Trump's closure of de minimis loophole disrupts Chinese suppliers' operations
- President Donald Trump ended the de minimis loophole, affecting imports from Chinese companies.
- Shein and Temu face operational challenges and rising costs due to the new tariff policies.
- The changes could significantly impact their market presence in the U.S., raising concerns around forced labor in their supply chains.
In early February 2025, President Donald Trump signed an executive order to terminate the de minimis loophole, which exempted certain low-value packages from tariffs and scrutiny under U.S. laws. This change primarily affects Chinese companies like Shein and Temu, which have leveraged the loophole to sell their goods to American consumers without facing import duties. Many suppliers to these companies are now experiencing confusion and uncertainty regarding the new processes they will need to comply with Trump's directive. The closure of this loophole raises serious concerns about the presence of forced labor due to the scrutiny enforced by the 2022 Uyghur Forced Labor Prevention Act, which presumes that cotton from occupied East Turkistan is tainted by slavery. Given that Shein and Temu dominate the American market, with 30 percent of de minimis packages traced back to them, the executive order may significantly impact their operations and sales in the U.S. market.