Jian Fan
An end to the de minimis exemption is weighing on shares of Chinese e-commerce names, specifically PDD Holdings (NASDAQ:PDD), the parent company of Temu, the online marketplace that offers heavily discounted consumer goods shipped directly from China.
After suspending the provision for shipments from China and Hong Kong in May, President Trump signed an executive order on Wednesday that officially ended the de minimis loophole, which allowed the import of merchandise valued at $800 or less exempt from trade tariffs. The loophole was exploited by fast fashion retailers like SHEIN, as well as Temu (NASDAQ:PDD) to ship packages duty-free from China. As a result of the exemption, the volume of de minimis shipments entering the U.S. exploded from 134M to 1.36B over a 9-year period.
Effective August 29, all packages sent imported into the U.S. are now subject to import tariffs based on the value of the merchandise.
While PDD (NASDAQ:PDD) shares reacted negatively to the news, Amazon (NASDAQ:AMZN) shares also registered a response. Although less notable than Temu and SHEIN, Amazon (NASDAQ:AMZN) also ships merchandise from third-party merchants in China through its low-cost marketplace, Haul.
Haul was created by the e-commerce giant to compete with Temu (NASDAQ:PDD), Alibaba (NYSE:BABA), SHEIN, and TikTok Shop offering merchandise priced at $20 or less, many of which are shipped directly from warehouses in China. Like its competitors, Haul also capitalized on the de minimis exemption.