Trump ends China tariff loophole used by Shein and Temu

Follow the money: Trump on Wednesday signed an executive order ending the loophole on shipments from China beginning May 2.

• The president had briefly suspended the duty loophole in the early days of his second term before restoring the exemption while the Commerce Department put together a plan to "fully and expediently process and collect tariff revenue."
• The Commerce Department has since declared that "adequate systems are in place to collect tariff revenue" on low-value international shipments, the White House said Wednesday.

Zoom in: Applicable duties will be attached to shipments under $800 that are sent from China to the U.S. outside of the international postal system, according to the White House.

• Shipments under $800 that are sent through the international postal network will be "subject to a duty rate of either 30% of their value or $25 per item (increasing to $50 per item after June 1, 2025)."

Threat level: Critics of the de minimis exemption say it has bludgeoned American businesses, such as fashion retailer Forever 21, which recently began liquidating its U.S. stores after partly blaming the rise of Shein and Temu for its downfall.

• "The ability for non-U.S. retailers to sell their products at drastically lower prices to U.S. consumers has significantly impacted the Company's ability to retain its traditional core customer base," Forever 21 co-chief restructuring officer Stephen Coulombe said in a court filing.

The other side: Free market think tank Cato Institute argued that eliminating the de minimis exemption means "effectively raising taxes on American consumers and dramatically increasing shipping times."

• Representatives from Temu and Shein did not immediately respond to requests for comment.