When U.S. President Donald Trump moved to close the de minimis “loophole” allowing goods valued at under $800 to cross into the U.S. duty free, it was a body blow to the likes of Shein and Temu.
That’s because the ultra-fast-fashion companies had used the tariff-free importing allowance to supercharge their business models and get big quick.
But they weren’t the only ones happy to tip toe goods through the backdoor.
It turns out that Coach parent Tapestry Inc. also made wide use of the de minimis provision and it expects to take a hit of some $53 million to profits in the fiscal year ahead since the duty-free treatment will run out on Aug. 29.
Where Shein and Temu seemed to model their businesses around de minimis, it was more of a nice-to-have for Tapestry.
“That was an opportunity that we had taken advantage of,” said Scott Roe, chief financial and chief operating officer, on a conference call with analysts Thursday. “It was a lot at that time and now the law has changed, so we have to address that.
“The good news is, as it relates to capacity and whatnot, as we think about our network, it’s pretty agile,” Roe said. “I’m not saying it’s nothing, but…that is not a significant disruptor…it’s just more work for our supply chain team.”
In all, Tapestry expects Trump’s trade war tariffs and the de minimis change to take about $160 million, or 60 cents a share, out of profits in this coming year.
For Trump, that’s more for the federal coffers, although experts maintain that tariffs are ultimately a tax on U.S. consumers, who one way or the other have to bear the brunt of higher import costs.
The executive order putting an end to what Trump has described as a “big scam” that was “hurting U.S. businesses” in manufacturing made clear how popular the de minimis route to American consumers has become.
Between 2015 and 2024, the number of de minimis shipments entering the U.S. jumped from 134 million shipments to more than 1.36 billion shipments.
On average, Customs and Border Protection was processing more than 4 million of the shipments every day.
