Starting Friday, low-cost packages from China will no longer escape U.S. tariffs, as President Donald Trump’s closure of a long-standing trade loophole takes effect—marking a significant shift for both consumers and online sellers.

Read also: Trump Administration’s Tariff Changes Could Hit Shein Harder Than Temu

The move ends the “de minimis” exemption, which had allowed imports valued under $800 to enter the U.S. duty-free. This exemption has been a key driver behind the rise of discount Chinese platforms like Temu and Shein, which have flooded the U.S. market with cheap clothing, gadgets, and household goods. The fallout is expected to hit American consumers directly, with rising prices and potential shifts in shopping habits.

Temu announced it will pivot away from its China-focused import model, instead turning to a “local fulfillment” strategy by partnering with U.S.-based sellers to keep prices competitive. “We intend to maintain price stability for American customers,” Temu’s parent company, PDD Holdings Inc., stated.

The crackdown stems from a Trump executive order aimed at closing what he called a “big scam” that benefits Chinese e-commerce giants at the expense of small U.S. retailers. Officials also cited national security concerns, claiming the loophole has been used to ship ingredients for illicit fentanyl into the U.S. undetected.

“De minimis—it’s a big deal, a big scam against American small businesses, and we’ve ended it,” Trump declared during a cabinet meeting.

The new policy imposes a 120% tariff on packages from China and Hong Kong, with a minimum charge of $100—rising to $200 by June 1. While Americans can still shop from platforms like Temu and Shein, higher prices are inevitable. Temu has already added surcharges at checkout, and Shein has raised prices on popular items—beauty and health products alone have jumped an average of 51% since the announcement.

Trump acknowledged the price hikes, saying Americans may now have “two dolls instead of 30” to choose from, with slightly higher price tags.

The de minimis exemption, which dates back to 1938, had set the U.S. apart from other nations with its unusually high $800 threshold—compared to about $40 in Canada and $150 in the EU. Last year alone, over 1 billion shipments claimed the exemption, up from just 140 million a decade ago.

The new rules are expected to expand beyond China and Hong Kong as the U.S. develops systems to efficiently collect tariffs from other regions. DHL CEO Tobias Meyer noted that the fine print will be critical, especially around customs clearance procedures for small packages, which could impact global logistics operations.

As the policy takes hold, shoppers and businesses alike are bracing for a new era of higher prices and potential supply chain adjustments—raising fresh questions about the broader impact of Trump’s evolving trade agenda.