A de minimis tariff exemption expires Friday. Here’s what that means for shoppers.

The expiration of a loophole that allowed cheaper goods from China to enter the U.S. duty-free is set to impact American consumers significantly. Ultra-low cost retailers like Shein and Temu, who relied on the loophole to offer lower-priced packages, are now shifting their business models to comply with the new regulations. This change will lead to an increase in prices for goods from China, as import levies will now be applicable on packages worth over $800.

The de minimis loophole, which was introduced in 1938 to eliminate the administrative burden of collecting duties on low-value goods, has been a primary path for Chinese exports to enter the U.S. market. The exponential growth of low-value e-commerce exports from China highlights the significance of this provision in facilitating trade between the two countries.

President Trump’s decision to eliminate the de minimis exemption was driven by concerns over China’s role in supplying synthetic opioids to the U.S. This executive order, which came into effect on May 2, has led to new tariffs on goods from China, impacting both consumers and businesses in the U.S. Retailers are already adding tariff surcharges to customer orders, resulting in higher prices for imported goods.

The end of the exemption will not only affect consumers but also create administrative challenges for importers and U.S. Customs and Border Protection. The increased volume of packages requiring inspection could lead to delays in shipments, posing a significant logistical challenge for CBP. Companies that sell goods made in the U.S. may benefit from less competition as prices of China-made goods rise, but smaller retailers with thin profit margins may struggle to adjust their supply chains.

Overall, the rollback of the de minimis exemption is expected to impact consumers’ wallets, leading them to trade down to cheaper alternatives or seek out resale platforms to stretch their budgets. The effects of this policy change are likely to reshape the landscape of online shopping and trade relations between the U.S. and China.