Explained: What is 'de minimis', the trade rule that Trump closed in blow to Chinese retailers Temu & Shein?

In a major move, US President Donald Trump Wednesday signed an executive order that effectively shuts down the "de minimis" import rule that allowed low-value packages from China and Hong Kong to enter the US duty-free. The order, set to take effect on May 2, follows Trump’s announcement of sweeping new tariffs aimed at reshaping global trade.

As a result, goods arriving outside the international postal network will now face standard import duties, while those coming through the postal system will be taxed at either 30% of their value or $25 per item—doubling to $50 per item after June 1.

Trump had signed an initial order on February 1 ending duty-free entry for the cheap Chinese goods, but later paused the order because of logistical issues complicating the inspection of millions of the low-value shipments.

What is the 'de minimis' trade rule? 

The de minimis rule, derived from the Latin phrase "de minimis non curat lex" (meaning "the law does not concern itself with trifles"), was originally designed to reduce administrative burdens by exempting shipments valued at $800 or less from duties and taxes. 

However, the rule has been increasingly exploited by Chinese e-commerce giants such as Shein and Temu, allowing them to bypass tariffs that traditional importers and domestic manufacturers must pay. By splitting larger orders into multiple smaller shipments, the impact of these tariffs can be reduced or eliminated. 

More than 90% of packages arriving in the US currently enter via de minimis, with around 60% coming from China, Reuters reported. Companies have been able to avoid hefty import duties, undermining American businesses that are subject to higher costs.

Additionally, concerns emerged that US companies were relocating warehouses to Mexico and Canada, where they receive bulk shipments, then repackage them into smaller parcels to qualify for de minimis exemptions when entering the US. This shift threatened American warehouse jobs and runs counter to the rule’s original intent of supporting the US economy.

Reform began under Biden administration

As a result, momentum for tightening de minimis rules has been building beyond the executive order. Last year, as many as 126 House Democrats called on then President Joe Biden to address concerns over low-value imports, arguing that such shipments "evade inspection, information disclosure requirements, or the requisite tariffs and taxes". Shortly after, the White House proposed rule changes and urged Congress to take legislative action. Lawmakers from both parties have introduced bills aiming to reinstate tariffs on various products that currently enter the US duty-free.
 
The impact 

Trump’s order marks the most aggressive move yet to close this gap, imposing duties on shipments valued under $800 that previously escaped tariffs. The White House defended the move as necessary to create a level playing field. 

While this move is expected to level the playing field for domestic businesses, critics warn of potential price increases and disruptions in e-commerce supply chains. Domestic manufacturers seem to have welcomed the change, seeing it as a long-overdue measure to curb unfair competition.