Online retailers are facing significant challenges due to President Donald Trump’s tariffs and the recent changes to the de minimis exemption.
Shein, a Singapore-based fast fashion e-commerce giant, has seen sharp price increases on many products. According to Reuters, a baby bodysuit’s price rose by 63% from April 24 to July 22. Other items faced similar hikes: kid’s t-shirts up 68%, boy’s shorts 57%, boy’s t-shirts 45%, girl’s tank-tops 52%, baby shirts 24%, girl’s camisoles 35%, and girl’s dresses 10%.
Impact of De Minimis Exemption Removal
Reuters tracked 70 of the lowest-cost apparel items on Shein’s U.S.-facing site as of April 24, just before new tariffs kicked in on May 2. At that time, packages valued under $800 coming from China were tax-exempt under the de minimis exemption. That exemption was eliminated, exposing these shipments to tariffs up to 145%.
The official rationale for ending the exemption was to curb illicit shipments of drugs such as fentanyl hidden in low-value packages. While lawmakers broadly agree on the need to address drug trafficking and support U.S. manufacturing, some question the timing and efficacy of the exemption’s removal amidst ongoing trade tensions.
Economic Consequences for Consumers
A working paper from the National Bureau of Economic Research, cited by Reuters, estimates the removal of the exemption will cost U.S. consumers between $10.9 billion and $13 billion annually, with disproportionate effects on lower-income Americans.
Though Shein is a prominent example, many others feel the impact. Influencers, content creators, and small entrepreneurs who sell products under the de minimis exemption are also facing increased costs and complications.
What The Author Thinks
While tackling illicit trade and protecting domestic manufacturing is important, removing the de minimis exemption en masse without a nuanced approach risks hurting everyday consumers, especially those with limited incomes. Policymakers should consider targeted solutions that curb illegal shipments without creating undue burdens on legitimate small businesses and shoppers relying on affordable e-commerce options.
Featured image credit: Wikimedia Commons
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