The US government has announced a significant reduction in the de minimis tariff rate on low-value Chinese imports. Effective May 14, the tariff on goods worth up to $800 has been slashed from 120 per cent to 54 per cent, according to an executive order issued by President Donald J. Trump. Despite this reduction, a separate $100 duty on postal shipments of such goods—introduced on May 2, 2025—will remain in place. A planned increase to $200, scheduled for June 1, has been shelved.
This decision follows a recent trade agreement between the US and China, which marked a 90-day pause in their ongoing tariff conflict. In the deal, the US agreed to reduce tariffs on Chinese imports from 145 per cent to 30 per cent, while China reciprocated by lowering tariffs on US goods from 125 per cent to 10 per cent. Both tariff reductions are set to take effect on May 14.
Previously, Chinese goods shipped through postal channels and valued below $800 enjoyed duty-free status and minimal customs scrutiny under the de minimis rule. This exemption greatly benefitted e-commerce platforms like Shein, which capitalized on the framework to ship fast-fashion apparel directly to US consumers at competitive prices. Shein, Temu and similar companies leveraged the $800 threshold to offer lower-priced products free from significant tariff burdens, giving them a substantial edge in price-sensitive markets.
While the revised tariff rate of 54 per cent is a reduction, it introduces a new cost barrier compared to the earlier duty-free scenario. This change could compel companies like Shein and Temu to reassess their pricing strategies and supply chain management to maintain profitability in the US market, especially as consumers remain sensitive to price fluctuations. However, the move is expected to balance the playing field for domestic retailers facing stiff competition from overseas e-commerce giants.
