U.S. is cracking down on Shein and Temu by closing a loophole that makes their cheap goods exempt from tariffs

The U.S. administration is cracking down on cheap products sold out of China by companies such as Temu and Shein by saying that companies are no longer exempt from tariffs simply by shipping goods that they claim to be worth less than $800.

U.S. President Joe Biden would no longer exclude these “de minimis” imports from tariffs under a proposed rule released Friday to tax all imports if they’re covered under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.

Importers mainly from China have used the de minimis exemption for shipments of $800 or less to flood the U.S. market. The number of these shipments has jumped from 140 million annually to over 1 billion a year, according to a White House statement.

The action comes at a delicate moment for the world’s two largest economies. The United States has tried to lessen its reliance on Chinese products, protect emerging industries such as electric vehicles from Chinese competition and restrict China’s access to advanced computer chips. For its part, China has seen manufacturing and exports as essential for driving economic growth as it has struggled with deflation following pandemic-related lockdowns.