Fast Fashion Prices Spike 300+ Percent As Tariff Exemption Ends

The end of a decades-old tariff exemption that allowed exporters, especially those in China and Hong Kong, to flood U.S. markets with ultra-low-cost apparel and toys is causing prices to more than double and in some cases triple on some items.

That is having a ripple effect across the retail sector, especially as businesses gear up for the Christmas buying season, the period in the fourth quarter that can determine if they survive. U.S. retailers who depend on foreign suppliers scrambled to buy toys and other items before the full 145 percent tariff on goods from China took effect on Friday.

President Donald Trump ended the de minimus exemption, which was approved by Congress in the 1930s under the belief that the effort required to process these low-cost items far outweighed the customs revenue.

The provision allowed packages valued at less than $800 to enter the United States duty-free. A report for Congress this year said Customs and Border Protection processed more than 1 billion de minimis packages a year. The average value of the shipments in 2023 was $54.

The tariff exemption may have been short-lived even without Trump’s intervention. Legislation to overhaul the law allowing de minimis has bipartisan support and addressed issues ranging from the competitive disadvantage it places on U.S. companies to how it is used by fentanyl traffickers to smuggle drugs in duty-free packages.

Trump’s action to end the tariff has also been cheered as a win for the environment that could divert millions of tons of textiles from U.S. landfills, where they can leach harmful chemicals that contaminate the groundwater and, ultimately, municipal water supplies.

Below are more things U.S. consumers need to know.

Increases Up To 377% At Shein

Two of the biggest users of the tariff are China-founded ultra-low-cost e-commerce sites Shein and Temu. Since launching in the United States, the companies have given Western retailers a run for their money by offering products at ultra-low prices, coupled with avalanches of digital or influencer advertising.

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Both Temu and Shein said they would make price adjustments when the customs exemption ended and their exports became subject to the 145 percent tariff Trump slapped on most products exported by China and Hong Kong. Shein, whose products are primarily sourced and shipped from China, is raising prices by as much as 377 percent, Bloomberg reported.

At Temu, import charges of $343.26 were tacked on a shopping cart of items totaling $275.03, including international freight charges and sales tax, bringing the total to $628.49, The New York Times reported.

Amazon Haul, the e-commerce behemoth’s new ultra discount storefront, isn’t displaying import charges, though it briefly considered doing so. Launched in November, it offers many of the same types of items as Shein and Temu, with electronics, apparel, and other products priced at under $20.

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An Amazon spokesperson told The Associated Press the company had briefly considered listing import charges on the Haul storefront, but the idea “was never approved and is not going to happen.”

Shein and Temu both encouraged their customers to stick with them.

“We've stocked up and stand ready to make sure your orders arrive smoothly during this time,” Temu's statement said. “We’re doing everything we can to keep prices low and minimize the impact on you.”

Tariffs Could Steal Christmas

The 145 percent import duty could steal some Christmas joy, too.

About 87 percent of Christmas decorations sold in the United States are manufactured in China, Reuters reported. Imported goods in this category are valued at an estimated $4 billion.

A significant number of toys have been imported to the U.S. under the de minimus exemption.

Judah Levine, research director at the global freight-booking platform Freightos, told The Associated Press that toys are among the items U.S. consumers could have difficulty finding in the coming weeks.

“You could start seeing shortages,” he said, adding they are “likely to be concentrated in categories where the U.S. is heavily dependent on Chinese manufacturing and there aren’t a lot of alternatives and certainly quick alternatives.”

Jay Foreman, CEO of toymaker Basic Fun, said he paused shipments of Tonka trucks, Care Bears, and other toys from China after Trump’s tariff plan was announced in early April. Now, he’s hoping to get by for a few months on inventory he’s stockpiled.

“Consumers will find Basic Fun toys in stores for a month or two but very quickly we will be out of stock, and products will disappear from store shelves,” he said.

Kevin Brusky, who owns APE Games, a small tabletop game publisher in St. Louis, has about 7,000 copies of three different games sitting in a warehouse in China. The tariff bill of about $25,000 would wipe out his profit on the games, so he is launching a Kickstarter campaign next week to help defray the cost of the duties.

Still, his sales representative is urging him to import the games if possible, because he expects that retailers will soon be desperate for products to sell. If he does import the games, Brusky is considering raising its price from $40 to at least $45.

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Trump acknowledged Wednesday that ending the de minimus exemption could limit the selection of gifts at Christmas and make them more expensive.

“You know, somebody said, ‘Oh, the shelves are going to be open,’” Trump said during a meeting Wednesday with his cabinet. “Well, maybe the children will have two dolls instead of 30 dolls. So maybe the two dolls will cost a couple bucks more than they would normally.”

‘Significant Win For The Environment’

The end of the exemption was cheered by environmentalists and others who said it could push more bargain hunters to thrift and resale shops and away from fast fashion — the rapid production and distribution of a constantly changing inventory of low-cost, trendy clothing that often ends up in landfills once the trend has passed.

A Government Accountability Office report late last year showed that textile waste — discarded apparel, as well as carpets, footwear, and towels — releases greenhouse gasses and leaches contaminants into the soil and water.

About 11.8 million tons of textiles are deposited in landfills every year, according to the Environmental Protection Agency. The agency estimates a more than 50 percent increase in textile waste in landfills between 2000 and 2018. Although there are limitations in the data, EPA, academic and advocacy, and industry sources say with confidence the shift to fast fashion accounts for a large part of the increase, along with few options for recycling, including centralized systems for collecting and sorting textiles.

The tariff policy is a “significant win for both the environment and the future of sustainable fashion,” online thrift reseller ThredUp said in a statement to Fashion Dive.

“For years, the de minimis loophole has provided an unfair advantage to fast fashion retailers, enabling them to flood the market with low-cost, short-lived items while circumventing import duties,” ThredUp said. “By leveling the playing field, this tariff order encourages a shift towards a more circular economy, where clothing is given a second life, reducing waste and carbon emissions.”

Paperwork Could Increase Prices, Too

Parcel carriers will be burdened with collecting duties, and the paperwork to comply with the new rule could result not only in higher prices but also delays and even disruptions to delivery, said Ram Ben Tzion of the vetting platform Publican.

Major commercial carriers such as UPS and FedEx have said they are well-equipped and prepared to collect duties on international parcels in compliance with local laws, including the new U.S. rule.

Commercial carriers will be collecting 145% tariffs on declared values. The U.S. Postal Service, a government agency that offers international mail service, can choose either to charge a 120 percent tariff on low-value packages or a flat fee of $100 per shipment, which is set to rise to $200 on June 1.

The U.S. Customs and Border Protection says it “stands ready to fully implement the restrictions on de minimis shipments and collect all revenue owed for these shipments on May 2, 2025.”

‘The Tijuana Two-Step’

Many other countries have similar exemptions, though the United States has one of the highest thresholds. Clark Packard, a research fellow at the Cato Institute, a public policy think tank based in Washington, D.C., told PBS that some companies could side-step the rules by moving production to one of those countries.

“This is what’s known as sort of the Tijuana two-step,” Packard said. “If you’re sending a $1,500 package from China that’s ultimately bound for the United States, what you can do is send it to Mexico, split it into two $750 packages and ship it from Mexico to The United States.”

Little Interest In U.S. Textile Jobs

Trump’s goal with tariffs is to boost U.S. manufacturing and protect jobs. That will be challenging, Alice Price, an apparel analyst with GlobalData, told Fashion Dive.

She said the United States “lacks the infrastructure and specialization needed to produce apparel at competitive prices, and brands will still need to import materials from abroad, which will also be subject to tariffs, resulting in apparel prices still increasing.”

“The impact of these duties on the global economy and inflation will also further squeeze consumer sentiment in an already testing macroeconomic climate, negatively impacting discretionary spending,” she said.

Packard has doubts that U.S. workers will embrace the textile industry.

“I don’t believe that there’s an outcry or much demand [from] Americans looking to work in textile manufacturing these days,” Packard told PBS. “Simply put, we’re a high-wage country and those tend to be pretty low-paying jobs.”

The Associated Press contributed reporting.