President Donald Trump's tariffs on imports from China have thrown red ink all over the ledgers of ultra-low-cost online retailers like Temu and Shein.
In recent years, the popularity of these Chinese online retailers has skyrocketed, with the former even securing an ad spot in last year’s Super Bowl. These apps rely on one thing for their mainstream relevancy and success: absurd sticker prices.
If you’ve ever wondered how Temu can sell smartphones for under $100 and offer hundreds of dollars worth of coupons to each user — a big part of it boils down to a little-known trade rule called “de minimis.”
De minimis allows goods and packages worth less than $800 to come into the U.S. duty-free, skipping out on fees typically collected by customs. According to the Associated Press, Trump's executive order implementing a 10% tariff on goods imported from China has effectively suspended the exemption. That means Chinese imports will be subject to a double whammy of new duties and a newly imposed tariff.
“The vast majority of these orders are valued less than $800, which means all or virtually all of them are going to get caught in that,” Youssef Squali, an analyst at Truist Financial, told the outlet.
It’s not just trinkets and garments being caught in the crossfire. U.S. automakers are also concerned that the tariffs will impact auto parts and vehicle prices. The U.S. imports up to $17.5 billion worth of transportation products from China annually, per the U.S. International Trade Commission.
It’s not clear yet what or how prices will be affected, but the auto industry is already bracing for impact.
“There’s not a specific item coming from China that’s under this tariff that says, ‘Oh no, this is the thing that’s going to mess everything up’,” S&P analyst Stephanie Brinley told CNBC. “But they will drive up costs.”
Shares