De Minimis Tariff End Shakes Up U.S. Retail

The end of the U.S. de minimis tariff exemption is prompting retailers to halt sales or devise workarounds to dodge high import charges. The policy change particularly affects goods from China and Hong Kong, with some companies exiting the U.S. market. Retailers like Shein and Temu adjust strategies to cope.

The United States has ended the de minimis tariff exemption for small parcels, sparking major changes in the retail landscape. The exemption, which allowed duty-free treatment of e-commerce packages valued under $800, has been removed for Chinese and Hong Kong goods, subjecting them to tariffs of up to 145%.

This significant policy shift, initiated by former President Donald Trump, has led to notable disruption. Companies such as Space NK and Understance have paused sales to U.S. customers, while Shein and Temu adapt by focusing on local warehouse goods and cutting digital advertising. The end of de minimis raises import charges and administrative burdens.

The change could create openings for retailers less dependent on e-commerce or Chinese manufacturing, like Primark, which emphasizes in-store sales in the U.S. Consumers might reconsider shopping mall visits as online price surges. The impact underscores the lingering complexities in global trade dynamics.

(With inputs from agencies.)