‘I Freaked Out and Spent $400 Online’
Deborah Grushkin, an enthusiastic online shopper from New Jersey, “freaked out” when she heard about the end of “de minimis,” a rule that allowed packages from China worth less than $800 to enter the US free of import taxes and customs procedures. With the May 2 deadline bearing down, Deborah rushed to spend $400 on items from Shein, including stickers, T-shirts, and sweatshirts. “I felt like maybe it was my last sort of hurrah,” she says.
The Impact of De Minimis Changes
The “de minimis” rule has been used by over 1.4 billion packages entering the country, representing more than 7% of consumer imports in 2023. Advocates argue that the system streamlines trade, leading to lower prices and more options for customers. However, those in favor of change say businesses are abusing rules intended to ease gifts between family and friends, making it easier to slip products that are illegal, counterfeit, or violate safety standards into the country. President Trump called de minimis a “scam,” saying, “Maybe the children will have two dolls instead of 30 dolls.”
Consumer Concerns
- Price Hikes: Krystal DuFrene, a retired 57-year-old from Mississippi, nervously checked prices on Temu, cancelling an order for curtains after seeing the price more than triple. “I don’t know who pays the tariff except the customer,” she says.
- Limited Options: Gee Davis, a 40-year-old author from Missouri, used Temu to buy small items during a recent house move. She believes the new rules are a “money grab” by the government to benefit big American retailers. “I don’t think it’s right or fair that little treats should be [restricted] to people who are richer,” she says.
Business Implications
- Struggling Firms: Many smaller American brands that manufacture abroad for US customers are struggling and may not survive due to the changes. Alex Beller, board member of the Ecommerce Innovation Alliance, says the tariffs paired with other tariffs make it “an insurmountable shift” for businesses.
- Price Increases and Job Cuts: Steven Borelli, CEO of CUTS, is considering price increases and job cuts due to the changes. He expects “thousands” of other brands to die without changes to the situation. “We want more time,” he says. “The speed at which everything is happening is too fast for businesses to adjust.”
Economic Impact
Ending de minimis is estimated to lead to at least $10.9 billion in new costs, disproportionately borne by lower-income and minority households. The Trump administration’s decision to end the carve-out while ordering new trade tariffs has delivered a one-two punch that has left businesses and shoppers reeling.