'De minimis' exemption elimination to raise US consumer costs

Based on rough estimates, if the United States ends the duty-free "de minimis" treatment of low-value imports from China, each US household is projected to face an additional annual expenditure of over $100, a renowned expert on US studies told China Daily on Wednesday.

"The burden resulting from the removal of de minimis will not immediately be reflected in inflation indices; rather, it will be directly felt in the increased costs borne by every American household," said Song Guoyou, deputy director of the Center for American Studies at Fudan University.

The comment came after the White House announced on Wednesday to eliminate de minimis trade exemption for Chinese imports, effective May 2. According to the announcement, which came alongside a set of sweeping new tariffs, postal items valued at or under $800 will face a duty rate of either 30 percent of their value or $25 per item, increasing to $50 after June 1.

Song added that since lower-income populations are more likely to import de minimis shipments, this additional expense would pose a significant financial strain on them.

Similar views was echoed by a wide range of US experts and consumers. Inu Manak, a research fellow at US think tank Council on Foreign Relations, said in a post on X on Wednesday: "De minimis is not a loophole … collecting tariffs on low-value shipments creates an unnecessary administrative burden on CBP (US Customs and Border Protection) and raises costs on US businesses and consumers."

A recent study by researchers from the US National Bureau of Economic Research also detailed that eliminating de minimis tax exemption would reduce aggregate welfare by $10.9-$13.0 billion and disproportionately hurt lower-income and minority consumers.

"Lower-income zip codes are more likely to import de minimis shipments, particularly from China, which suggests that the tariff and administrative fee incidence in direct-to-consumer trade disproportionately benefits the poor," it said.

Song added the policy shift is expected to have a limited impact on Chinese cross-border e-commerce enterprises in the short term, as they can bypass tariffs by redirecting shipments to distribution centers in the US or third-party countries.

In this regard, Shein and Temu, two popular Chinese-owned e-commerce platforms, have already taken steps to offset elimination of de minimis by expanding their operations in the US, diversifying their supply chains, and shifting to bulk orders.

For example, Temu’s strategy includes significantly enhancing the promotion of sellers with inventory in local warehouses to adapt to the changes brought by the new tariff policy.

In fact, before this round of tariff shifts, the US government abruptly ended the de minimis trade exemption in February, but reversed course and delayed the cancellation of the provision within days of its announcement.

"The Trump administration's tariff policy shifts are characterized by high volatility, strong coercion and unilateralism," Song said, adding that the next phase of US-China tariff and trade developments will depend on the future interactions between both sides.