The End of the De Minimis Exemption: How Tariffs Are Impacting Online Retailers
A decade ago, the de minimis exemption for tariff-free shipments of goods from China and Hong Kong nearly a decade ago gave rise to platforms like Temu, Shein, and other low-cost online retailers offering items straight from Chinese factories at unbelievable discounts. This expansion unleashed a cascade of billions of dollars in digital advertising, providing a windfall for tech giants like Meta, Alphabet, and others.
However, the advertising bonanza might be coming to an end after the demise of the de minimis exemption that allowed goods valued at less than $800 to enter the United States without being subject to import taxes. On Friday, President Trump eliminated the exemption, meaning Temu and Shein, which had been jockeying for attention with their ads, now face tariffs of up to 145 percent to bring over Chinese goods. Last week, Temu started adding "import charges" to certain products, which more than doubled the overall price to buy and ship the items.
Temu’s Response
A Temu spokesperson said the company had stopped shipping products from China directly to customers in the United States and would now ship from local warehouses in America, as the business transitions to a local fulfillment model. Shein did not immediately respond to an email requesting comment.
Impact on Advertising
The new tariffs are expected to deal a punishing blow to companies built on selling goods at rock-bottom prices and attracting customers through aggressive online advertising. Temu and Shein, which had flooded Google in the United States with ads for the goods they sell, started to disappear from the platform in April. Temu accounted for 19 percent of all U.S. ads displayed on Google Shopping in early April, but that figure dropped to zero a week later.
Meta’s Response
At Meta, which owns Facebook, Instagram, and WhatsApp, some Asian retailers had already reduced their U.S. advertising spending in anticipation of the end of the de minimis exemption. Meta’s chief financial officer, Susan Li, said on a conference call with investors that some of the spending had been redirected to Meta platforms in other markets, but the spending in April was down from a year earlier.
Google’s Perspective
Google’s chief business officer, Philipp Schindler, said changes to the tariff loophole "will obviously cause a slight headwind to our ads business in 2025," primarily from Asian e-commerce companies. He did not identify specific companies.
Conclusion
Without the constant advertising presence, Temu’s and Shein’s apps have fallen off the charts of the 10 most downloaded mobile apps in the United States. Temu served about 30 million daily users in the United States, the company disclosed in a lawsuit filed against Shein in 2023.
Investors were closely watching what Meta said because advertisers from China, led by Temu and Shein, had been one of the company’s fastest-growing segments. Last year, advertisers from China generated $18.4 billion in revenue for Meta, accounting for about 11 percent of its total and more than doubling in size since 2022.
Reference : https://www.nytimes.com/2025/05/03/business/china-tariffs-temu-shein.html
