The U.S. Postal Service (USPS) has announced that it will temporarily halt shipments of parcels from China and Hong Kong. This move follows President Donald Trump’s recent decision to close a trade loophole that had allowed retailers like Temu and Shein to send low-value packages to the U.S. without paying duties.

The Trump administration implemented a 10% tariff on Chinese imports, effective as of Tuesday, and also moved to shut down the “de minimis” loophole. This loophole previously allowed shipments valued under $800 to enter the U.S. duty-free.

Despite the suspension of parcels, USPS stated that the change would not affect the delivery of letters or flats from China and Hong Kong. The Postal Service did not immediately clarify whether the suspension was directly linked to Trump’s decision to end the de minimis exemptions for shipments from China and other countries.

Temu and Shein, both of which have rapidly grown in the U.S. market, have greatly benefited from this duty-free shipping provision. The two companies, which sell a wide range of products, including toys and smartphones, were reported by a U.S. congressional committee on China in June 2023 to account for more than 30% of all daily shipments to the U.S. under the de minimis exemption.

According to the same report, nearly half of all packages sent under de minimis come from China. Both Shein and Temu have not yet responded to requests for comment on the matter.

“In our view, the USPS would require some time to sort out how to execute the new taxes before allowing Chinese packages to arrive in the U.S. again,” said Morningstar’s senior equity analyst Chelsey Tam. “This is a significant challenge for them because there were 4 million de minimis packages per day in 2024, and it is difficult to check all the packages – so it will take time.”

Trump's crackdown on de minimis rules is expected to drive up prices for products sold by online retailers like Shein and Temu. However, experts believe this won't significantly reduce the number of shipments coming into the US.

“E-commerce volumes out of China grew 20-30% last year, so it’s going to take a sledgehammer to crack that level of consumer demand, and I’m not sure de minimis alone is enough,” said Niall van de Wouw, Chief Airfreight Officer at freight platform Xeneta.

According to Niall van de Wouw, the Chief Airfreight Officer at Xeneta, a freight platform, “E-commerce volumes out of China grew 20-30% last year, so it’s going to take a sledgehammer to crack that level of consumer demand, and I’m not sure de minimis alone is enough.” 

“They will still be cheaper than buying through retailers in the U.S. Delays in receiving the goods due to operational disruptions could have a bigger impact than price.” Shein has previously stated that it is in favour of reforming the de minimis provision.

Temu, Chinese e-commerce giant PDD Holdings’s subsidiary, and Shein, a company based in Singapore that plans to be listed in the London market this year, have taken steps to reduce the impact of new trade policies. These measures include sourcing more products from countries outside of China, opening warehouses in the U.S., and adding more U.S.-based sellers to their platforms.

However, the majority of their products are still manufactured in China. The new tariff on Chinese goods, imposed by Trump, came after repeated warnings to Beijing about its insufficient efforts to stop the flow of fentanyl, a harmful synthetic opioid, into the U.S.