News Roundup: Tariff Ruling; Online Shopping Hits Roadblock

Many of the tariffs President Donald Trump has put into action since regaining the presidency are illegal, according a federal appeals court ruling issued on Friday.

However, tariffs will remain in place until mid-October to give the Trump Administration time to appeal the decision to the Supreme Court.

Trump invoked emergency powers in imposing many of his global tariffs. Friday’s decision upholds a lower court finding, issued in May, that Trump overstepped his authority in doing so.

The White House quickly condemned the ruling, and U.S. Attorney General Pam Bondi vowed in a social media post that the Justice Department would appeal the ruling.

If you like to hunt for online bargains, it might be time to brush up on your Latin.

Today (that’s Friday, Aug. 29) marks the end of the de minimis exemption*, a policy that allowed small commercial packages below a set dollar amount to be mailed into the United States without paying customs duties or fees.

The policy has been around since 1938 (when the bar was set at $1) and was a relatively small part of the economy — until 2016, when the $200 limit that had been in place since the 1990s was raised to $800. That helped spark the rise of e-commerce platforms like Shein and Temu, which specialized in direct-order imports of inexpensive fast fashion, toys and electronics from China.

Add one pandemic to the mix and we saw an explosion of small-package imports into the U.S., growing from 220 million de minimis packages in 2016 to 1.36 billion in 2024, eventually hitting a rate of 4 million packages a day. Here’s a look at the dollar value of de minimis imports into the United States since 2012.

The de minimis exemption for China and Hong Kong ended May 2 — forcing companies that built their business models around the exemption to quickly adapt. Temu formally ended direct shipments to the U.S. in May, for instance, and along with Shein is building warehouses in the U.S. That means the companies are now bulk-shipping to warehouses, paying applicable tariffs upfront and, presumably, passing at least some of that cost along to consumers.

“At their peak, these two platforms were shipping about 600,000 packages per day to U.S. customers,” said Sean Henry, CEO and co-founder of Stord, an Atlanta-based supply chain specialist, in an email interview. “When average delivery times jumped from 7-10 days to 14-21 days due to customs bottlenecks, and customers started to experience ‘sticker shock’ from new duty charges, they had no choice but to adapt.”

Stord operates warehouses in the U.S. and manages order fulfillment for a variety of online retailers.

Now that the exemption has ended for all incoming packages, changes are rippling to all corners of the e-commerce ecosystem. “Beyond the Chinese platforms, many companies have historically leveraged de minimis — dropshippers, marketplace sellers on Amazon and Etsy, fast-fashion exporters, and even U.S. brands that manufacture abroad and ship direct-to-consumer from overseas warehouses,” Henry said.

All of them are quickly adjusting their business models in response to the policy change, according to Henry: “​​Overall, companies that built their entire model on cheap international shipping are having to pivot to focus on quality, customer service, and other differentiators beyond just price.”

What does all this mean for shoppers? “In the short term, shoppers should expect significant changes,” Henry said.

“A $10 item with free shipping from overseas will now come with import duties and customs fees that might double the price. Look for new line items like ‘import duties’ or ‘customs fees’ at checkout. We’re already seeing 40% of online shoppers abandon their carts when faced with these extra charges. Delivery times are also stretching from days to weeks. Express carriers like DHL, UPS, and FedEx are still operating, but what used to be $10 shipping might now be $30-$50.”

In the longer term, “shoppers should expect fewer ultra-cheap options,” Henry said. “The old system created artificial price competition that often came at the expense of quality and worker conditions.”

So, is the direct-import model over, after its brief heyday?

“The individual parcel direct import model is essentially dead, yes,” Henry said. “We’re projecting a 75% collapse in small-parcel volume, from 800-900 million packages annually down to 200-300 million. The era of easily shipping a $5 phone case directly from China to your doorstep is over.”

But hey, it was fun while it lasted. And something new is rising in its place. “Cross-border e-commerce isn’t dead,” Henry said. “It’s being rebuilt from the ground up.”

Back in April, when the first quarter economic growth report came out, the picture was grim: Gross domestic product (GDP) for January through March showed a 0.5% decline — the first economic contraction since early 2022.

Doomer predictions followed as recession fears spiked. After all, two straight quarters of shrinking GDP is how economists define a recession. But by July 30, second-quarter data was released and the outlook brightened: GDP rose 3%. And on Thursday, the second GDP estimate showed GDP grew 3.3% — a 0.3 percentage point upward revision from the first estimate.

But the topline figures don’t tell the whole story. The first quarter contraction was mainly due to a spike in imports (which subtract from GDP) and weak business investment. In Q2, business imports dropped, while consumers spent heavily on health care, dining, travel and cars. Both behavioral shifts were influenced by the looming threat of tariffs.

During the first half of the year, the full breadth of President Donald Trump’s tariffs weren’t yet in place. That means that growth data for the first half of the year may understate the effects of the policies. The third quarter GDP report may provide a clearer picture of how the tariffs are influencing economic growth.

The animated hit marked some milestones, becoming the most-streamed movie ever on Netflix and dominating the weekend box office with a two-day-only run of a sing-along version. The movie also dominated the virtual watercooler talk at NerdWallet this week. A thoroughly unscientific poll found that for 62% of NerdWallet parents who responded, “KPop Demon Hunters” is now definitely a “thing” in their households.

And for those who said yes, it’s a thing, how many times has it been watched?

Here’s what our senior economist, Elizabeth Renter, will be tracking next week:

Friday, Sept. 4:
Employment Situation (“jobs report”), Bureau of Labor Statistics — After last month’s (July data) revisions (and subsequent BLS shakeup), all eyes will be on this report. I’ll be paying close attention not only to the topline total employment change, but the diffusion index — a figure that tells us whether there are more industries adding or losing jobs in a given period.

Check out Elizabeth’s full weekly look-ahead here.