Impact of De Minimis Loophole Closure

The closure of the de minimis loophole by the U.S. affects consumers buying low-cost items from China, disproportionately impacting lower-income and minority communities. Economists predict a $10.9 billion to $13 billion cost to consumers, with potential price hikes of up to 55% on products like those from Shein and Temu.

The abrupt closure of the de minimis loophole by the U.S. government is set to raise prices for American consumers purchasing affordable items from direct-from-China shopping sites like Shein and Temu. The shutdown, part of former President Donald Trump's tariff package, eliminates duty-free shipping for low-value packages.

Economists warn that the end of this loophole may hit lower-income and minority households hardest, as data suggests these groups spend more on such shipments. Research conducted by economists, including Amit Khandelwal from Yale University, labeled the previous de minimis policy as 'pro-poor.'

Companies relying on this provision, such as Shein and Temu, may be forced to increase prices, affecting their customer base and market competitiveness. Analysts suggest that products shipped under de minimis could see price increases of 55%, possibly leading to a similar drop in demand as consumers, like shopper Porche Hughes, look for alternatives.

(With inputs from agencies.)