What the U.S.-China Trade Deal Means for Online Shoppers

Frequent Shein and Temu shoppers can breathe a small sigh of relief after President Donald Trump rolled back the most stringent policies on Chinese imports, with the new rules effective today.

Trump announced on Monday a broad trade deal after weekend talks with Beijing that lowered import taxes on all Chinese goods from a prohibitive 145% to 30%. China, in turn, lowered its tariffs on U.S. imports from 125% to 10%. The reductions will hold for the next 90 days, while the world’s two largest economies negotiate a longer-term deal. 

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Trump also signed an executive order to temporarily lower the tariff on low-value, direct-to-consumer parcels originating from China and Hong Kong, effectively rolling back one of the most impactful moves in his trade war.

Packages valued at less than $800 were long able to enter the U.S. duty-free via the de minimis exemption, which allowed e-commerce giants like Shein and Temu to flood the U.S. market with cheap shipments from China. Earlier this year, Trump moved to close the provision, imposing a 30% tariff on low-value imports from China and Hong Kong at the start of April, effective May 2. Trump claimed in an April 2 executive order that the provision allowed shippers to “hide illicit substances and conceal the true contents of shipments sent to the United States through deceptive shipping practices.” (Reuters reported last year that the de minimis exemption has been exploited to deadly consequences by fentanyl traffickers.) In tit-for-tat tariff hikes, the low-value parcel tariff rate for China was raised to 120%, while setting an alternative per-package flat-rate of $100 option to the value-based tariff for low-value imports from China shipped via the U.S. Postal Service, to be raised to $200 in June.

But on May 12, Trump reversed course, lowering the value-based tariff rate for low-value imports from China to 54%, effective May 14. Additionally, the per-package flat-rate option will be retained at $100 but will no longer be further increased to $200 starting in June, per the order. 

The tariff rules also apply differently to different carriers: the 54% rate will only impact shipments via USPS, while commercial carriers like DHL, FedEx, or UPS, will face the default 30% rate even for low-value parcels, delivery experts told Reuters. In effect, that means that most imports from China will face the tariff rate of 30%, while shipments worth greater than $333 but less than $800 would face an effective tariff rate as low as 12.5% by shipping via USPS and paying the flat-rate tariff.

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Days before the de minimis exemption was terminated on May 2, U.S. customers began posting screenshots of receipts from some online stores, including Temu, which showed “import charges” of around 145%, amounting to more than the cost of the product itself. (Amazon also considered displaying the cost of tariffs on its products but backed down after a complaint from the Trump Administration.)

“From shopping like a billionaire to shopping like a peasant in one day,” one user posted on Reddit. (Research from UCLA and Yale economists shows that lower-income zip codes actually report a significantly larger share of their spending on de minimis imports from China than higher-income zip codes.) Some customers said they’d turn to U.S. retailers like Walmart and Target, instead, though many of these retailers rely on Chinese imports, and would likely also pass on the cost of the tariffs to consumers. 

Shein and Temu saw their U.S. sales drop dramatically in the week after Trump’s tariffs on China went into effect. The average price of Shein’s top 100 beauty and health products more than doubled from April 15 to May 6, according to a Bloomberg analysis. Temu paused its shipments from China and instead moved to sell inventory from its American warehouses that had been imported from China before the tariffs. The company said it would switch to selling goods from local merchants in the U.S. market. It is not yet clear whether or how Temu will adjust its model based on the new trade rules.

Still, shoppers will likely see their wallets hurt a little more than before the tariffs took effect, as the de minimis rule previously meant that fast fashion sites like Shein and Temu could offer ultra-low prices by bypassing duties and other customs declarations altogether, allowing millions of cheap packages to come into the U.S. every day. And the fact that the latest executive order lowering the value-based tariff for low-value imports from China is only effective for 90 days leaves both businesses and consumers to continue operating under uncertainty about what could come next.