Pour one out for Temu and Shein (and my wife), friends. The Chinese e-commerce darlings that have been flooding your TikTok feed with $2 leggings and $1 earrings just got b**ch slapped by Donny Politics and his big swinging tariff plans. How so? Well his latest tariff salvo didn’t just hammer a 10% levy on Chinese imports—it also killed off the de minimis loophole, a sneaky little carve-out that’s been letting these companies ship millions of dirt-cheap packages into the U.S. without paying a single cent in duties. And just like that, the party’s over.
(Source: Giphy)
Shares of PDD Holdings, the parent company of Temu, tanked nearly 6% on Monday after the announcement, and honestly, that feels generous for how bad this news is. The de minimis rule has been the secret sauce behind Temu and Shein’s ability to undercut everyone from Amazon to Target. It allowed them to ship packages worth less than $800 straight into the U.S. without inspections, without tariffs, and—let’s not mince words here—without accountability. Now? Every one of those packages will need to clear customs, complete with tedious forms detailing every material used (all while customs is about to get slammed with an extra million packages a day—yeah, goodluck with that.)
What’s more is that without the de minimis loophole, Temu and Shein are looking at higher costs across the board. Tariffs, customs delays, and all that red tape are going to turn your $3 crop top into a $6 crop top that takes twice as long to arrive. And let’s be honest, the whole appeal of these platforms is the “cheaper than a pack of gum” pricing. If customers have to wait twenty years for their $4 knockoff earrings, they might just say “screw it” and buy something on Amazon that ships in two days.
(Source: CNBC)
Meaning this is no doubt an absolute win for every U.S. seller who’s been quietly punching air as Temu and Shein at their lunch. Amazon sellers are now living their best lives, and honestly, I can’t blame them. These Chinese platforms have been weaponizing a 1930s-era trade rule—designed so Americans could bring back souvenirs from vacation—to dominate the low-value import game. In 2023 alone, Chinese sellers shipped $66 billion worth of goods into the U.S., up from just $5.3 billion in 2018. That meteoric rise, courtesy of the De minimis—is now gone.
Of course, both Temu and Shein are claiming their business models don’t rely on de minimis. And well, technically they aren’t lying—they’ve been building out U.S. distribution centers to store goods locally, mimicking Amazon’s logistics empire. But here’s the catch: Citi analysts estimate that these local warehouses only account for about 20% of Temu’s U.S. sales. The other 80%? Still riding the de minimis gravy train. So yeah, those warehouses might soften the blow, but they’re not a life raft in the middle of this tariff tsunami.
(Source: New York Post)
Which means, friends—is that politically speaking, Trump is dunkin’ on dem h*es (sorry, I had to say it). Killing de minimis plays well with the “bring jobs back to America” crowd, and it hits China where it hurts without needing to fire up a new trade war. But for Temu and Shein, this could be an existential crisis. Their entire value proposition hinges on being the cheapest, fastest option for budget-conscious shoppers. If tariffs and customs delays take that away, what’s left?
Now with that said, in the short term, expect higher prices, longer shipping times, and a lot of angry TikTok influencers wondering why their haul videos are now “custom delayed”. In the long term? Temu and Shein are going to have to reinvent themselves in the wake of “Making America Great Again”.
(Source: Giphy)
For now, keep an eye on PDD Holdings and you know, Amazon (who stands to benefit the most from this). And as always stay safe and stay frosty, friends! Until next time…
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Stocks.News holds positions in Amazon as mentioned in the article.
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