Cheap stuff from China can be shipped to the US duty-free again… temporarily

This week the Trump Administration imposed a 10 percent tariff on Chinese products shipped to the United States and removed an exemption that allowed goods from China valued at less than $800 to be shipped duty-free. The sudden move caught many retailers, shippers, and customers by surprise.

Now the president has temporarily reinstated the exemption which means that customers won't have to pay duties on cheap products shipped from China… for now. But those charges could reappear at any time.

Temu has built a reputation for offering super-cheap goods shipped directly from China.

In a nutshell the "de minimis" exemption allows packages to be shipped duty-free directly from mainland China and Hong Kong. Chinese companies including Shein, Temu, and AliExpress have taken advantage of that exemption to offer free or cheap shipping on millions of products that are shipped directly from China to consumers.

Without the exemption many of those products would be subject to inspection by customs and border enforcement officials, and customers would be expected to pay duty fees that may vary depending on a number of factors.

So when the exemption was lifted without advance notice, a number customers who had already ordered products and were waiting on them to arrive started to receive notices letting them know that their packages would be held until duty fees were paid.

As reported by The Verge, the Trump administration has now amended the executive order regarding the de minimis exemption indicating that it is available for eligible items but "shall cease to be available for such articles upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expediently process and collect tariff revenue."

The amendment is kind of an implicit acknowledgment that by moving so quickly, the administration triggered unintended consequences, which it's now taking steps to address. But it's not clear how long that will take, or what the results will look like.

As I mentioned earlier this week, there's been bipartisan support for ending or at least tightly restricting the de minimis exemption for some time. While the move has allowed US shoppers to save money on a wide range of goods, there's also a case to be made that it puts American retailers, manufacturers, and others at a disadvantage.

While removing the exemption won't stop Chinese companies from offering direct-to-US-consumer shipping, it will make it much less convenient for shoppers. They may have to wait longer for packages to arrive due to increased scrutiny by US customs. And they may have to pay higher prices and go through the hassle of paying duties before they can receive their packages.

But it could also encourage Chinese companies to ship larger quantities of their products to the US so that they can be stored in US warehouses before being shipped domestically to US customers. That would simplify the duty process by shifting the burden to the retailer. But since they'd likely build the additional costs into the prices of their products, it might not be a net positive for customers looking for cheap stuff.

It's also a strategy that might not be as viable for companies like Shein, which rely on their ability to quickly shift their product lineup, rather than stockpiling goods in a US warehouse where they may remain unsold due to shifting fashion trends.

Anyway, the good news is that if you were waiting for a package to arrive, hopefully this update will remove the hassle. But at this point it's unclear how long this reprieve will last, so I'd probably be a little wary about ordering anything new that would normally have been subject to the de minimis exemption until it's a little more clear what hoops you may or may not have to jump through to receive your package.

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