President Donald Trump's latest tariff threats have sent ripples through the e-commerce industry, with a specific focus on ultracheap retailers like Shein and Temu. Nestled within the executive order is a provision that could change how Americans shop online: the closing of a little-known loophole called the de minimis exception.

Under the de minimis rule, packages valued under $800 can enter the US duty-free, and recipients in the US can receive up to $800 worth of goods per day without paying import taxes. E-commerce giants like Temu and Shein have used this loophole to ship low-value packages to shoppers, who benefit from not having to pay import taxes on their purchases. This allows companies to mail orders directly from manufacturers or warehouses in China, where many products are produced, rather than storing merchandise in US warehouses.

The de minimis provision has been on the books for nearly 100 years, but it's arguably a bigger issue now than at any point in the past century. The number of packages avoiding taxes has skyrocketed, from 139 million a year in 2015 to over 1.36 billion in 2024, according to US Customs and Border Protection. The cost limit was increased from $200 to $800 in 2016 after groups like eBay, Etsy, and package delivery companies lobbied Congress.

The growing popularity of platforms like Shein and Temu in the last few years has normalized waiting a few weeks for orders to come from China in exchange for bargain-bin-priced goods. However, Trump's executive order, as written, effectively kills the de minimis loophole, making low-value shipments subject to existing tariffs plus the additional 10% tax. This is not just an extra fee; it's an existential threat to the business models of Shein and Temu.

A T-shirt from China, for example, would be subject to Trump's new 10% tax, plus standard tariffs based on the specific product and then additional China-specific tariffs that the first Trump administration put in place. This could make the impossibly cheap dresses, coats, handbags, and home decor Americans are hooked on more expensive. Tariffs are a tax on the person or entity importing the goods, not on the exporter.

Research has shown that getting rid of the de minimis loophole would both cost the government billions of dollars more in enforcement and disproportionately raise costs for poorer Americans. It's not just big corporations that would be affected; dropshippers who fulfill orders directly from abroad would be affected, as would small businesses importing components, parts, or supplies in batches under $800. Small orders from platforms like Etsy or eBay coming from China could cost consumers more, too.

Temu, Shein, and Amazon did not immediately respond to a request for comment. Amazon, however, has taken a page out of Temu's playbook and introduced Amazon Haul, a marketplace of ultracheap home goods, gadgets, and clothing that looks and feels like Chinese e-commerce platforms. As Amazon is taking advantage of this same de minimis exemption, the products on Haul are even cheaper than normal Amazon listings, and the marketplace features many products that also appear for sale on Shein, Temu, and AliExpress.

Trump has justified imposing tariffs and ending the de minimis loophole by pointing to "the synthetic opioid supply chain," claiming that de minimis packages receive less scrutiny and can be used for shipping drug ingredients. A Reuters investigation last year outlined how de minimis packages could be used to traffic drugs — but it's not clear that low-value parcels pose a greater threat than larger shipments.

The prices on platforms like Shein and Temu feel unbelievably cheap because, in a way, they are. These goods depend on a technicality that both sides of the political aisle appear motivated to stamp out, and on Tuesday, they might succeed. As the e-commerce landscape continues to evolve, it remains to be seen how retailers and consumers will adapt to these potential changes.