In the steady stream of new trade policies over Trump's first three months, Andy Musliner, who owns a small toy business in Maryland, can fall behind.
It is the end of a tax-free loophole for cheap products from China.
This month, Trump repealed a provision that allowed packages imported to the US from mainland China or Hong Kong to avoid customs duties and other customs requirements if they are worth less than $800. The loophole previously faced bipartisan scrutiny from lawmakers and insurrections from the Biden administration, but on some of the concerns that it allows fentanyl to flow into an unchecked US.
The first fashion giant scene and Tem, which rely on Chinese vendors, have been able to gain a large market share in recent years by avoiding tariffs on low value products shipped directly to consumers.
Musliner's company Inroad Toys has been crushed by the rise of these Chinese e-commerce giants, he said. His business in Crofton, Maryland sells road tapes for toy cars. This is a tape that looks like it's on the street. All of these are manufactured in bulk in China and shipped to the US in containers. His business is booming, with double-digit sales rising for several consecutive years. It ended in 2023. This ended when Temu's popularity in the US exploded after the company's well-known Super Bowl commercial.
Musliner's sales suddenly fell sharply. American customers have begun buying similar load tape roll roll imitations for $1.50, much cheaper than his $9 product. Within a few months, his revenues fell 30%.
“The amount of cost savings doesn't take me into that price range,” he said. “I manufacture in China, import goods and sell them on Amazon at prices that take all of those costs into consideration.”
Ending the loopholes in products from China can level the small consumer brand playing field, which they say is undercut by Temu and Shein's business models. Musliner said he was even more pleased when the Biden administration proposed reforms to its provisions last year, and when the Trump administration moved to end it completely.
But small business owners who may otherwise have reason to celebrate are now faced with a dilemma. The potential benefits of disposing of transport workarounds are higher than Trump's high-air tariffs on Chinese goods, and are not mitigated anytime soon. Trump has imposed a tariff rate of at least 145% on imports from China and a 10% tax on dozens of other trading partners.
“Because there's less competition, if you have enough privileges to start gaining more businesses, you need to manufacture more to meet that need,” Musliner said. “But what we're guessing. It costs more money than we don't have.”
President Trump's head will meet with his Chinese counterparts in Switzerland this weekend. It will be the first formal trade meeting since Trump imposed tariffs at triple digit levels last month. On Friday, Trump suggested he was open to dropping tariffs to 80%, but even at that level it could be too expensive for many importers, especially small businesses.
Jyoti Jaiswal, who lives in Siset, New York, designs handmade crafts and clothing, mainly made in India. She said competition from companies that imported goods cheaply from China to the US was a challenge, forcing her to halt certain products. She said Shine and Tem have lacked the sale of crafted sheets, scarves and jewelry over the past few years. Customers have chosen similar products despite declining quality and offer just a small portion of the price.
With the control of these first fashion retailers in mind, Jaiswal called the end of China's de Minimis a “fair trade policy.”
But Trump's other customs suites also take the central stage for her. The 10% tariff on imports from India is already in effect, and once the 90-day suspension on Trump's mutual tariffs ends in July, the threat of a 26% higher tax on the country is still looming. Jayswal has suspended several business activities, including an upcoming introduction to a new collection of scarves and travel products.
“It's very difficult to say what the price of those products is, whether we can plan things and sell them or not,” Jaiswal said.
On Thursday, Trump announced the framework for a trade agreement with the UK, but transactions with India and other countries have not yet been negotiated or completed.
Shortly after Trump's order closed China's minimum exemption, Temu said it had stopped shipping products from China directly to US customers. Instead, all US orders are shipped from local US warehouses and show fundamental changes in response to new taxes on low-value Chinese imports.
Not all small businesses get from the end of a transport loophole. And unlike major retailers like Temu, many people are unable to quickly relocate their supply chains.
John Allenmeyer, chief executive of the majority of advocacy groups, Small Businesses, has put changes to the regulations face-off as part of SMEs' widespread complaints about the Trump administration's tariffs. Some business owners who rely on tax exemptions to import small products or components of products sold in the US, lamented new taxes on low value imports, he added.
For businesses that rely on De Minimis, this challenge has been amplified by Trump's 145% tariffs on Chinese products, and is now applied to previous duty-free imports.
“Now, losing suddenly is even greater than losing it last year,” said Arensmeyer.
Small e-commerce vendors selling their products on popular online marketplaces are mandatory to bear the brunt of fallout in the US and abroad. Colicyle, who lives near Vancouver, British Columbia, and whose Etsy jewelry business is her main source of income, said she is preparing to stop all sales from halting its suspension to US customers. The closure of De Minimis could be too expensive for Americans to buy. The original rocket comes from China and is currently subject to high tariffs. Most of her sales may be cut off soon.
Still, for American moms and pop retailers who saw sales dented due to Shein's and Temu's invasion of the US market, policy changes could be a boost.
For Mike Gray, the hit from competition with China's e-commerce platform began appearing in the “decimation” of his electric bicycle business about five years ago. Gray owns Sourland Cycles, a bicycle shop in Hopewell, New Jersey, and 20% of his sales previously came from e-bikes. However, as Shein and Temu became more popular, customers began to be drawn to e-bikes shipped cheaply to the US through De Minimis. His e-bike sales fell to about 5% of his overall sales.
“We needed a big chunk,” Gray said. Many cheap e-bikes have experienced malfunctioning brakes and are lacking in parts, he said, but the low prices still lure customers to e-commerce sites.
Gray said the Trump administration hoped the closing of de Minimis for China would continue. He called the change a “silver lining” that could level the arena at least slightly.
But for now, Gray is head-on on understanding how to price his bike as manufacturers begin to raise prices for different amounts. Bicycle maker Ibis added a 5% tariff fee (over $120) to one of its mountain bikes last week, Gray said.
“It's difficult to think about that,” he said of the effects of de minimis changes in “when we have all this uncertainty about price.”
