Amazon Rival Temu Feels The Heat As Trump Kills De Minimis Loophole—Ends Free Ride For 1.3 Billion Parcels
President Trump has eliminated the de minimis exemption, ending duty-free treatment for packages worth $800 or less entering the U.S., impacting 1.36 billion packages annually. This change particularly affects Chinese e-commerce platforms like Temu and Amazon. Following the policy shift, Temu's U.S. daily users dropped 58%, and PDD Holdings reported a revenue miss. New tariffs will increase consumer costs, with companies facing duties based on origin country rates. Amazon's competition with Temu intensifies as both face similar tariff impacts.
President Donald Trump eliminated the global “de minimis exemption” last week, ending duty-free treatment for packages worth $800 or less entering the United States.
The sweeping trade policy change targets Chinese e-commerce platforms, including PDD Holdings Inc. PDD-owned Temu, Shein, and Amazon.com Inc. AMZN marketplace sellers, affecting 1.36 billion packages annually.
Massive Import Volume Loses Tax-Free Status
U.S. Customs and Border Protection processes nearly 4 million duty-free de minimis shipments daily, with research indicating most originate from China and Hong Kong, according to CNN. The exemption’s elimination, effective August 29, closes what Trump called a “catastrophic loophole” in U.S. trade policy.
“Many shippers go to great lengths to evade law enforcement and hide illicit substances in imports,” Trump stated in the executive order, citing risks of “evasion, deception, and illicit-drug importation” in low-value shipments.
Temu User Base Plummets 58% Following Policy Shift
Temu’s U.S. daily users dropped 58% in May after the initial China-specific de minimis suspension, according to Sensor Tower data. The platform shifted from direct Chinese shipments to U.S.-based fulfillment, marking China-sourced items as “out of stock.”
PDD Holdings reported first-quarter revenue of $13.18 billion, missing analyst estimates of $14.17 billion. Operating profit declined 36% to $2.52 billion as margins compressed from 32.9% to 19.1%.
New Tariff Structure Hits Consumer Costs
Under the new regime, companies face ad valorem duties based on origin country tariff rates or flat fees ranging $80-$200 per item. Countries with tariff rates above 25% face $200 per item charges, while those under 16% pay approximately $80.
Chris Tang, UCLA global supply chain management professor, told CNN that companies “will now have to pay a hefty import tax even if they ship in bulk, which means customers may eventually have to pay more.”
Amazon Haul Competition Intensifies Market Pressure
Amazon’s discount platform, Amazon Haul, competing directly with Temu and TikTok Shop, ships directly from China and faces similar tariff impacts. An Amazon spokesperson said the company “consistently offers the lowest prices” and will “continue to meet or beat prices versus other retailers,” according to CNN.
The policy change extends Trump’s May suspension of China’s de minimis exemption globally, eliminating workarounds through third countries like Vietnam, facing 20% tariff rates. Air cargo volume from Asia dropped 10.7% in May following the initial China-specific changes.
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