Following the recent executive order by President Trump that ended the de minimis loophole, the Information Technology and Innovation Foundation (ITIF) has issued a statement highlighting its implications. Eli Clemens, an analyst at ITIF, provided insights into the potential impacts of this decision.
"While the Trump administration frames the President's executive order shutting down the de minimis loophole for Chinese imports as a move to curb fentanyl trafficking, the biggest impact will be higher costs and supply chain disruptions for U.S. companies that rely on de minimis for low-cost imports. However, it is also an important step toward addressing unfair competition in e-commerce from Chinese companies."
Clemens elaborates that with the imposition of steep duties and compliance requirements on carriers, the business model of Chinese platforms like Temu and SHEIN, which has been able to significantly undercut U.S. retailers, faces disruption. According to Clemens, China's government supports these platforms with subsidies that reduce operational costs and bolster their logistics in the U.S. Chinese companies may seek alternative routes to maintain their pricing advantage, but the executive order's mention of Macau could identify it as a potential route for circumventing these new regulations.
Eli Clemens notes that, "To maximize effectiveness, policymakers should complement this EO with strong enforcement mechanisms, including AI investment for Customs and Border Protection, so that it can handle the surge in small packages it will need to screen."
An ITIF report further highlights how Chinese e-commerce platforms such as SHEIN, Temu, and AliExpress have leveraged state-backed strategies to secure an edge over U.S. businesses. These strategies are perceived as part of China's bid to broaden its global influence, expand financial clout, and bolster AI capabilities, making e-commerce a key element of national strength by 2035.
The report also points out that these platforms' exploitation of U.S. import rules introduces consumer risks tied to counterfeit goods and data security issues.
For more detailed findings, the report is available for reading.
For additional information, contact Nicole Hinojosa at [email protected]