*

Order targets packages under $800 from China and Hong Kong

*

Order effective May 2

*

Carriers must report shipment details to U.S. Customs and

Border

Protection

(Adds graphic and context of Temu and Shein preparation in

paragraphs 10-13)

By Andrea Shalal

WASHINGTON, April 2 (Reuters) - U.S. President Donald

Trump signed an executive order on Wednesday that closes a trade

loophole known as "de minimis" that has allowed low-value

packages from China and Hong Kong to enter the United States

free of duties.

Trump signed the order, which takes effect at 12:01 a.m.

Eastern Time (0401 GMT) May 2, in the Rose Garden of the White

House after announcing sweeping new tariffs on global trading

partners.

The White House said the move, first reported by Reuters

earlier on Wednesday, came after Commerce Secretary Howard

Lutnick certified "adequate systems are in place to collect

tariff revenue" on the shipments.

It said imported goods from China and Hong Kong sent outside

the international postal network and valued at or under $800

would now be subject to all applicable duties.

Imported goods sent through the postal network and valued at

or under $800 would now be subject to a duty rate of either 30%

of their value or $25 per item, with that rate increasing to $50

per item after June 1.

Trump had signed an initial order on February 1 ending

duty-free entry for the cheap Chinese goods, but later paused

the order because of logistical issues complicating the

inspection of millions of the low-value shipments.

"They figured it out," a source familiar with the decision

said. "De minimis is being stripped from China."

The number of shipments entering the U.S. through the

duty-free route has exploded in recent years, reaching nearly

1.4 billion packages last year.

More than 90% of all packages coming into the U.S. now enter

via de minimis, and of those, about 60% come from China, led by

direct-to-consumer retailers such as Temu and Shein.

Temu is owned by PDD Holdings ( PDD ), while Shein is aiming

to list in London this year.

With changes to the U.S. de minimis threshold anticipated,

Temu has rapidly expanded its semi-managed model, an Amazon-like

strategy that sees goods shipped in bulk to overseas warehouses

instead of directly to customers.

PDD Holdings' ( PDD ) co-CEO Chen Lei last month told analysts to

expect "challenges" for its global business, adding that PDD's

response includes exploring new business models and

experimenting with "innovative localised supply chain

solutions".

For its part, while the vast majority of Shein's products

are still made in China, it has also started to diversify its

supply chain, adding suppliers in Vietnam, Brazil and Turkey, a

move that might also accelerate in the wake of new tariffs and

regulations.

Trump campaigned on a promise to punish China for the role

it has played in the synthetic opioid crisis that has killed

more than 450,000 Americans in the last decade. Chinese chemical

makers are the top suppliers of raw materials purchased by

Mexico's cartels to produce the deadly drug, U.S. anti-narcotics

officials say.

A Reuters investigation last year showed how traffickers

often route these chemicals through the United States by

exploiting the de minimis rule. China has repeatedly denied

culpability.

Trump's order affecting de minimis parcels was paused on

February 7 because there had not been sufficient time to

prepare, with packages stacking up at ports of entry.

The White House said carriers transporting the Chinese and

Hong Kong postal items must "report shipment details to U.S.

Customs and Border Protection, maintain an international carrier

bond to ensure duty payment, and remit duties to CBP on a set

schedule."

It said CBP may require formal entry for any postal package

instead of the specified duties.

The White House said the Commerce Secretary Lutnick would

submit a report within 90 days assessing the Order's impact and

considering whether to extend these rules to packages from

Macau.