US shuts loophole, roiling online sales

Vendors trying to blunt the pain from tariffs on low-cost Chinese goods

- DANIELLE KAYE

Small-ticket items shipped to the United States from China were no longer exempt from tariffs starting yesterday, when a decision by President Trump to shutter a shipping loophole he calls a “scam” took effect.

The move is expected to send ripples through the economy as American consumers, who have gotten used to buying cheap shoes, Hawaiian shirts, holiday decorations and other products made in China, suddenly find those products much pricier. The fallout is also expected to extend to independent online vendors who have based their businesses on the ability to cheaply import Chinese-made goods.

Trump acted against a shipping workaround that has allowed products made in China and valued at less than $800 (about 26,800 baht) to come into the United States without being subject to duties and taxes. The Trump administration has said it was focused on eliminating the de minimis loophole because of its apparent ties to the fentanyl trade, a concern previously raised by the Biden administration and several advocacy groups.

Traditional retailers that typically send big bulk shipments to their warehouses have also expressed frustration with the workaround, which has allowed popular Chinese e-commerce sites like Temu and Shein to cheaply send packages directly to customers. Retailers like Walmart and Amazon had explored shifting more towards shipping directly from China to consumers.

But the end of the exemption is expected to cause pain for a wide swath of online sellers across the globe, including independent e-commerce companies that rely on the channel, too.

Trump's order repeals the duty-free provision for all goods made in mainland China and Hong Kong, which would apply to products sent both directly and indirectly to the United States. Vendors in the United States and Canada who sell Chinese-made goods online to US buyers say they're bearing the brunt of Trump's decision to end the exemption.