The recent move by President Trump to close a duty-free loophole known as the "de minimis" exemption is expected to significantly impact online shopping prices for US consumers, particularly those purchasing from Chinese retail giants like Shein and Temu. This exemption previously allowed packages valued under $800 to enter the US without incurring duties or taxes, thus enabling these companies to provide ultra-low prices to a growing customer base.

While supporters argue that the exemption streamlined the customs process, both Trump and former President Biden contend it has hurt American businesses and been exploited for smuggling illegal substances, including synthetic opioids like fentanyl. The de minimis exemption, originating from a 1938 US trade rule allowing tourists to bring back small-value items without declaration, has ballooned in relevance in recent years, with more than 90% of US cargo entry now falling under its guidelines.

Amid concerns about rising import volumes leading to security challenges at the border, the US Customs and Border Protection agency noted an increase in the number of packages entering the country—from 140 million a decade ago to over one billion last year. This directive is part of a broader enforcement strategy aimed at reducing the illegal importation of drugs, and will make packages from mainland China and Hong Kong subject to import duties from May 2, with rates increasing in subsequent months.

Shein and Temu have indicated that they will adjust their prices in reaction to these changes. A policy group predicted that the elimination of the de minimis exemption could lead to an additional burden of $8 billion to $30 billion annually, which, ultimately, would be passed onto consumers.

Similar regulatory evaluations are ongoing in the UK, where low-value imports are also being scrutinized. A review will be conducted to address the competitive impact such imports have on local businesses. The European Union also appears poised to revise its own regulations regarding low-value parcels, suggesting a trend towards tightening import rules across multiple regions.

Despite the intent to tackle drug smuggling, critics worry that the closure of the exemption may not significantly reduce the incoming illegal substances, as many enter through other means. Moreover, there are concerns this new policy might overload borders and customs personnel, who are already dealing with significant challenges.

As the date for these new regulations draws near, online shoppers in the US will need to brace for impending price hikes, prompting questions about the future of affordable international online retailing.