Shein and Temu will cost more, thanks to massive tariffs going into effect

They’re still cheap by any measure, just not as cheap. The world of discounts, deals and hauls – hallmarks of popular Chinese online shopping giants Shein and Temu – could be coming to an end.

Starting Friday, American shoppers will be paying import duties, per item, on their orders from China, as the U.S. government ends a legal loophole that once exempted tariffs on low-value packages shipped from China.

The Trump administration says the move is to counter fentanyl trafficking. “President Trump is targeting deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption,” the White House said in an executive order mandating the new levies.

Shock and awe among shoppers

Some shoppers have already seen the effect of the tariffs when they looked at the final bill on eorders that will start arriving on Friday, May 2.

Shocked with the higher prices, some have posted screenshots of their import duties on social media in the days before duties started.

One of them, Amanda Norris, an accountant in Tampa, had selected a few pet harness options that she wanted to buy on Temu a few weeks ago but forgot to complete the order. 

When she went back and checked her shopping basket, she noticed the estimated total cost had more than doubled. 

“The total for the two dog harnesses came to like $33, but then the import charges were an additional $46 and change, so it brought the whole total for the two dog harnesses up to 80 something dollars,” she told NPR.

Norris, who says she tends to “thrift almost everything,” will now be looking for her shopping elsewhere.

The story behind the de minimus loophole

For almost a century, U.S. law carved out a duty exemption for small packages. The idea was that if you are visiting another country and want to ship something small back home, you would not have to pay an import tax. The loophole was called de minimis, which is Latin for something trivial and insignificant. 

Over time, this little exemption became huge business because of online shopping. That is where Shein and Temu came in, along with TikTok Shop and Amazon’s many Chinese sellers. 

About a decade ago, Congress expanded the exemption to packages worth under $800. So any package, from clothes to kitchenware, under that price point would come in  duty-free and pass inspection faster. Online sellers realized this was a big advantage. 

Shein and Temu mostly ship directly from their Chinese suppliers to your doorstep in the U.S. duty-free, saving millions of dollars, which is one of the reasons why they have been able to charge lower prices, like $10 for a shirt or $30 for a dresser. The mass appeal from those cost savings helped catapult them from companies no one had heard of to being wildly popular and among the fastest growing online retailers.

Why the loophole was closed

Last September, the Biden administration moved to close that loophole, saying it not only presents drug enforcement problems but also harms U.S. businesses and workers and makes it harder to enforce health and safety laws.

The de minimis exemption was also not great for the U.S. government, which was missing out on tax revenue from these packages, nor for American companies who said they could not compete with those low prices.

U.S. lawmakers also warn some goods sold via Shein or Temu could be produced by forced labor in China or are counterfeits, an allegation European lawmakers are investigating.

“While most shipments contain legitimate goods, many contain fake or dangerous products that can put American consumers and businesses at serious risk,” U.S. Customs and Border Protection (CBP) warned in a new video this week.

New rules means new duties and lots of paperwork

CBP currently only has the capacity to screen a tiny percentage of the more than 1 billion small packages which arrive at U.S. ports every year – a more than six-fold increase over the last decade, largely driven by Chinese e-commerce sites. 

“Often what CBP is faced with is a single package in a shipment that they suspect might have some illicit content in it,” says Laura Murphy, a senior associate expert at the Center for Strategic and International Studies.

She points out that with the new customs duties on low-value packages from China, importers will now need to fill out information where every small package is coming from and what is inside them. It means a lot more work for brokers and for American customs officials.

“But they’re going to have so much more information in their system that will help them figure out which container has the illicit packages,” Murphy says, of CBP.

Trade enforcement experts are warning international shipping will experience massive delays as both customs brokers and U.S. customs officials transition to the more rigorous vetting standards.

“Now that everything needs to go through a formal entry process, it is beyond the capacity of consumers, logistic operators, and carriers who until yesterday were not liable to anything or near anything,” says Ram Ben Tzion, the CEO at digital trade enforcement company Ultra.

Chinese shopping apps like Temu are now promoting what they call “local” goods: items already in warehouses in the U.S. which American customers will not need to pay import duties on. But those goods will run out at some point.