TikTok Shop is likely to see a dramatic change in assortment and pricing after the planned May 2 cancellation of the tariff loophole known as ‘de minimis’ on goods from China and Hong Kong.
On April 7, TikTok emailed business leaders warning them of the upcoming change. “…Duties will be applicable to all impacted shipments regardless of value, and additional supporting documentation may be required to import, previously exempt, goods into the U.S.,” the letter read.
A representative from TikTok did not immediately respond to Glossy’s request for comment on exactly how many sellers this would impact.
The nearly 100-year-old law allows packages valued at less than $800 to receive tariff exemptions and less oversight from U.S. customs. This reversal on de minimis, announced by President Trump on April 2, only applies to China and Hong Kong but could be expanded worldwide.
According to Reuters, 90% of all packages that enter the U.S. fall under the de minimis exception, and more than 60% of those packages come from China. The majority of those 60% are from Shein and Temu.
As previously reported by Glossy, de minimis allows foreign products to slip in that are potentially counterfeit, illegal or tied to various human rights violations, like forced labor or child labor. This rollback specifically targets synthetic opioids that enter the country undetected alongside cheap consumer goods, according to the White House.
“Temu and Shein are building empires around the de minimis loophole in our import rules, dodging import taxes and evading scrutiny on the millions of goods they sell to Americans,” Wisconsin Representative Mike Gallagher, one congressional leader who rallied against the loophole, said in a statement last year.
Consumers will not directly shoulder the cost burden, which includes a 125% tariff on China as of Friday. Instead, “Carriers transporting these postal items must report shipment details to U.S. Customs and Border Protection (CBP), maintain an international carrier bond to ensure duty payment, and remit duties to CBP on a set schedule,” according to the White House.
“Obviously it impacts not only consumers who buy the product, but also USPS, FedEx and UPS. These [shipping providers] made a lot of money on [de minimis],” Yuriy Boykiv, CEO of Front Row, a creative, e-commerce and marketing agency that oversees top brands’ TikTok sales, told Glossy.
That means low-value importers and those that drop-ship from China will likely halt selling and shipping or dramatically raise pricing in the coming weeks on platforms like TikTok Shop, Temu, Shein, Amazon and Amazon’s Haul app.
For example, if China’s tariffs land at around 50%, sellers will likely increase the MSRP of goods by 30%, said Boykiv. Instead, he predicts that most selling under-$25 items will shift focus away from the U.S. market to those without tariffs.
However, until tariffs fall back to these levels, the environment for indie brands or content creators that rely on China is bleak. “It’s a death blow [because], at best, normal margins are 90% on most beauty products — no [amount of] volume can make up a 100% tariff,” said Rachel Roberts Mattox, a longtime branding and marketing expert whose CV includes Juice Beauty and Perricone MD. “If I were them, I would be shifting my focus to drive sales and boost new consumer acquisition and retention to global consumers outside the U.S.”
To combat this, TikTok could temporarily subsidize some low-cost sellers, Boykiv said, or plan an Amazon Day-inspired sale to boost sales the week de minimis goes into effect. “It’s just a rumor,” Boykiv said. “[But I believe] they’re working on a few big sales days that they want to promote. Maybe they’re going to use that around the time when this rule comes into effect, just to promote a little bit of trade.”
However, whereas some cheap goods may disappear, it’s unlikely to impact the economy or overall sales on TikTok, said Kimber Maderazzo, Pepperdine Graziadio Business School professor and former Proactiv executive.
“Consumers love shopping [on marketplace and social commerce sites like TikTok Shop] so much that it has become a behavior in shopping,” she told Glossy. She believes that cheap pricing may have lured some shoppers in, but consumers enjoy the selection and ease of use most, so price increases shouldn’t derail this newly learned behavior.
“What it comes down to is consumer confidence and what they buy,” said Maderazzo. “The economy goes up and down, and consumers adapt. … [They will continue] to buy things that are important to them and buy from brands that are important to them.”
Low-price items with slim margins, such as brand agnostic cosmetic dupes and tools — like a $5 peel-off lip stain or a $20 electric shaver — will be hit hardest. This could mean a fresh opportunity for established brands to increase sales through brand value-focused marketing, said Front Row’s Boykiv.
“If there is a vacuum of low-price products, it will open up opportunities for high-value brands,” he said. This could impact existing sellers or prompt new ones to join TikTok Shop. It may also drive down operating and marketing costs.
“What may happen is a brand’s CPM [cost per 1,000 impressions] drops and then you have more power to negotiate [seller] fees [with TikTok],” he said. What’s more, “you can go to influencers and get better deals because now they have fewer products to choose from. Plus, your affiliate fees will go down, and some of the brands will benefit from the disappearance of those low costs.”
For brands looking to dodge new tariffs and future-proof their supply chains, multi-shoring may be the best solution, said Nick Benson, founder of beauty manufacturing platform Atelier. That is, creating numerous supply chains for any single product, with each focused on specific markets.
For example, Benson oversaw a new U.S. supply chain creation for Switzerland-based Weleda last year as the company grew weary of new tariffs. Weleda’s popular Skin Food moisturizers are made in Europe and sell for under $20 on marketplace sites and through traditional retailers like CVS, Target and Dermstore.
“Now we’re getting multiple panicked calls every single day [from brands],” he told Glossy. “[Weleda] saw the coming struggle, but more broadly, brands have been pretty head-in-the-sand on this stuff for a long time.”
Using its 8 million supply chain combinations within its global network, Atelier rebuilt a supply chain in the U.S. in less than five months for Weleda.
Supply chain disruptions — including tariff wars in the 2010s, Covid and the latest from the Trump administration — are unlikely to subside, according to all of the experts quoted today told Glossy. In fact, they’ve compounded, Benson told Glossy. “The reality is this is going to persist for decades,” he said. “I don’t think it’s going to go back to the way it was in the ‘90s and the 2000s [with humming supply chains and free, unchecked global trade into the U.S.].”
Partnered with tariffs, TikTok Shop could look very different in just a few months. But despite the turbulence, Pepperdine’s Maderazzo believes consumers will continue to shop, albeit making fewer low-cost impulse purchases. “We’re dependent on China, and China is dependent on us, so I think we’ll come up with a solution,” she said.
