Alibaba and Temu’s parent company are getting slammed by the end of the de minimis exemption

Along with the reciprocal tariffs announced Wednesday, President Donald Trump also signed an executive order ending the de minimis treatment that enabled cheap imported goods from China and Hong Kong to enter the US without facing duties.

Aside from any other levies, these shipments will face a tax of 30% of their value or $25 per item as of May 2. 

The US ADRs of PDD Holdings (parent company of Temu) as well as Alibaba, the two major beneficiaries of this exemption, are down 5% and 3% in premarket trading, respectively.

The White House’s fact sheet frames this as a national security call more than an economically motivated decision. 

“President Trump is targeting deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption,” per the statement.

Already, Wall Street is wondering (hoping?) that since Wednesday’s announcements don’t immediately go into effect, they might be more of a negotiating ploy than an enduring feature of cross-border commerce going forward. 

And the death of the de minimis exemption is something that has been long reported and often scheduled, but nevertheless, so far, the loophole persists.