Trump’s Push to Eliminate the De Minimis Duty-Free Loophole on China is a Win for America
Removing Chinese e-commerce giants’ ability to dump cheap products on the American market levels the playing field and protects Americans.
President Donald Trump’s tariff policy is delivering some long-overdue shock therapy to American consumers and Chinese e-commerce giants that undercut American companies like eBay, Amazon, and Etsy and bypass rigorous U.S. border inspection.
On May 2, the Trump administration eliminated the tariff loophole on China and Hong Kong, known as “de minimis.” This previously allowed goods under $800 to enter the country duty-free with minimal oversight. In recent years, Chinese e-commerce giants took advantage of the policy to avoid U.S. tariffs, undercutting American businesses.
By removing de minimis, Trump is leveling the e-commerce playing field and defending Americans against possible fentanyl deliveries. Shipments from China and Hong Kong are now charged a 54 percent tariff—30 percent for commercial carriers like FedEx and UPS—or a flat fee of $100.
Free market absolutists argue that if Chinese companies can meet the demand of American consumers more cheaply and efficiently than American companies, they should be allowed to monopolize the market. But Chinese companies don’t operate in the same free market as American companies and often receive outlandish public funding for research and development.
Restoration News previously covered the unfair market conditions the Chinese Communist Party (CCP) creates for its domestic companies like Newsbreak, Temu, Shein, and TikTok, which allows them to rank near the top of app stores and monopolize U.S. market share.
In addition to undercutting American businesses, they often pose national security and behavioral risks to American consumers. The Center for Strategic and International Studies calls Temu “an information-gathering spyware program masquerading as an e-commerce site.” In 2023, Google suspended Temu’s China-focused sister company Pinduoduo over malware concerns.
In 2015, Congress raised the de minimis threshold from $200 to $800. Since then, the number of duty-free imports increased 1,000 percent. Over 90 percent of packages entering the U.S. entered duty-free, and, of that amount, 60 percent came from China.
Raising the limit to $800 undoubtedly helped Shein, which rocketed from a relatively unknown firm to the world’s largest fast fashion company by 2022—the year Temu was founded.
The disastrous results of raising the de minimis limit became obvious by the early 2020s and sparked a bipartisan backlash. Last February, Sens. Rick Scott (R-FL) and Sherrod Brown (D-OH) penned a letter urging the Biden administration to end the policy.
Thanks to the deep pockets of its parent company PDD Holdings, it took Temu less than a year to reach 51 million active monthly users in the U.S. and dethrone Shein. This came largely because of advertisement blitzes, including during the Super Bowl. In 2023 alone, the company spent $1.7 billion on advertising. Before long, it acquired over 160 million monthly active users worldwide and overtook Alibaba as China’s largest e-commerce company, whereas Amazon spent decades building a user base of 67 million.
Like TikTok, Shein and Temu are designed to addict people to scrolling—and shopping.
Ironically, companies backed by the CCP exhibit some of the worst traits which socialists attribute to capitalism. Despite spending $17 billion in 2023 sales, some analysts estimate Temu lost around $7 per order for market share. Critics of American capitalism often accuse large American retailers of similar predatory pricing, but American companies lack government backing to do this long or often.
Allowing Chinese companies to conquer vast swaths of American market share also creates a race-to-the-bottom effect on the entire e-commerce industry. Last year, to keep up with its Chinese competitors, Amazon launched Amazon Haul, which sources more items directly from Chinese sellers.
Free trade critics level the same complaint against removing the de minimis loophole that they use against all tariffs—claiming it will harm American consumers. But that is exactly the desired effect. Some goods sold on Shein and Temu have alerady more than doubled their price, bringing them closer to similar products from American retail and e-commerce companies. Low-income Americans will manage just fine if they must go without cheap luxury knockoffs.
Regardless of any economic deal Trump makes with China, his administration should not return de minimis for China. Allowing CCP-backed companies to undercut American retail and e-commerce is not only bad economic policy, but it makes Americans less safe. It also encourages American e-commerce companies to replicate the low-cost labor practices and cheap sourcing of Chinese companies, lowering product quality and killing American jobs.
Jacob Grandstaff is an Investigative Researcher for Restoration News specializing in election integrity and labor policy. He graduated from the National Journalism Center in Washington, D.C.
From restoration-news.com