Chinese E-Commerce Firms Targeted by New White House Import Rules

American depositary receipts (ADRs) of Temu parent PDD Holdings (PDD) fell Friday after the Biden administration took new steps to limit tariff exemptions that often benefit Chinese e-commerce companies.

The White House announced a crackdown on what is known as the de minimis exemption—a trade provision that allows imports of products that sell for less than $800 to avoid paying duties and processing fees.

White House officials announced they were countering the “significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms,” taking aim at firms like fast-fashion retailers Temu and privately held Shein, although they were not mentioned by name.

The White House said that the number of shipments entering the U.S. that used the exemption had surged to more than 1 billion a year from about 140 million a decade ago.

Loophole Brings ‘Huge Volumes of Low-Value Products’ Into US Duty-Free

The officials argued that the use of the loophole is “putting American consumers at risk, undercutting American workers and businesses, and resulting in the importation of huge volumes of low-value products such as textiles and apparel into the U.S. market duty-free.”

The administration said it would be proposing rules to prevent use of the de minimis exemption for any imports that are subject to Chinese tariffs, as well as other steps to limit the provision’s use. The White House also called on Congress to pass “comprehensive de minimis reform legislation by the end of the year.”

PDD’s ADRs fell 2.5% to $94.88 in late-morning trading Friday and have lost more than a third of their value this year.