Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
US President Donald Trump has decided to temporarily halt the closure of a tariff exemption on low-cost shipments from China. Officials are now working on a plan to tax the millions of packages that enter the US on a daily basis.
The White House issued an amendment to an executive order last week, stating that the de minimis provision, which exempts shipments under $800 from tariffs and strict customs checks, will remain in effect until the necessary systems are in place to efficiently process and collect tariff revenue.
Trump’s original executive order imposed an additional 10 per cent tariff on Chinese goods, with the exemption cancellation aimed at penalizing Beijing for allowing the illegal drug fentanyl to enter the US. Other tariffs imposed by the order are still in place.
In response, China announced retaliatory tariffs on US goods such as liquefied natural gas, coal, crude oil, and farm equipment, scheduled to take effect on Monday.
Trump mentioned on Tuesday that he is not in a hurry to engage in discussions with the Chinese president.
The de minimis provision was initially implemented to facilitate the purchase of low-cost items from abroad by US households and small businesses, without subjecting them to extensive customs checks. However, canceling the exemption could lead to customs officials having to apply a more complex entry process to all packages arriving from China.
According to the US Customs and Border Protection, over 4 million low-value shipments are processed daily, with about 30 per cent originating from Chinese ecommerce platforms like Shein and Temu.
The suspension of the de minimis provision would not only subject previously exempt parcels to a 10 per cent tariff but also to existing trade levies.
Following the directive, the US Postal Service initially suspended the receipt of packages from China and Hong Kong but later resumed acceptance after working with customs officials to establish an efficient collection process.
Some Chinese ecommerce sellers reported that logistics groups were charging them withholding fees to cover levies and customs costs.
US officials have been critical of the de minimis rules, with domestic retailers arguing that the exemption gave Chinese ecommerce groups an unfair advantage.
The Biden administration had previously proposed measures to tighten regulations related to the de minimis provision.
An analysis by Nomura estimated that China shipped $46 billion worth of packages to the US under de minimis rules in 2024, and eliminating the exemptions could potentially impact Chinese economic growth in 2025.