A massive tariff on millions of Americans’ purchases just went into effect — cue the chaos

Parcels slide down a ramp after being scanned at the U.S. Customs and Border Protection overseas mail inspection facility at Chicago's O'Hare International Airport in February 2024. (Charles Rex Arbogast/AP via CNN Newsource)

New York — Many Americans might not have felt major effects from U.S. President Donald Trump’s sweeping tariffs – until now.

That’s because a major shipping loophole expired at one minute past midnight on Friday. The de minimis exemption, as it’s known, allowed shipments of goods worth $800 or less to come into the U.S. duty free, often more or less skipping time-consuming inspections and paperwork.

The loophole helped reshape the way countless Americans shop, allowing ultra-low-cost Chinese e-commerce sites like Shein, Temu and AliExpress to pour everything from yarn to patio furniture, clothes to photography equipment and more into U.S. homes.

Its impending end has rung alarm bells across social media, with a baseline tariff as high as 145 per cent depending on the carrier set to take effect on Chinese imports, potentially more than doubling the cost for all those cheap products deal-hungry Americans scooped up.

And the end of the de minimis exemption for Chinese goods will also distill abstract, complicated, messy, hard-to-follow trade policy into something much easier to understand: a receipt.

Major carriers like UPS, FedEx, DHL and the United States Postal Service say they’re prepared for the changes. The government says it, too, is set; a U.S. Customs and Border Protection spokesperson told CNN that “We are prepared and equipped to carry out enhanced package screenings and enforce orders effectively.”

But whether regular American shoppers are ready for the changes is another matter.

Of tchotchkes and trade policy

When U.S. President Donald Trump initially closed the de minimis exemption for goods from Hong Kong and China earlier this year, chaos ensued.

USPS briefly stopped delivering parcels from China. Delivery times for parcels that did get shipped stretched longer, with limited information on package tracking in the U.S.

At the heart of the issue: the sheer volume of packages. More than 80 per cent of total US e-commerce shipments in 2022 were de minimis imports, the vast majority of which come from China, according to a congressional research report.

CBP told CNN it currently processes “nearly 4 million duty-free de minimis shipments a day.” Research indicates that a majority of those shipments come from China and Hong Kong. In total, over the last fiscal year, CBP said 1.36 billion packages came to the US under the de minimis exemption.

That’s a lot of dog bandanas, bead kits, frosting spatulas and tchotchkes. Regular Temu and Shein shoppers told CNN this week they’ve increasingly turned to the site as they feel made-in-the-USA products have gotten out of reach.

“I can’t afford to buy from Temu now, and I already couldn’t afford to buy in this country,” Rena Scott, a 64-year-old retired nurse from Virginia, previously said to CNN Business.

Lower-income households will suffer the most from the end of cheap Chinese e-commerce sites. About 48 per cent of de minimis packages shipped to the poorest zip codes in the United States, while 22 per cent were delivered to the richest ones, according to February research from UCLA and Yale economists.

The changes could come in stages. Already, for example, Shein and Temu raised prices ahead of the de minimis exemption’s end, hiking prices on several goods tracked by CNN.

“Due to recent changes in global trade rules and tariffs, our operating expenses have gone up. To keep offering the products you love without compromising on quality, we will be making price adjustments,” Shein said in a notice posted online recently. “We’re doing everything we can to keep prices low and minimize the impact on you.”

A Temu spokesperson said the company was changing its business model to encourage more local fulfillment, growing the number of U.S. sellers on the platform.

“Temu’s pricing for U.S. consumers remains unchanged as the platform transitions to a local fulfillment model,” the company said in a statement. “All sales in the U.S. are now handled by locally based sellers, with orders fulfilled from within the country.”

It’s unclear if more price increases are on the way from those retailers and others.

Shippers, too, will see higher costs. DHL told CNN the company has “increased our staffing levels in order to support the additional volume of informal entry clearances we anticipate.”

Goods from China and Hong Kong shipped via UPS, DHL and FedEx are subject to a baseline 145 per cent tariff, plus any additional product-specific tariffs. Goods shipped through USPS will be subject to a baseline 120 per cent tariff or a flat $100 fee per postal item. Come June 1, the flat fee will increase to $200.

A core of Trump’s MAGA base remain with the president, saying in social media posts and news reports that they will ride out bumps in the economy with their faith in the president. But increasingly, more Americans feel otherwise.

A 59 per cent majority of the public now says Trump’s policies have worsened US economic conditions, according to a CNN poll conducted by SSRS last month.

The survey was conducted from April 17 to 24, after the White House first announced expansive new tariffs on dozens of countries, and then called a pause on many of them. Even so, 6 in 10 respondents said that Trump’s policies have increased the cost of living in their community.

On Friday, with the de minimis exemption ending, many Americans could see those costs go even higher.

“It’s a very, it’s a big deal,” Trump said at a Cabinet meeting Thursday, calling the de minimis exception “a big scam.”

He added: “And we’ve ended, we put an end to it.”

Article written by Elisabeth Buchwald and Ramishah Maruf, CNN