00:00A lot of stuff that we consume in the U.S. is made in China, whether that's clothing
00:05or shoes or electronics or furniture.
00:08Look around and check the labels and tags in your home.
00:12Maybe you're one of the 78 million monthly Timo users and have taken a chance on the
00:16$5 hoodies or the $12 drones on the site.
00:19You've probably already heard about this new round of tariffs that Donald Trump has
00:23imposed on goods the U.S. imports from China.
00:26But within the executive order, there's a change to a little-known law that could change
00:31the way we buy things online from sites like Timo and raise the price of Chinese goods
00:36for U.S. consumers.
00:37It's the shopping app at the top of the Google Play and Apple App Stores, Timo.
00:42It's everywhere and it's dirt cheap.
00:45Over the last few years, discount store Timo and ultra-fast fashion site Shein have gained
00:50massive popularity in the U.S. thanks to their bargain bin prices.
00:55$8 security cameras or $30 suits.
00:59But the items come from faceless sellers, with experts warning there's a high chance
01:04that child labor or forced labor is involved in manufacturing.
01:09Timo's slogan is, shop like a billionaire.
01:12And U.S. shoppers have become accustomed to waiting a little bit longer for their online
01:16purchases in exchange for low prices.
01:20Part of the reason these prices are possible is because of something called the de minimis
01:23exemption.
01:24Using the de minimis exemption, packages valued under $800 can enter the U.S. duty-free, meaning
01:31the importer doesn't have to pay import taxes.
01:34By shipping directly to consumers, companies like Shein and Timo don't need the vast
01:38warehouses that Amazon has.
01:41They don't need much of a footprint in the U.S. at all.
01:43The de minimis exemption has been around for nearly 100 years, but it's more relevant
01:48now than ever before.
01:50About a decade ago, the de minimis threshold was increased from packages under $200 to
01:55$800 after lobbying from companies like eBay and Etsy.
02:00The number of packages claiming the exemption has skyrocketed, from 139 million a year in
02:062015 to over 1.36 billion in 2024.
02:11Even Amazon has tried to get in on the action.
02:14Seeing competition from Timo and Shein, last November, Amazon launched a marketplace called
02:20Amazon Haul that's filled with cheap items you might see on Timo.
02:25One of the billion de minimis packages that came into the U.S. last year was my Amazon
02:29Haul order.
02:30I bought women's clothing, tech accessories, a neon lamp, and more, and all of that was
02:35just $27.
02:38Unlike typical Amazon Prime products, this order came to me all the way from China, and
02:43because of de minimis, entered the U.S. without me having to pay duties.
02:47Now that Trump has killed de minimis, all of those low-value packages showing up to
02:51our homes will get taxed, whether they're from Amazon or a small business based in China.
02:56And it's not just the new 10% tariff that would be added to my Amazon Haul order now.
03:02All the usual tariffs that the order was avoiding will now also be applied.
03:07My order would be subject to Trump's new 10%, plus the standard tariff that is assessed
03:13based on item categories, plus additional tariffs on Chinese goods that Trump introduced
03:18during his first presidency.
03:20It adds up quickly.
03:22As you can imagine, without the de minimis exemption, a lot of companies will need to
03:26rethink their business model.
03:28Shein and Timo don't have the vast warehouse and logistics operations that Amazon does
03:33in the U.S.
03:35Dropshippers' entire business model is beholden to cheap imports delivered directly to consumers.
03:41And as I've written previously, the writing has been on the wall for a while.
03:46The Biden administration last year suggested tightening the rules around de minimis,
03:50and now the Trump administration seems to have killed it.
03:54These ultra-cheap goods American shoppers have gotten used to
03:57suddenly might not be very appealing.
03:59It also will likely raise costs for small businesses that import components, supplies,
04:05and parts from China to make things domestically, which in turn is likely to raise prices for
04:11consumers.
04:12Trump's broader tariffs on China will touch a lot of industries.
04:16The tech industry relies heavily on China to build phones, gadgets, and gaming consoles.
04:22And China dominates in clean energy supply chains for things like solar panels.
04:27As we've seen this week, Trump treats tariffs like a political bargaining chip
04:31to get what he wants from other countries.
04:34This week, Trump attempted to impose tariffs on Mexico and Canada,
04:38but they were paused for a month pending increased border measures.
04:42Given Trump's track record, it's unclear if they'll happen at all.
04:46But tariffs are one of Trump's favorite policies, and it's likely we haven't heard the last of them.
04:53Late last night, USPS announced that they would not be accepting inbound packages
04:57from China and Hong Kong.
05:00This is, I think, very clearly related to the new broad 10% tariffs,
05:04but also the fact that they're getting now millions of packages a day from China.
05:10Customs has to inspect, levy the duties.
05:13This is a task that our workforce is not prepared for.
05:17So last night, USPS says we're not going to accept these anymore.
05:21This morning, they've reversed course and said, actually, we will accept them,
05:25and we're working on systems to make sure it's compliant with the new tariffs.
05:29But they don't have the system in place.
05:31And some experts actually told me that we probably will see delays with USPS.
05:37So it is, it's a big deal.
05:40It's a big deal.
05:40USPS is typically like the last mile carrier for packages that come from China, right?
05:46And then they get passed on to USPS.
05:48So there's a huge burden on the post office now.
05:52You know, they need to figure out what to do with all these things.
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