In a significant development on Monday, the United States and China issued a joint statement, marking a new phase in the trade tensions between the two nations. This move temporarily suspends the tariffs that the US and China had imposed on each other earlier in the year. For a period of 90 days, China will reduce duties on US imports from 125% to 10%, while the US will decrease tariffs on Chinese imports from 145% to 30%. However, this agreement excludes Chinese shipments valued at less than $800, which will be subject to a tax rate of 120%, or a flat fee of $100 per postal item. Notably, this $100 fee will increase to $200 starting June 1st.

This joint statement follows a meeting between officials from both countries in Geneva over the weekend. The news sparked a surge in the markets on Monday morning, which have been experiencing heightened volatility since President Trump’s announcement of the “Liberation Day”.

Last month, President Trump introduced a wide range of new tariffs on global imports, including an 84% duty on Chinese imports, which subsequently rose to 145%. Additionally, he closed the “de minimis” loophole, which had previously exempted shipments from China valued at less than $800. According to President Trump, the closure of this loophole is aimed at combating the US’s synthetic opioid crisis. A White House fact sheet claimed that many Chinese-based shippers exploited the de minimis exemption to “hide illicit substances, including synthetic opioids, in low-value packages”.

Despite the Trump administration’s emphasis on the issue of synthetic opioids, the public conversation surrounding the end of the de minimis exemption has primarily focused on the impact on affordable products such as sneakers, memory foam pillows, and drones sold by Chinese e-commerce giants like Shein and Temu.

Both Shein and Temu greatly benefited from the de minimis exemption and announced plans to increase prices in response to the change. In identical statements, the companies stated, “Due to recent changes in global trade rules and tariffs, our operating expenses have increased. To continue offering the products you love without compromising on quality, we will be making price adjustments starting April 25, 2025”.

However, earlier this month, Temu appeared to shift its strategy. Fashion Dive reported that Temu would address tariffs by adopting a local distribution model and hiring suppliers in the US. This approach enables the company to circumvent Trump’s tariffs but puts it in direct competition with Amazon and Walmart in the US market. Last year, Amazon seemed to take notice of Temu and Shein’s growing popularity in the US by launching Amazon Haul, its own discount platform. Recently, President Donald Trump contacted Amazon’s Executive Chairman Jeff Bezos regarding a report that Amazon Haul would display import charges on its site, although Amazon stated that the idea was never approved and will not be implemented.

In March, the American retailer Forever21, a stalwart in the fast fashion industry, filed for bankruptcy for the second time. In a court filing, Forever21 stated that it was “materially and negatively impacted” by Shein and Temu’s use of the de minimis exception and blamed them for “undercutting” its business.

As the trade landscape continues to evolve under Trump’s policies, it remains to be seen who the ultimate winners and losers will be. Nevertheless, it is worth considering whether American consumers might reassess their ongoing demand for cheaper products and their implications.