The US Postal Service (USPS) announced a temporary suspension of parcels from China and Hong Kong, following a key move by the Trump administration to shut a trade loophole used by major retailers such as Temu and Shein.
This decision follows President Donald Trump’s recent closure of the “de minimis” loophole, which allowed packages valued at under $800 to enter the US duty-free. The new regulations took effect this week, with an additional 10% tariff imposed on Chinese goods.
The USPS clarified that the suspension would not affect the flow of letters and ‘flats’ from China and Hong Kong but did not immediately address whether this change is directly linked to the end of de minimis shipments from these regions.
This move has significant implications for fast-fashion retailers Shein and the online dollar-store Temu, both of which have seen explosive growth in the US thanks, in part, to the de minimis exemption. According to a June 2023 report by the US Congressional Committee on China, these two companies together accounted for more than 30% of all packages shipped to the US each day under the de minimis provision. Nearly half of all packages shipped under this rule come from China.
Shein and Temu, which sell products ranging from toys to smartphones, did not respond immediately to requests for comment on the suspension.
Morningstar senior equity analyst Chelsey Tam noted that USPS would need time to adapt to the new tax system and sort out operational challenges. “In our view, the USPS would require some time to execute the new taxes before allowing Chinese packages to arrive in the US again,” Tam explained. “This is a significant challenge, especially considering 4 million de minimis packages are shipped per day, and it’s difficult to check them all.”
The Trump administration’s crackdown on de minimis is expected to raise the prices of products sold by companies like Shein and Temu but is unlikely to drastically reduce shipment volumes, experts suggest. Niall van de Wouw, Chief Airfreight Officer at Xeneta, noted that e-commerce volumes from China grew by 20-30% last year, indicating that consumer demand remains strong.
Shein, which has previously expressed support for reforming the de minimis provision, along with Temu, has already taken steps to mitigate the impact of these changes. Both companies have increased their sourcing of products from outside China, established US warehouses, and brought more US sellers on board to continue catering to American consumers.
Despite these efforts, the majority of their products remain manufactured in China. The tariff imposition and the closing of the loophole follow Trump’s repeated warnings to Beijing regarding the flow of fentanyl, a dangerous synthetic opioid, into the US.
Chioma Kalu
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