On February 1, US President Donald Trump signed an executive order that eliminates the long-standing 'de minimis' tariff exemption, which previously permitted packages valued under US$800 to enter the US without incurring duties.

This decision, which will increase tariffs on Chinese imports by an additional 10%, is predicted to have a notable impact on American consumers, especially those with lower incomes, according to analysts.

The exemption was instrumental in the expansion of China's cross-border e-commerce industry, enabling small shipments from retailers like Shein and Temu to bypass import duties and customs inspections.

In the past decade, shipments entering the US under this exemption skyrocketed by over 600%, rising from approximately 139 million in 2015 to over 1 billion in 2023, as per data from US Customs and Border Protection.

From 2018 to 2021, China reportedly exported about US$228.3 billion in de minimis shipments to the US, with more than US$79 billion originating from Hong Kong, which constituted over two-thirds of all de minimis imports.

With this change, goods from these cross-border e-commerce entities will now face tariffs that are already exceeding 20% in certain sectors, with the new executive order adding an additional 10% to those duties.

The elimination of the exemption could increase costs for American consumers who have depended on affordable goods from China, especially in sectors where tariff rates are elevated.

Nonetheless, the repercussions for Chinese companies are anticipated to be less pronounced, as the adjustments are likely to influence pricing and consumer demand in the US, rather than their operational capabilities or their ability to sell goods internationally.