President Donald Trump has introduced a sweeping tariff policy aimed squarely at online retail giants such as Alibaba Group (NYSE:BABA), Amazon.com (NASDAQ:AMZN), PDD Holdings (NASDAQ:PDD), the parent of Temu, and fast-fashion heavyweight Shein.
The measure eliminates the long-standing tax-free treatment of low-value imports under $800, effectively closing what Trump described as a “catastrophic loophole” in U.S. trade policy.
The new regulation, which takes effect on August 29, ends the de minimis exemption that previously allowed millions of direct-to-consumer packages to enter the U.S. duty-free each year.
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Trump framed the move as a crackdown on tariff evasion and illicit goods, accusing Chinese companies of exploiting the loophole to flood the U.S. market with unsafe products.
The change applies to all packages regardless of their declared value, country of origin, or delivery method. However, exceptions remain for U.S. travelers and small personal gifts, Bloomberg reported on Wednesday.
U.S. Customs will now apply one of two tariffs on postal shipments: an “ad valorem duty” based on the origin country’s effective tariff rate, or, for six months, a flat fee ranging from $80 to $200 depending on that rate.
The volume of de minimis shipments has surged over the past decade, growing from 134 million in 2015 to more than 1.36 billion in 2024. Today, U.S. Customs handles over 4 million of these shipments daily.
Since the U.S. removed the tariff exemption for low-value goods from China on May 2, Reuters reported a 10.7% drop in air cargo volume from Asia.
Initially taxed at rates up to 145%, Chinese and Hong Kong shipments saw tariffs ease to around 30% following a mid-May trade agreement.
Low-cost e-commerce from Asia now plays a significant role in global air freight, lifting airline cargo operations. In 2023 alone, these shipments accounted for 55% of the goods flown from China to the U.S., a sharp rise from just 5% in 2018, mainly driven by platforms like Shein and Temu.
Trump’s latest tariff order builds on previous efforts to revoke the de minimis exemption for China and Hong Kong. The change faces legal challenges, but a U.S. court recently declined to reinstate favorable tax treatment for Chinese goods, signaling the administration’s stance may hold.
Price Actions: AMZN stock is trading higher by 3.21% to $237.57 premarket at last check Thursday. BABA is up 0.66% and PDD is down 0.43%.
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Image via Jonah Elkowitz from Shutterstock
