How the removal of the de minimis exemption affects global trade

President Trump has suspended a global trade loophole allowing smaller parcels into America duty-free. This will affect so-called fast fashion giants like Shein and Temu, who could potentially pass the cost of those duties down to consumers. Trump eliminated the so-called “de minimis exemption,” which had admitted duty-free shipments of goods worth $800 or less into the United States.

Giant e-commerce sites used the loophole when shipping hundreds of millions of packages to US consumers. 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.

Danielle Sponder Testa, PhD who is an Assistant Professor for ASU Fashion Institute of Design and Merchandising (FIDM) joined “Arizona Horizon” to discuss how this will impact global trade

“…historically De Minimis…is latin for too small to matter,” Testa said, “…so for really small shipments that saves time at importing for not having to go through the duty process.”

Testa discussed how historically the de minimis value used to be a lot lower, and was increased to $800 in 2015. This was done to increase global trade, and allow more shipping of goods from other countries, to ensure cross-country sales can happen.

“…so it was really meant for these trivial items you were bringing into the country,” Testa explained. “It wasn’t necessarily thought of a loophole when it increased to that value, but it was to encourage economic activity, to ecnourage more items to come in.”

Testa also clarified that the elimination of the de minimis exemption is not only just for individuals but for any sort of business as well.

“…so I like to think of things like if you do want to buy a crafted item on Etsy from a seller in Germany,” Testa said, “…you don’t have to worry about the duties as a person-to-person seller.”