Name: De Minimis Ballooned This Chinese Market’s Exports - Now That’s Changing
Uploaded: 2025-02-06T04:55:00Z
Duration: 5 min 9 s
Description: President Trump moved to close a loophole that has fuelled a boom in cheap goods being shipped from China to the U.S. WSJ’s Jonathan Cheng traveled to the world’s largest wholesale market to see how these products are making their way into U.S. markets.

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President Trump moved to close a loophole that has fuelled a boom in cheap goods being shipped from China to the U.S. WSJ’s Jonathan Cheng traveled to the world’s largest wholesale market to see how these products are making their way into U.S. markets. Photo: CCTV+

https://m.wsj.net/video/20250206/f618412d-d2d8-4bed-98ca-d4ebdbb50007/3/hls/manifest-hd-wifi.m3u8

President Trump moved to close a loophole that has fuelled a boom in cheap goods being shipped from China to the U.S. WSJ’s Jonathan Cheng traveled to the world’s largest wholesale market to see how these products are making their way into U.S. markets.

De Minimis Ballooned This Chinese Market’s Exports - Now That’s Changing

This is the Yiwu International Trade Market in China. With 75,000 stores spread out over 1500 acres, it's the world's largest wholesale market. If you've ever bought anything on Temu or Shein, there's a good chance it came from here. But the price of all these goods might be going up after President Trump suspended a trade exemption that had turbocharged Chinese e-commerce platforms. A little known loophole had fueled a boom in low cost Chinese goods making their way from Yiwu to the US. You can get bunting for your US election campaign. But Trump's new tariffs may put an end to that. Here's why this market, the center point of global wholesale trade, has found itself in the US government's crosshairs. The bazaar is strategically located near China's East coast, close to huge ports in Shanghai and Ningbo, allowing easy trade to the US. Buyers for e-commerce platforms like Temu and Shein flock to Yiwu to source cheap products in bulk and sell them on to American consumers. Look at this. You got Trump 2024, and they've even got the hair to prove it, made in China. These MAGA hats are sold wholesale in Yiwu for around a dollar a cap, and the price has stayed low for US consumers because the shipment wasn't subject to any import taxes or tariffs. That's thanks to something called de minimus. It's a provision that allows any shipments under $800 to enter America tariff free regardless of where they come from. The US has one of the highest de minimus thresholds in the world, around 50 times higher than Canada's.

The argument here was if you had to put a tariff and all of the customs paperwork on every single product that comes into a country, you would overwhelm your customs officials with things that are so small that what is the point?

Jonathan Cheng: Chinese platforms like Shein and Temu have built huge business models around shipping tariff free from places like Yiwu directly to US consumers. Exports from the city were valued at more than $70 billion in 2023, and a significant amount of that ends up in the US. About $54 billion worth of products were shipped to America in 2023 under the de minimus provision with the bulk coming from China. But the new US administration's move to end the duty free allowance for Chinese imports could increase the price for a lot of the products that flow from Yiwu to American customers. President Trump has announced new tariffs on China that removed the de minimus exemption.

That was just an opening salvo. If we can't make a deal with China, then the tariffs will be very, very substantial.

Jonathan Cheng: The order caused widespread confusion and prompted the US Postal Service to temporarily stop accepting parcels from China before allowing them again. More than 1.3 billion packages entered the US tariff free under the provision in 2024. Temu and Shein alone likely accounted for nearly one third of these shipments. An average order on Shein is around $70. Under previous rules, that parcel entered the US duty free. With the provision removed, these shipments will now be subject to import taxes, including a new additional 10% tariff. Under Trump's order, small parcels from China will now be subject to extra customs checks, meaning packages could face a lengthy processing time. And talk of higher tariffs has sparked growing anxiety in Yiwu. Critics say changes are needed to stop Chinese e-commerce platforms like Temu and Shein from flooding the US market and undercutting domestic businesses. Both Shein and Temu say de minimus isn't key to their success.

It's symbolic because now you can say we're going after Chinese companies at all levels. The tsunami of packages that apparently needs to be stopped. I don't think it will be stopped. It'll just be routed differently.

Jonathan Cheng: Shipments from Yiwu have surged, and experts say demand for these cheap goods from China is not going anywhere.

Why do we have so many packages? Because there's so many American consumers who are interested in purchasing these products from companies like Temu.

Jonathan Cheng: A new trade war between China and the US is taking shape with Beijing imposing its own retaliatory tariffs on some US imports. But if Trump keeps tighter trade restrictions on China, experts say the shipments won't stop.

They will just do things differently. They will say, "Well, if that's the rule, then we'll adjust." So you haven't necessarily solved the challenge, which was to cut off Chinese products entering the US market. What you have done is drive up the cost for US consumers.

News moves fast, and there's not always time to untangle the complex forces driving the day's biggest stories. WSJ Explains breaks down big market moves, business and economic trends, and scientific developments to help you stay ahead of the curve.