Adapted by:
Javier Pastor
Senior WriterComputer scientist turned tech journalist. I've written about almost everything related to technology, but I specialize in hardware, operating systems and cryptocurrencies. I like writing about tech so much that I do it both for Xataka and Incognitosis, my personal blog.
Alba Mora
WriterAn established tech journalist, I entered the world of consumer tech by chance in 2018. In my writing and translating career, I've also covered a diverse range of topics, including entertainment, travel, science, and the economy.
President Donald Trump’s tariffs on imports from China have posed a threat to the global economy. The 90-day pause has provided a respite. More recently, the U.S. announced new measures regarding tariffs that heavily impacted Chinese e-commerce companies Temu and Shein.
What happened? On Monday, Trump issued an order to significantly reduce tariffs on low-value packages arriving from China and Hong Kong to the U.S. The tariff rate on these items, valued at up to $800, has been reduced from 120% to 54%. While this reduction is substantial, tariffs are still a considerable burden on these types of products.
Temu and Shein. For years, Chinese online retail giants such as Temu and Shein have benefited from the so-called “de minimis” exemption. This loophole allowed them to ship low-cost products directly to consumers in the U.S. without incurring import duties. However, the Trump administration recently revoked the exemption, creating a ripple effect that has also affected Big Tech.
Meta and Google. Trump’s recent decision also provides relief for Meta and Google. Temu and Shein have been thriving in the U.S. market due to the de minimis exemption, which allowed them to sell products without paying high tariffs.
However, to take advantage of the de minimis exemption, they invested heavily in advertising through major companies such as Meta and Google. When the exemption was removed, their advertising revenues dropped sharply. With the new developments, ad spending in Big Tech is expected to increase once again.
Caveats. Although the situation is improving for Temu and Shein, there are important details to consider. Trump changed the de minimis rule, establishing a flat rate of $100 for packages valued under $800. This flat rate will increase to $200 in June. These tariffs remain in effect despite the 90-day truce agreement for other tariffs, making it quite costly for Temu and Shein to sell directly from China to consumers.
Temu’s workaround. To sidestep these measures, Temu has started storing large quantities of its products in U.S. warehouses. This allows the Chinese company to ship products “locally” before the tariffs take effect. However, this solution is only temporary. Temu will eventually need to replenish its warehouses, and at that point, it’ll face the new tariffs.
A backup plan. Temu has identified a loophole in Trump’s recent announcement. Instead of selling products directly to consumers, which incurs tariffs on packages valued under $800, Temu can fill its warehouses with large orders. By doing this, it can serve consumers locally without facing the higher tariffs.
In this scenario, only the reduced tariffs (30%) apply, rather than the 54% tariffs that affect individual packages valued under $800. This strategy provides some relief for businesses like Temu that view the U.S. as their primary sales market.
Trump is making concessions. In April, the U.S. raised tariffs on Chinese imports, prompting China to respond with equivalent increases. The situation escalated when U.S. tariffs on Chinese imports soared to 145%, while China’s tariffs on U.S. products reached 125%.
Despite the escalating tensions, neither side seemed willing to budge. In the end, Trump relented. On Monday, both countries announced a 115% reduction in their reciprocal tariffs, offering a much-needed relief for the global economy.
Image | Gage Skidmore
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