U.S Ends Duty-Free Entry of Cheap Chinese Shipments In A Move To Punish China

The U.S. President Donald Trump has signed an executive order to do away with a loophole ‘de minimis’, which enabled low value items from Hong Kong and China to enter the U.S without any duties.

The order will come into effect at 12:01 a.m Eastern Time May 2, 2025 in White House’s Rose Garden after the announcement of new tariffs.

The development came after Commerce Secretary Howard Lutnick said “adequate systems are in place to collect tariff revenue” on the shipments.

Imported goods coming via postal networks worth $800 or less would be subjected to a duty rate of either 30% of their value or 25% per item. The rate would increase to $50 per item after June 1, 2025.

President Trump had already signed the order on February 1, 2025 to end the duty-free entry of cheap Chinese items. However the order had to be paused for sometime as logistical problems arose, which complicated inspections of millions of low value items.

The duty-free entry of cheap Chinese goods has exploded in the U.S, reaching 1.4 billion packages in 2024.

Over 90% of all the packages coming into the United States now enters via the de minimis and among those at least 60% are from China, from retailers like Shein and Temu.

With the U.S planning these changes, Temu is expanding its semi-managed model, a strategy in which goods are shipped in massive quantities and stored in warehouses, rather than being sent to the customers directly.

It will also test new business models and experiment with local supply chain solutions.

Trump is implementing what he promised in his campaign; to punish Beijing for its role in the synthetic opioid crisis which has resulted in the death of over 450,000 Americans in the last 10 years.

Chinese chemical makers are the key suppliers of raw material bought by cartels in Mexico to produce the drug.

A 2024 investigation showed that traffickers exploited the de minimis rule to send these chemicals, while China has denied any accountability in this regard.

The White House has also stated that carriers with Chinese and Hong Kong postal goods should report the details of the shipment to the U.S. Customs and Border Protection, have an international carrier bond and ensure the payment of duties, and remit duties to CBP on the set schedule.

Commerce Secretary Lutnick will present a report within 3 months, in which he would assess the impact of this order and also decide if it should be extended to items coming from Macau.

References: Yahoo, DD News

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