Trump’s Recent Executive Orders on Trade and Tariffs

On Wednesday, President Donald Trump took action by signing two executive orders. One order aims to close the de minimis loophole that had long exempted low-value imports from duties. The other significantly increases tariffs on Brazilian goods to 50%.

The suspension of tax-free de minimis treatment for all countries eliminates a loophole that allowed goods valued at less than $800 to enter the U.S. without incurring tariffs.

According to the White House fact sheet, “As of August 29th, imports that were sent through means other than the international postal network and are eligible for the de minimis exemption will be subject to all applicable obligations.”

The new duties will be implemented in one of the following ways:

• • AD Valorem Duty: This duty corresponds to an effective tariff rate applied under the International Emergency Economic Force Act (IEEPA) based on the product’s country of origin, calculated based on the value of each package.
  • Specific Obligations: Customs duties that will vary from $80 to $200 per item depending on the applicable IEEPA tariff rate for the country of origin. Importantly, this methodology will be available for six months; afterward, all shipments must adhere to the AD Valorem Duty method.

A senior White House official expressed concerns that de minimis packages often evade testing, which has allowed counterfeit goods and substances like fentanyl to enter the U.S. For instance, cheaper products containing nicotine vapors from China have inundated the American market, impacting companies like Juul.

John Hayward mentioned earlier that the de minimis threshold had risen from $200 to $800 under former President Barack Obama.

The marked increase in de minimis thresholds paved the way for a new industry to thrive, one that is largely dominated by Chinese companies. With the rise of online shopping and digital payments, businesses such as Shein and Temu can now send large quantities of affordable products directly to American consumers without needing to set up distribution centers in the U.S.

Additionally, the executive orders from Trump addressed concerns regarding the Brazilian government, increasing tariffs from 10% to 50% starting August 6th under the IEEPA. The White House fact sheet highlighted issues of “persecution” against former Brazilian president Jair Bolsonaro:

• The order utilizes the president’s powers under the IEEPA to declare a new national emergency, involving an additional 40% tariff to counteract Brazil’s unusual governmental policies.
• The findings indicated that Brazil was engaged in politically motivated persecution, harassment, censorship, and serious human rights abuses that compromised legal standards.

On the same day, Trump also signed a declaration to place a universal 50% tariff on semi-finished copper products being imported into the U.S. starting Friday.