Online shopping has taken over in the past few years, aided by retailers like Amazon, Shein and Temu, who have made it cheap and easy to get anything delivered to our door, especially it is low quality. They have captured everyone, form influencers, to regular people, to even millionaires just looking for a bargain, but those times may be over, as the tariffs implemented by President Donal Trump begin to take effect.
There were always supposed to be tariffs on many of the goods that these companies imported to the United States, but there was a very handy loophole that allowed them to skip the extra fees and maintain the low prices users were seeking. This loophole was the rule called the “de minimis” exemption, which was a fan favorite of Chinese companies like Shein and Temu. According to this rule, any order under $800 could enter the country tax free, and because of the very low prices, it would have been unheard of to have a shipment be worth that much.
If they had not taken advantage of this exception, all packages would have been a lot more expensive and thus would have incurred in even more taxes, which would not have made the companies as profitable as they are today. But the loophole is ending now.
Why has President Donald Trump closed the loophole on companies like Shein and Temu
President Trump closed the loophole as part of the tariff packet that he implemented when he took office, adding a standard 10% on imports from China and 25% on Mexico and Canada. The reasons are complex, but many retailers that for a long time could not take advantage of this exception to make their imports cheaper had complained against this rule as it gave an unfair advantage to foreign stores. So much so, that in 2023 it was calculated that 30% of packages entering the United States came from China.
As leaders in low-cost shopping, this change will hit Chinese retailers hard. Juozas Kaziukenas, CEO of Marketplace Pulse, emphasized that having this loophole was a major factor in keeping prices low and shipping fast for these companies and with the new regulation in place, their profit margins will shrink, leading to noticeably higher prices for consumers.
Aaron Rubin, CEO of ShipHero, estimates that this policy shift could reduce Shein and Temu’s margins by five percentage points. Given that these companies already operate on thin margins of just 10–15%, the impact could be significant.
The great outlier in this equation is Amazon. While they will be impacted by the tariffs, their prices are not as low as other retailers and their structure s more diversified, meaning their profit margin is derived from many sources, some of them American retailers that use it as an e-commerce platform already.
In fact, Gil Luria, an analyst at DA Davidson does not believe that Amazon will be negatively affected, if anything, according to his view, they will profit. “If Shein and Temu lose competitiveness, Amazon could gain customers who are looking for products at affordable prices, but with a greater guarantee of delivery.”
But the big question here is, will these tariffs benefit or negatively affect consumers? The answer is complicated, as cheap prices mean that there is a lot more shopping done than necessary, landfills are filling up at unprecedented rates and many are suffering from shopping addictions, so putting a few barriers in place will help. On the other hand, many relay on the cheap process to clothe their families and purchase furniture for their home and an increase in price will hinder their ability to make ends meet. The jury is still out, but just the environmental impact could make these tariffs worth it.