US consumers have said goodbye to the five-dollar dress

For years, the little-known ‘de minimis’ trade loophole enabled packages worth under $800 to enter the US duty-free, with no tariffs and minimal inspections. Ultra-fast fashion giants Shein and Temu have built empires by exploiting this loophole, shipping billions of items directly from Chinese factories to American doorsteps and flooding the market with five-dollar garments, all while undercutting domestic retailers.

Executive Order 14257

This trade route was closed with effect from May 2 this year, after President Trump signed Executive Order 14257, revoking China’s de minimis privilege and subjecting parcels to “reciprocal tariffs” as high as 145 per cent.

Though later adjusted to 54 per cent for postal shipments, the change has still shattered the economics of ultra-fast fashion. As a result, a $20 Shein dress now costs $30.80, while kitchen towels (set of 10) once priced at $1.28 skyrocketed to $6.10—a 377 per cent spike.

As a result, for millions of budget-conscious US consumers, the era of frictionless bargains ended very abruptly.

Lobbying war ineffective

The battle over de minimis ignited a political firestorm. Shein spent $2.1 million lobbying in the US in 2023 to protect the threshold, even joining a Customs data-sharing programme to position itself as a “good actor”.

Arrayed against it stood the US National Council of Textile Organizations (NCTO), which rallied unions, domestic manufacturers and families affected by fentanyl trafficked through uninspected parcels. The coalition highlighted a devastating toll on domestic manufacturing—with 28 US textile plants shuttered in just 23 months.

The NCTO’s pressure was effective. In July 2025, President Trump signed the ‘One Big Beautiful Bill’ into law after it was passed by the Congress and the Senate. The bill phases out de minimis for all countries by July 1, 2027. Simultaneously, the House advanced the ‘End China’s De Minimis Abuse Act’, imposing immediate penalties on violators.

Hitting lower-income households

US consumers, however, are now bearing the brunt of this shift. Before tariffs, 38 per cent of apparel purchases by lower-income households came from Chinese apps like Temu and Shein. These platforms are now rapidly losing users—Temu’s US active users plummeted 51 per cent between March and June 2025, while Shein’s fell 12 per cent.

Yet the NCTO argues this pain is a necessary trade-off for reviving American manufacturing. It claims that closing de minimis could “restore tens of thousands of textile jobs”—a promise that resonates in communities hollowed out by the decline of manufacturing industries.

Platforms explore options

Shein and Temu, on the other hand, are scrambling to adapt. Temu already funnels goods through US fulfilment centres and partners with domestic sellers to offer ‘local’ inventory, avoiding tariffs. Shein is accelerating a global supply chain overhaul, shifting Latin American orders to Brazilian factories and exploring production in Vietnam, Türkiye and Mexico.

Regulatory threats loom elsewhere, however. The EU has recently filed complaints against both companies for “dark pattern” marketing tactics, signalling global scrutiny is intensifying. France, in particular, has passed a new law that targets ultra-fast fashion giants Shein and Temu with eco-taxes, ad bans, and package levies, aiming to curb environmental damage and unethical labour practices.

Meanwhile, the US’s global termination of de minimis is planned in 2027 and can only result in even higher prices for domestic consumers.

ALCHEMPro News Desk (IL)