(Updates Feb 5 story after Trump's measure came into effect on

May 2)

By Casey Hall

May 2 (Reuters) -

The Trump administration

ended

U.S. duty-free access for low-value shipments from China

and Hong Kong on Friday, removing the "de minimis" exemptions

availed of by Shein, Temu and other e-commerce firms as well as

traffickers of fentanyl and other illicit goods.

Items valued at up to $800 and sent from China via

postal services are now subject to a tax of 120% of the

package's value or a flat fee of $100 per package - an amount

that rises to $200 in June. Shippers are bracing for more

package chaos at airports.

Trump accuses China of unfair trade practices and blames it

for a crisis over the deadly drug fentanyl.

WHAT IS DE MINIMIS?

De minimis, a legal term referring to matters of little

importance, describes the U.S. waiver of standard customs

procedures and tariffs on imported items worth less than $800

that are shipped to individuals.

It is one of the most generous such exemptions in the world:

the EU de minimis threshold, for example, is 150 euros ($156).

The U.S. has used de minimis since 1938 to reduce

administrative burdens. During Barack Obama's presidency,

Congress quadrupled the waiver from $200, facilitating an

explosion in the number of exempted packages entering the

country. Shipments claiming de minimis have soared more than

600% over the past decade to over 1 billion items in fiscal

2023, according to Customs and Border Protection data.

WHY IS DE MINIMIS CONTROVERSIAL?

Contentions largely concern U.S. trade imbalances and the

synthetic opioid fentanyl - which is fuelling a national

epidemic that killed nearly 75,000 people in 2023.

Reuters reporters last year found they could easily import

the core precursors for at least 3 million fentanyl tablets -

with a potential street value of $3 million - at a cost of

$3,607.18. The shippers mislabelled the packages as, for

instance, electronics.

Legitimate products, too, are controversial as Trump ramps

up his rhetoric against China, with which the U.S. has its

largest bilateral trade deficit, at $279 billion as of 2023.

Big beneficiaries of de minimis include online retailers

that ship goods mainly from China, such as Shein, PDD

Holdings ( PDD )-owned Temu and Alibaba's ( BABA ) AliExpress.

Their growth prompted U.S. rival Amazon ( AMZN ) to start its

own discount service, Haul, allowing marketplace merchants to

ship $5 accessories and other items directly from China using de

minimis.

Shein declined to comment on possible changes to U.S. de

minimis policy. In 2023 the company called for de minimis reform

"to create a level, transparent playing field - where the rules

are applied evenly and equally". Temu, AliExpress and Amazon ( AMZN ) did

not respond to requests for comment.

Critics of de minimis also say it lets companies evade

tariffs on Chinese goods and customs inspections under a law

banning products made with forced labour.

CHINA GDP IMPACT

China exported $240 billion in direct-to-consumer goods

benefiting from de minimis worldwide last year, accounting for

7% of its overseas sales and contributing 1.3% of gross domestic

product, according to Nomura estimates.

The brokerage forecasts that eliminating the U.S. threshold

would slow Chinese export growth by 1.3 percentage points and

GDP growth by 0.2 point, with a significantly bigger hit if

Europe and Southeast Asia also removed their minimum

requirements for customs duties.

China's most exposed sectors include apparel, which makes up

35% of China's direct-to-consumer exports by value, consumer

electronics at 22%, home decor at 17% and beauty products at 7%,

Nomura reckons.

($1 = 0.9639 euros)