A notice to customers dazzled by the low-priced products on Chinese shopping apps: the days of getting trendy clothing, tools and gag gifts that cost less than lunch delivered to your door in 10 days are probably numbered.
President Donald Trump is ending a little-known but听听that allowed as many as 4 million low-value parcels 鈥 most of them originating in China 鈥 to arrive in the U.S. every day tax-free.
An executive order the president signed April 2 will eliminate the 鈥渄e minimis provision鈥 for goods听听on May 2. The tax exemption, which applies to packages valued at $800 or less, helped China-founded e-commerce companies like Shein and Temu thrive while听听the U.S. retail market.
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鈥淪hoppers had a full array of product and options of timing,鈥 said Marshal Cohen, chief retail adviser at market research firm Circana. 鈥淣ow, they鈥檙e going to have a limited array of options and timing: so you can still buy this product, but you may have to wait three or four weeks.鈥
U.S. politicians, law enforcement agencies and business groups described the long-standing policy as a trade loophole that gave inexpensive Chinese goods an advantage and served as a portal for illicit drugs and counterfeits to enter the country.
罢丑别听听Trump announced also aim to end the duty-free exception for all imported goods worth less than $800, but only when the U.S. government has the personnel in place to process parcels from every country.
A worker loads boxes of goods from a truck outside a wholesale clothing mall in Beijing.
What will be the effect on prices and shipping times?
A White House fact sheet said small packages of Chinese products sent through the international postal network will be subject to a duty rate of either 30% of their value or $25 per item, an amount that will increase to $50 per item after June 1.
Commercial carriers such as FedEx and UPS will be required to report shipment details and remit the appropriate duties to U.S. Customs and Border Protection, according to the White House. After Trump's latest round of tariffs, the tariff rate for Chinese products will be听.
Supporters of the de minimis exception argued that its elimination will drive up costs and听.
The tariff costs threaten to deal a blow to the U.S. operations of companies like Shein and Temu, which rapidly expanded in the U.S. using the de minimis provision to deliver ultra-cheap fast fashion items from China.
However, it's unclear what impact the loss of the tax exemption will have on the two online retailers, as well as on American companies听听and Walmart, whose platforms include virtual marketplaces where international sellers offer products.
Shein and Temu have been building warehouses in the U.S. so they could get orders to U.S. shoppers more quickly. Shein recently opened a fulfillment and logistics hub in the Seattle area. Neither company could immediately be reached for comment.
Souvenir apparel vendor Duane Jackson completes a听sale Tuesday of "Make America Great Again" caps, that are made in China, at his location in New York's Times Square.
Ram Ben Tzion, chief executive officer of the digital vetting platform Publican, said he expected the companies to 鈥渂e forced to rethink their business strategy and possibly explore opting out of the U.S. market.鈥
In an emailed statement to AP, FedEx said it would support its customers to adapt to the new regulatory requirements and said it would be important for shippers to have 鈥減aperwork completed correctly ahead of pick-up鈥 for shipments to move smoothly.
Hilton Beckham, an assistant commissioner of the U.S. Customs and Border Protection, said the federal agency is ready to implement the latest tariffs.
鈥淥ur automated systems are fully updated to capture, assess, and administer all new duties, and clear guidance will be provided to support uniform enforcement across the nation,鈥 Beckham said.
Ben Tzion said he would 鈥渉ighly doubt鈥 the U.S. government was ready to process the huge number of low-value shipments to be taxed starting next month.
The Hong Kong government said the HongKong Post would 鈥渢emporarily maintain鈥 postal services to the U.S. through May 2 but 鈥渨ill not collect any so-called tariffs on behalf of the U.S. authorities.鈥
What is the de minimis provision?
Introduced in 1938, the de minimis exception was intended to facilitate the flow of small packages valued at no more than $5, the equivalent of about $109 today. The threshold increased to $200 in 1994 and $800 in 2016. But听, driven by China, challenged the intent of the decades-old customs exception rule.
Chinese exports of low-value packages soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a February听听by the Congressional Research Service. The U.S. market was a major destination.
The Chinese government, which sees cross-border e-commerce as a critical part of its foreign trade, introduced favorable policies, including financial support and infrastructure building, to foster its growth.
Former President Joe Biden proposed a rule last year that said foreign companies can鈥檛 avoid tariffs simply by shipping goods that they claim to be worth $800 or less. Trump tried in February to end the exception but his initial order was听听within days when it appeared the U.S. was not prepared to process and collect tariffs on the millions of parcels.
U.S. Rep. Rosa L. DeLauro, a Democrat from Connecticut, said she was pleased Trump acted a second time to eliminate the rule.
鈥淔or too long, this customs loophole has let foreign exporters flood our market with cheap goods and helped drug traffickers move fentanyl past our borders 鈥 resulting in factory closures, job losses, and deaths,鈥 DeLauro said.
Pages from the Shein website, left, and from the Temu site, right, are shown 听June 23, 2023, in New York.
An explosion of cheap goods
In 2023, for the first time, more than 1 billion such packages came through U.S. customs, up from 134 million in 2015. By the end of last year, Customs and Border Protection said it was processing about 4 million small shipments a day.
The cheap prices and increasing popularity of Shein and Temu squeezed fast-fashion retailers like Forever 21 and H&M. Forever 21 blamed the tax exemption in part for its decision to听听and close its U.S. stores,
鈥淲e have been unable to find a sustainable path forward, given competition from foreign fast-fashion companies, which have been able to take advantage of the de minimis exemption to undercut our brand on pricing and margin,鈥 Chief Financial Officer Brad Sell said in a statement.
Meanwhile, Amazon late last year听launched听听featuring electronics, apparel and other products priced under $20, in an apparent effort to compete with Temu and Shein. Amazon shipped the products to U.S. customers from a warehouse it operates in China, according to documentation the company provided to sellers.
4 strategies to navigate market volatility in 2025
Navigating market volatility in 2025
After reaching all-time highs in February, U.S. markets have experienced notable volatility amidst a flurry of news regarding tariffs and rapid changes in the geopolitical landscape. The S&P 500 is now negative for the year, having declined nearly 9% from its mid-February peak (as of March 31, 2025), while the tech-heavy Nasdaq briefly entered correction territory in early March, and is down over 9%. This pullback has effectively erased the post-election gains, explains, and investors have been seeking safe havens like bonds and gold.
Understanding Current Volatility Drivers
Market weakness has been driven primarily by high levels of uncertainty rather than any meaningful change to economic fundamentals. Investors dislike uncertainty in any form, and are experiencing it through multiple channels.
While investors get tariff headlines multiple times a day, they still don't know: Will all the proposed tariffs actually go into place? How long will they last? What might ultimate settlements look like? How will consumers respond? How will manufacturers respond, domestically and abroad?听
The past several weeks have made it clear that proposals and threats can change at any moment. Unpredictable policy leads investors to reduce risk exposure and keep capital on the sidelines, at least temporarily until they have a better sense of the playing field.
Contextualizing Market Pullbacks
While there has been impressive performance in equity markets for two consecutive years, pullbacks are normal. On average, the S&P 500 has seen a correction, or decline of at least 10%, every year going back to 1928. Declines of 5% are even more common, occurring over three times per year on average over that period. In spite of these regular drawdowns, the S&P 500 has managed strong double-digit returns over the past 100 years. In many instances, pullbacks can be healthy for durable market returns, curbing.
Portfolio Diversification Demonstrating Value
This volatility has reinforced the benefits that diversification can offer across both asset classes and geographic regions. Thus far this year, while the S&P 500 is down over 4% as of March 31, 2025, the market has seen:
- International equity strength: European equities have delivered their best relative performance to start the year since 2000, with double-digit gains during the first two months of 2025. Emerging markets are also showing gains against U.S. market declines.
听 - Fixed income outperformance: Bonds are up over 2% for the year while U.S. equities have declined, demonstrating their essential role as portfolio stabilizers during market turbulence.
Foreign markets entered the year in a very different place than U.S. equities. International stock valuations were at historical levels of discount vs. U.S. stock valuations. Many international economies are also significantly earlier in their economic cycle (meaning they have seen recessions more recently) than the U.S., setting the framework for a longer potential period of future economic growth. At the same time, investors have been meaningfully underweight in international equities relative to historical levels. All of these factors are contributing to the outperformance of international stocks seen year-to-date.
Meanwhile, bonds are acting as a hedge against a potential economic slowdown in the U.S. Domestic consumers and businesses are grappling with monetary policy that has been restrictive for an extended period of time and significant uncertainty related to trade policy. As investors grow concerned about the potential impact to the economy, they bet that the Fed may have to ease and bring rates lower in the future than they are today. This causes bond prices to rise, offsetting weakness in the equity markets.
Medium-term, U.S. equity markets can be a great place to be invested. Some of the highest quality companies in the world are in the S&P 500鈥攖hese businesses can grow earnings regardless of economic pressures. The Fed also has the capacity to stimulate the economy should growth and corporate earnings come under meaningful pressure.听
However, other regions of the world can generate attractive returns, especially given relative valuations and greenshoots as it relates to international earnings. And diversification can help ensure balanced returns in periods of temporary weakness in a particular region or asset class.
Strategic Actions for Investors
During periods of elevated volatility, here's what disciplined investors can do:
1. Strategic Tax-Loss Harvesting
Market declines create valuable opportunities. Identifying positions with unrealized losses while maintaining market exposure through temporary substitutes can generate significant tax benefits. Ideally, you've implemented automated harvesting processes to capitalize on volatility without making emotional decisions during market stress.
2. Portfolio Rebalancing
Market movements naturally shift allocations away from targets. Given the recent move lower in equities and appreciation of bonds, you may have experienced drift relative to your target allocations. Rather than relying solely on calendar-based approaches, consider a volatility-based rebalancing strategy that responds directly to market conditions. This approach allows portfolios to systematically "buy low and sell high" by trimming outperformers and adding to underperforming assets.听
3. Opportunistic Capital Deployment
For investors with available capital to deploy, you can take advantage of better entry points into U.S. equity markets compared to recent market highs. Historical data suggests that after a 5% pullback, average stock returns one year later are around 12% and markets are higher 75% of the time.听
4. Stick to Your Plan
Perhaps most critically, avoid reactive decisions driven by headlines or short-term market movements. If you have a financial plan, remember that it already incorporates scenarios of significant market stress. Stay disciplined鈥攖he benefit of having a plan is you aren't forced to sell at inopportune times because you took too much risk or lacked confidence in your positioning.
During volatile times, you can also take a moment to revisit your long-term goals. This helps you stay focused and keep things in perspective. Try to limit how much you're watching the daily market news; it can often lead to knee-jerk reactions.
Conclusion
While market drawdowns can be stressful, data shows that if you are invested for decades, the negative impacts of short-term market movements are dwarfed by the long-term positives of compounding returns. There can be a significant upside in staying disciplined and taking advantage of the opportunities created by market volatility.
was produced by and reviewed and distributed by Stacker.
