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President Donald Trump signed an executive order Wednesday eliminating a long-standing trade loophole that allowed low-value packages under $800 to enter the United States duty-free, a move that could reshape cross-border e-commerce and intensify trade tensions.
The order, which will take effect on August 29, subjects all foreign shipments valued at $800 or less to tariffs, regardless of the country of origin or how they are shipped, the White House announced.
Trump’s action expands on a May crackdown that specifically ended the de minimis exemption for goods from China and Hong Kong. Now, the new order applies globally — including to close U.S. allies — marking a dramatic shift in American trade enforcement strategy.
Background: A Loophole Exploited by E-Commerce Giants
Under the de minimis rule, shipments below a certain value threshold — currently $800 — have historically been exempt from duties, streamlining customs for small online purchases.
The rule, once seen as an efficiency measure, has come under increasing scrutiny as e-commerce platforms like Temu and Shein have exploded in popularity, shipping millions of ultra-cheap items directly to U.S. consumers from overseas factories — particularly in China — without paying duties or facing significant customs inspections.
The White House says this practice has contributed to a massive spike in de minimis shipments, from 115 million in all of last year to 309 million so far this fiscal year.
Policy Rationale and Trade Enforcement
Administration officials have called the loophole a “big scam” that undercuts American manufacturers, enables unfair competition, and exposes the U.S. to illicit goods.
“We’ve seen how the de minimis provision has been manipulated,” a senior White House official said Wednesday. “Not only does it hurt U.S. jobs and industry, but it also facilitates the import of dangerous drugs like fentanyl, which often enter via small packages that avoid inspection.”
Goods sent through international postal systems — a common avenue for cheap overseas orders — will now be assessed for duties based on both value and country of origin, the order says.
Trump’s move is also bolstered by a federal trade court ruling on Monday, which rejected an effort by an auto parts retailer to block the China-specific ban. The court found the administration acted within its legal authority, clearing the way for broader enforcement.
Market Impact and Industry Reaction
The announcement rattled markets. Shares of PDD Holdings, the Chinese parent company of online discount retailer Temu, fell Wednesday following the news.
Retail and logistics groups are bracing for a shift. Analysts say consumers may soon see higher prices or longer shipping times, as retailers grapple with new compliance costs and customs delays.
Critics warn the order could trigger retaliatory trade measures from key allies and trade partners, who may see the global expansion of duties as a breach of trade norms.
Still, supporters argue it levels the playing field for U.S. small businesses who pay duties and must meet domestic standards when selling goods.
Broader Context: Trade, Tariffs, and 2024 Politics
Trump has made aggressive trade enforcement a hallmark of his presidency, from reworking NAFTA to imposing sweeping tariffs on Chinese goods. Ending de minimis was a long-standing goal among “America First” trade hawks, who argued the rule had outlived its purpose.
The move also comes amid ongoing political debate over U.S.-China relations, fentanyl trafficking, and the role of e-commerce in American economic decline — all hot-button issues heading into the 2024 presidential election.
It remains unclear whether other major trading nations will follow suit or challenge the measure through the World Trade Organization (WTO).
Next Steps and Enforcement
The executive order is scheduled to take effect on August 29, giving retailers and importers a narrow window to prepare.
Customs and Border Protection will begin implementing new procedures to screen, assess, and collect duties on low-value imports. While the exact enforcement mechanisms remain under development, officials said stepped-up inspection protocols are expected — particularly for goods shipped via international mail.
“This is about restoring fairness to the U.S. economy,” a senior Trump trade adviser said. “And we’re just getting started.”
