports/" class="sc-f9178328-0 bGFWdi">The executive order</a> announcing the latest move said it was aimed at tackling the illegal importation of synthetic opioids like fentanyl.</p>
<p class="sc-9a00e533-0 hxuGS">It said many Chinese shippers use deceptive practices to hide illicit substances in low-value packages "to exploit the de minimis exemption".</p>
<p class="sc-9a00e533-0 hxuGS">"These drugs kill tens of thousands of Americans each year, including 75,000 deaths per year attributed to fentanyl alone," it added.</p>
<p class="sc-9a00e533-0 hxuGS">Under the executive order, those packages from mainland China and Hong Kong will become subject to import duties from 2 May and the charge will rise the following month.</p>
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<p class="sc-9a00e533-0 hxuGS">The idea is not new. Last year, the Biden administration proposed rules intended to stop "abuse" of the exemption.</p>
<p class="sc-9a00e533-0 hxuGS">"The growing volume of de minimis shipments makes it increasingly difficult to target and block illegal or unsafe shipments," it said.</p>
<p class="sc-9a00e533-0 hxuGS">The move is in line with Trump's policies of cracking down on goods from China.</p>
<p class="sc-9a00e533-0 hxuGS">Since returning to the White House in January, Trump has imposed taxes of up to 145% on Chinese imports. His administration said in April that when the new tariffs are added on to existing ones the levies on some Chinese goods could reach 245%.</p>
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<p class="sc-9a00e533-0 hxuGS">US authorities have also blamed the success of firms like Temu and Shein for putting strains on
