Importers Passing New Tariffs Onto Shoppers Risk Alienating Them
Key Takeaways
Two in five (40%) U.S. consumers have heard “a lot” or “some” about President Trump’s executive action ending the de minimis trade exemption — the lowest awareness of any trade activity tested.
After seeing a definition of the de minimis exemption, more consumers support than oppose the policy (43% to 25%).
Low-income consumers and Gen Zers have some of the lowest support for the de minimis exception, despite being most likely to benefit from the practice.
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President Trump’s tariff policy changes have undoubtedly dominated the news cycle in recent weeks, but the end of one little-known rule hasn’t been a feature of mainstream headlines: the de minimis exemption. This trade policy has allowed foreign companies to send goods under $800 to customers in the U.S. tax free, which has been a boon for companies like Temu, Shein and Quince that built their reputations on offering low-cost goods.
As of this publication, beginning May 2, goods valued under $800 shipped from China and Hong Kong will be subject to import duties. The White House’s announcement of this change emphasized that this policy is intended to counter fentanyl imports, not cheap clothing.
But U.S. consumers haven’t seen much information about eliminating the de minimis exemption: When surveyed in early April, just 14% say they’ve heard “a lot” about the change, and 26% have heard “some,” the lowest awareness of several headlines tested. For context, 61% of respondents have heard “a lot” or “some” about Canadians boycotting U.S. goods in response to tariff threats.
Eliminating the exemption will help to level the playing field for U.S. retailers who have lost customers to these low-cost alternatives, though the overall impact of the tariffs on prices could dampen consumer spending.
More consumers support the de minimis exemption than oppose it
The strongest support for the de minimis exemption comes from high-income households earning at least $100,000 annually — ironically, those in the best position to insulate themselves from the impact of the end of the exemption.
A plurality of U.S. adults support the de minimis exemption
While Gen Zers overindex among low-cost e-commerce shoppers — users of sites like Temu, Shein, and AliExpress that take advantage of the duty exemption — they are also most likely to oppose the exemption. This illustrates consumers’ lack of understanding of the policy and how the change will impact them.
There’s also a substantial share (32% of U.S. adults) who just don’t know if they support the de minimis exemption or not. Maybe it’s because of the Latin phrasing, or maybe it’s just uncertainty about the benefits and costs of the policy. Either way, brands should avoid using this technical jargon when explaining price changes to customers.
Companies losing this competitive advantage do have some options: Temu has already started highlighting local inventory — part of their strategic move into U.S. warehousing — on its site, but also announced imminent price increases. Some companies might try to eat at least some of the increased costs, in line with consumer expectations. But others might pass the cost on to shoppers, even highlighting the duty as a line item in an effort to be transparent about the cause of higher prices.
That third option will likely be met with skepticism from shoppers who don’t have strong awareness about the policy change. Sellers shouldn’t assume shoppers have a strong understanding of tariff policy in general, despite it being dominant in headlines, and increasing prices when consumers are still feeling the pinch of post-pandemic inflation will just serve to further alienate them.
