The United States recently officially canceled the “de minimis” policy that applied to parcels from China and Hong Kong. Experts believe that this move will have a significant impact on China’s export trade and cross-border e-commerce ecosystem, with small and medium-sized enterprises and related industries in the supply chain facing multiple pressures such as rising costs, operational adjustments, and market shrinkage.
As of May 2, the United States has officially canceled the “de minimis” policy that applied to parcels from China and Hong Kong. The original policy allowed goods valued at $800 or less to enter the United States without paying duties.
The “de minimis” policy originated in 1938, and Congress has raised the legally defined value of “small amounts” multiple times, most recently in 2015 when the value was raised from $200 to $800.
The policy was originally intended to promote international e-commerce and facilitate logistics, but its long-standing lack of effective review mechanisms has long drawn widespread criticism from lawmakers in the United States. Critics point out that the system has been abused to smuggle fentanyl precursors from China and has helped large quantities of cheap clothing, toys, and furniture flood into the United States through platforms like Temu, Shein, and Amazon Haul.
On April 30, U.S. President Trump publicly stated: “The so-called ‘de minimis’ is a huge fraud against the United States, especially small businesses, and it is now being terminated.”
Statistics from the U.S. Customs and Border Protection (CBP) show that in 2024, as much as 97% of the counterfeit intellectual property goods seized entered through the “de minimis” channel, highlighting that it has become one of the main channels for illegal goods to enter the U.S.
A CBP spokesperson stated that one of the main purposes of terminating the “de minimis” policy is to crack down on unreviewed low-cost imports and illegal smuggling. “We have the necessary resources and will strengthen parcel screening and tax enforcement in accordance with the executive order.”
Chinese capital and financial expert Xu Zhen, interviewed by The Epoch Times, also believes that the “de minimis” policy had indeed been used by the Chinese Communist Party to massively dump inferior goods, both lowering prices to capture market share and absorbing surplus production capacity. “This is an economic strategy designed by the CCP to weaken the competitiveness of American industries.”
Xu Zhen pointed out that Chinese goods enter the U.S. market through the “low-price tax-free direct mail” channel, becoming an important export channel for digesting China’s surplus production capacity. “From a strategic perspective, the de minimis tax exemption system has essentially become a tool for the CCP to dump goods on the U.S.”
In response to the changes in U.S. policy, Xu Zhen revealed that Chinese businesses have been actively exploring a new model of “sea freight consolidation combined with overseas warehousing” to replace the original direct mail channel. However, while this plan is legal and can avoid high tariffs, the high upfront investment and operational requirements make it difficult for small and medium-sized enterprises to afford.
“The accuracy of inventory management is high, and warehousing and logistics costs are not low, the financial pressure will force many sellers to stop.” He said.
Xu Zhen analyzed that the Chinese export industry has built a complete ecosystem covering processing and manufacturing, logistics, overseas marketing, and agency operation. The termination of the de minimis tax exemption by the U.S. will have the most direct impact on import and export traders and processing plants, and will indirectly affect raw material suppliers and related service providers, reshaping the entire industry chain.
Financial expert Huang Shicong, interviewed by The Epoch Times, stated that the U.S. policy change has a “very direct” impact on Chinese cross-border e-commerce platforms and many small sellers: “Platforms like Temu, Pinduoduo Overseas, Shein will be most affected. Chinese sellers and small businesses that rely on direct mail exports may be forced to withdraw from the U.S. market due to significant cost increases.”
A report released by the U.S. Congressional Research Service (CRS) at the beginning of 2025 pointed out that China’s dependence on small parcel exports is extremely high, with the amount increasing from $5.3 billion in 2018 to $66 billion in 2023, growing more than tenfold.
Huang Shicong analyzed that after the tax exemption is canceled, products will need to go through customs declaration and tariff procedures, increasing customs declaration costs and tax burdens, thereby affecting suppliers, sellers, and consumers.
“Chinese businesses will face a sharp increase in operating costs, and American consumers may bear the pressure of rising prices. However, this will bring relief to local U.S. businesses.”
Faced with the strengthening of tax regulation by the U.S., the Chinese State Council recently announced the establishment of 15 cities such as Hainan, Qinhuangdao, and Baoding as “comprehensive cross-border e-commerce pilot zones,” attempting to reduce U.S. tariff pressures using the concept of free trade zones.
However, Huang Shicong believes that this strategy is only short-term and opportunistic: “The U.S. will increasingly trace the origin of products and sources of raw materials, and the room for maneuvering origins is rapidly shrinking.”
Before the official implementation of the termination of the de minimis tax exemption policy, many companies had stockpiled large amounts of goods in warehouses in the U.S. However, as stocks run low, they are facing severe challenges in their subsequent operations. Reuters reported that Shein and Temu have recently significantly reduced their digital advertising budgets in the U.S., indicating a shadow over their market prospects.
According to the CRS report, in 2023, the U.S. Customs processed over 10 billion low-priced parcels, most of which came from Chinese cross-border e-commerce platforms such as Shein and Temu.
Parcel service company UPS revealed that many of its small and medium-sized customers “almost 100% rely on supplies from China.” With the rise in administrative and tariff costs, many companies are considering withdrawing from the U.S. market. UPS also announced a layoff of 20,000 employees to reduce costs, describing this policy adjustment as “one of the potentially most profound variables affecting international trade in a century.”
At the same time, U.S. domestic industries are optimistic that this policy will help restore their competitive advantage. The U.S. e-commerce platform Etsy has helped sellers label the correct country of origin to comply with tax regulations, as U.S. tariffs are levied according to the country of origin of the goods rather than the shipping location.
According to the Associated Press, the U.S. Flag Manufacturers Association stated that due to the impact of cheap Chinese imitations, U.S. domestic flag sales dropped by 25% to 35% in 2023, with businesses stating: “We need tariffs to bring competition back to fairness.”
The bicycle industry is facing similar challenges. Heather Mason, representative of the National Bicycle Dealers Association, pointed out that many consumers who originally planned to purchase a $2000-brand bicycle found a visually similar, but only $1200 Chinese imitation product online, which was very attractive.
Mason stated that well-known brands must comply with strict safety, labor, and warranty standards, while Chinese imitations often evade regulations through de minimis exemptions, not only impacting the industry but possibly jeopardizing consumer safety.
The British fast fashion brand Primark currently sells products only through physical stores scattered across the United States and has not yet ventured into online business. The company indicated that this policy change may help revive physical retail, and “American consumers may re-enter malls in search of shopping experiences that combine quality and price advantages.”