What: The end of the de minimis trade exemption forces a complete restructuring of retail supply chains, with new duties of up to 90% on packages under USD 800 from China.

Why it is important: The policy change exposes the fragility of ultra-fast fashion's business model built on tariff-free logistics, compelling a wholesale transformation of retail supply chains and potentially levelling the playing field for traditional retailers.

The Trump administration's decision to eliminate the de minimis exemption marks a pivotal shift in global retail dynamics. Starting May 2, packages valued under USD 800 from China and Hong Kong will face a 90% duty or a USD 75 minimum charge, with the minimum set to increase to USD 150 by June 1. This change directly impacts the business model that helped Chinese companies like Shein and Temu dominate the market, where they previously avoided costly import duties by shipping individual parcels directly to consumers. The impact extends beyond immediate operational concerns, forcing companies to adapt their entire supply chain strategies. Temu's response includes expanding US infrastructure and onboarding local sellers, while industry experts anticipate longer shipping times and higher prices for American consumers. The change has broader implications for environmental accountability, with resale platforms viewing it as a crucial step toward addressing the textile waste crisis. This regulatory shift exposes how much of the modern retail economy relied on legal grey zones and regulatory blind spots.

IADS Notes: The elimination of de minimis rules represents a seismic shift in retail economics. As noted in February 2025, the change affects approximately 4 million daily shipments, fundamentally disrupting e-commerce operations. March 2025 data revealed staggering consumer anxiety, with confidence showing its sharpest decline since August 2021. The retail industry's response has been swift, with major players like Amazon launching direct-from-China shipping services in July 2024 to maintain competitiveness. This transformation has prompted companies like Shein to offer 30% higher procurement prices in February 2025 to relocate manufacturing to Vietnam, demonstrating the far-reaching implications for global supply chains.

How the end of de minimis is forcing a global reset in retail supply chains