On April 17, 2025, the Trump administration escalated its trade war with China by imposing tariffs of up to 245% on Chinese imports, a dramatic increase from earlier levies. Alongside this, Trump signed an executive order ending the “de minimis” exemption—a trade loophole that allowed packages valued under $800 to enter the U.S. duty-free. This policy shift directly targets Chinese e-commerce giants like Ali express, Shein and Temu, which have thrived by offering ultra-low-cost goods to American consumers. This article explores the impact of 245% Tariff on China on Shein and Temu product prices, the consequences for lower and working-class Americans, broader effects on the U.S. market, and the implications of the de minimis levy on low-value packages.
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The 245% Tariff on China and Its Direct Impact on Shein and Temu Prices
Shein and Temu have built their popularity in the U.S. by offering fast fashion and household items at rock-bottom prices—think $5 blouses and $14 sneakers. Their business model relies heavily on low manufacturing costs in China and the de minimis exemption, which allowed them to ship small packages directly to U.S. consumers without tariffs or rigorous customs inspections. However, with the new 245% Tariff on China,both companies have announced price hikes starting April 25, 2025.
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The tariff increase stems from a series of escalations. Initially, Trump imposed a 30% tariff or $25 per item on previously exempt packages, set to rise to $50 by June 1. After China retaliated with its own tariffs, Trump tripled the rates to 90% or $75 per item, rising to $150 by June 1. By mid-April, the combined tariffs on some Chinese goods reached 245%, as reported by the BBC. Shein and Temu, in nearly identical statements, cited “recent changes in global trade rules and tariffs” as the reason for their price adjustments, warning that operating expenses have risen significantly.
Retail experts estimate that prices on Shein and Temu could rise by 25-50%. A $10 dress might now cost $15, and a $14 pair of sneakers could jump to $21. Sheng Lu, an assistant professor of fashion and apparel studies at the University of Delaware, noted that there’s “no way either for retailers or their suppliers to absorb the additional cost,” meaning the burden will largely fall on consumers. While some experts argue that even with the tariffs, Shein and Temu products might remain competitively priced compared to other retailers, the price hikes will still be significant for budget-conscious shoppers.
Impact on Lower and Working-Class Americans
Lower and working-class Americans, who disproportionately rely on Shein and Temu for affordable clothing, household goods, and electronics, will feel the brunt of these price increases. A Yale University study highlighted that lower-income consumers are more likely to use de minimis shipments, with the average package value in 2023 being just $54. For families already stretched thin by inflation and rising living costs, a 25-50% price hike on essentials like clothing and home goods could force tough choices—either cutting back on purchases or reallocating budgets from other necessities like food or utilities.
Many are trying to stock up on clothes, Shoes and essential items now , particularly Gen Z and millennials, who rely on these platforms for affordable fashion and home goods. The tariffs could exacerbate financial strain for these demographics, potentially deepening economic inequality as access to cheap goods diminishes.
Beyond price hikes, the end of the de minimis exemption may lead to longer shipping times. Shein and Temu will now need to comply with formal customs procedures, which could overwhelm their administrative capacity and delay deliveries. For working-class families who depend on quick access to affordable goods—say, a last-minute outfit for a job interview or school supplies for kids—these delays could create additional hardships.
Consequences for the U.S. Market
The tariffs and closure of the de minimis loophole have ripple effects across the U.S. market. Shein and Temu account for 17% of the U.S. discount market, and their rapid growth—fueled by the de minimis exemption—has pressured domestic retailers. For example, Forever 21 recently began liquidating its U.S. stores, partly blaming the rise of Shein and Temu for its inability to compete with their low prices.
With the tariffs in place, U.S. retailers might see a temporary reprieve as Shein and Temu prices rise, potentially allowing companies like Amazon (which launched its own low-cost platform, Haul, in November 2024) or domestic fast-fashion brands to regain market share.
However, this comes at a cost to consumers. Economists warn that the tariffs could increase American households’ budgets by up to $2,100 annually, according to The Budget Lab at Yale. The broader trade war has already triggered market volatility, with global equities declining and U.S. Treasury yields surging. J.P. Morgan Chase CEO Jamie Dimon cautioned in his annual letter that the tariffs “will likely increase inflation” and raise the probability of a recession, a concern for an economy still recovering from post-COVID inflationary pressures.
Shein and Temu are adapting by exploring alternatives, such as sourcing products from outside China or expanding into markets like Europe and Australia, which still have de minimis exemptions (e.g., Australia allows duty-free imports under $1,000). However, these shifts may not fully offset the impact on U.S. consumers, and the companies have already cut back on U.S. social media advertising—Shein by 19% and Temu by 31% in early April—potentially reducing their visibility among American shoppers.
De Minimis Levy Tariffs on Low-Value Packages
The de minimis exemption, established in the 1930s, allowed packages valued under $800 to enter the U.S. without tariffs or extensive customs scrutiny. This loophole became a cornerstone of Shein and Temu’s business models, enabling them to flood the U.S. market with low-cost goods. In 2023, the value of de minimis shipments soared to $66 billion, up from $5.5 billion in 2018, with nearly two-thirds originating from China and Hong Kong, according to a Congressional Research Service report. U.S. Customs and Border Protection reported over 1.36 billion de minimis shipments in 2024, doubling the 2022 figure.
Trump’s executive order, effective May 2, 2025, ends this exemption for shipments from China and Hong Kong. Now, these packages face a 90% tariff or $75 per item, rising to $150 by June 1. This levy aims to address concerns over unfair competition for U.S. businesses and the smuggling of illicit substances like fentanyl, which the White House claims often evades detection in de minimis shipments. Critics of the exemption, including the National Council of Textile Organizations, argue it gave foreign retailers an unfair advantage, harming domestic manufacturers.
However, the levy’s implementation raises concerns. The Cato Institute warns that eliminating de minimis effectively raises taxes on American consumers and increases shipping times, disproportionately affecting lower-income households. Additionally, the new customs requirements could overwhelm logistics systems, leading to delays and further price increases as companies pass on compliance costs.
Conclusion
Trump’s 245% tariff on China – Chinese imports and the closure of the de minimis loophole mark a seismic shift for Shein, Temu, Ali express and the U.S. market. While these policies aim to level the playing field for American businesses and curb illicit trade, they come at a steep cost for lower and working-class consumers who rely on affordable goods.
Price hikes of 25-50%, potential shipping delays, and broader economic ripple effects—like inflation and market volatility—could deepen financial strain for vulnerable households and reshape the competitive landscape of U.S. retail.
As Shein and Temu adapt by diversifying their supply chains and markets, the long-term impact on American consumers and the economy remains uncertain, but the immediate consequences are clear: the era of ultra-cheap Chinese goods may be coming to an end.