Previously, packages valued under $800 entered the United States without any import duties or tariffs. This loophole allowed e-commerce platforms like Shein, Temu, and the TikTok Shop to flood the U.S. market with incredibly low-priced goods shipped directly from overseas manufacturers, bypassing traditional import taxes that domestic retailers face.
How will this affect your wallet?
According to Krista Li from Indiana University's Kelley School of Business, whose research focuses on online shopping behaviors, the impact will be significant: "The end of the de minimis exemption means that many low-cost goods, such as fast fashion and apparel, small electronics, home kitchen goods, toys, and beauty products, shipped directly to U.S. consumers via postal services, particularly from international e-commerce platforms such as Shein and Temu, will now be subject to a baseline tariff as high as 145%."
The changes go beyond just higher prices. Li explains that consumers should higher prices, yes—but also fewer ultra-cheap options, potentially fewer varieties, and slower delivery times as manufacturers and retailers adjust to the new cost structure. "Consumers may make fewer impulse purchases of inexpensive imported goods and be more price-conscious," according to Li.
What this means for different online retailers
There are a lot of reasons you might want to curb your online shopping habit (the environment, your budget, being buried under mountains of stuff, etc.). But with the closing of the de minimis loophole, you'll need to brace yourself for a financial impact.
Amazon and major U.S. retailers
Established U.S. retailers may actually benefit from the change, as it levels the playing field against international competitors who previously enjoyed tax advantages. However, many Amazon Marketplace sellers source products from overseas, so certain categories may still see price increases.
Small businesses
American small businesses have long complained that the de minimis exemption created an unfair advantage for foreign sellers who could ship goods without tariffs. This change may help domestic sellers compete more effectively, but the main takeaway here is that U.S. consumers will bear the cost. Meanwhile, U.S. based businesses that rely on importing goods from China to resell will have to choose between lowering profit margins, charging higher prices, or sourcing goods U.S. made goods (which simply won't be possible for some sellers, as no U.S. made alternatives exist).
Buy in bulk when possible: Consolidating purchases may help offset some shipping and processing costs.
Check retailer policies: Some international retailers may absorb a greater portion of the tariff costs than others in a bid to maintain market share.
The bottom line
What's clear is the end of an era for seemingly impossibly cheap goods arriving directly from overseas, at least for the time being. But on the bright side, perhaps this hit to your wallet can be a wake-up call to curb your online shopping addiction. I mean, those impossibly low prices were impossible for a reason—the manufacturers rely on unfair wages, low-quality goods, and cutting corners. Maybe it's time to bring a little more intention to your shopping habits.
Unfortunately, it won't end here either. Keep bracing yourself for impact of the ongoing trade war, and be prepared to continue to alter your personal shopping habits. As my colleagues at Mashable point out, given the tariff-related price increases we've seen so far, we can expect to see more import taxes passed on to U.S. consumers going forward.
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