• President Trump's executive order on tariffs has contributed to market volatility.
• The executive order also targets the de minimis customs loophole and has brands scrambling.
• Brands are considering raising their prices and using other entry methods for their goods.

President Trump's Saturday executive order placing tariffs on goods from China, Canada, and Mexico sent shockwaves through global markets.

But another part of the order has also had e-commerce brands scrambling for solutions. It targets a loophole in US customs law that has been used by e-commerce disruptors like Shein and Temu and many American companies.

Section 321, also known as de minimis, allows importers to avoid paying duty and tax on shipments that are valued at less than $800 and going directly to customers. Shippers using de minimis do not have to provide as much information to US Customs and Border Protection as shippers using more traditional methods would. Opponents of the provision have argued that since de minimis shipments are often not inspected, they have allowed bad actors to import illicit goods like fentanyl into the US.

Saturday's executive order closes that loophole, at least in part. However, there are still uncertainties regarding the future of de minimis.

The executive order imposes tariffs on goods originating in China, Mexico, and Canada and specifically calls out Canada for its failure "to do more to arrest, seize, detain, or otherwise intercept DTOs [drug trafficking organizations], other drug and human traffickers, criminals at large, and drugs." It does not mention de minimis shipments originating in countries aside from the three listed, leaving open the possibility that the loophole could still be used elsewhere.

DTC brands are scrambling

Companies that have relied on de minimis are trying to quickly make changes to their business models.

Maggie Barnett, CEO of third-party logistics provider LVK, said that some direct-to-consumer brands she spoke with over the weekend are facing cash-flow issues because they have relied on the de minimis provision to import their goods into Mexico or Canada before shipping them to customers in the US duty-free. They may have to raise their prices.

"They're used to not having to pay this money upfront before sales come, if at all," Barnett told Business Insider.

She said the company is advising its customers to weigh their options before revamping their supply chains in response to the executive order.

"Making changes to your supply chain can be very costly, and you wouldn't want to completely change your supply chain and then have a new announcement drop," she said. "I would urge all brands to be very cautious and to find optionality in their approach to their supply chains."

That could mean working with a US-based third-party logistics company if they don't already, or starting to work with suppliers in countries not affected by the executive order.

Portless, a startup that replicates Shein's model by fulfilling online brands' orders in China and then shipping them directly to customers, told BI on Monday that it would shift to using other methods like Entry Type 11. Entry 11 is faster than traditional types of import, but it does require importers to pay tax. Portless will now pay its customers' import duties upfront and then issue a monthly invoice for brands to cover.

"We've been preparing for this potential change over the last few months," CEO Izzy Rosenzweig said.

Some US politicians have called for reform to the de minimis provision in recent years, arguing it creates unfair competition for American companies and furthers trade of illicit goods.

The rise of Shein and Temu has brought further attention to the loophole. An interim 2023 report from the US House Select Committee on the Chinese Communist Party said that Shein and Temu "likely" account for more than 30% of all shipments made to the US under the de minimis provision. It added that almost 50% of all de minimis shipments to the US come from China. Both Shein and Temu have pushed back on the notion that they rely on de minimis to grow their business.

Canadian Prime Minister Justin Trudeau announced 25% retaliatory tariffs on the US following Trump's executive order. The tariffs on Mexico, meanwhile, have been delayed a month after Trump reached an agreement with Mexican president Claudia Sheinbaum on Monday.

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• Investors are opening their wallets to social-shopping startups as TikTok's US future sits in limbo.
• Companies like Whatnot and ShopMy have raised rounds in the tens of millions of dollars.
• Upstarts are also making acquisitions and launching creator funds to capitalize on the moment.

The moment is ripe for social-commerce startups in the US.

Investors are betting big on platforms like Whatnot and ShopMy. In January, Whatnot said it closed a $265 million fundraising round after crossing $3 billion in livestream sales in 2024. ShopMy also said it closed a new round worth $77.5 million after reaching profitability.

"The timing of this raise aligns with a fundamental shift we're seeing in the market — creator marketing is evolving from an experimental channel into a core performance driver for brands," ShopMy's CEO Harry Rein told Business Insider.

Part of the category's momentum stems from TikTok. Over the past year, the company helped popularize livestream selling and connect thousands of merchants with influencers via its e-commerce tool, Shop.

But the app's US future is uncertain. It's disappeared from app stores and faces other fallout from a divest-or-ban law that requires its Chinese owner to separate from its US assets. Some e-commerce partners are testing alternative platforms to diversify where they sell.

Outside ShopMy and Whatnot, apps like Flip are gaining steam this month. Flip, a TikTok-like app focused on user-generated product reviews, recently landed in the top 10 in Apple's app-store rankings. Flip could benefit from a TikTok ban if the company fails to find a path forward by an April deadline set by President Donald Trump.

"If the TikTok ban does move forward, these platforms have a huge opportunity," said Ollie Forsyth, a former senior manager at investment firm Antler who now writes the newsletter New Economies. "Not only can they acquire huge volumes of creators, they can also acquire a huge number of new consumer users."

How social-commerce startups are seizing the moment

On top of investors pouring cash into social-commerce startups, startups themselves are spending now to capitalize on a moment of flux in the US market.

Flip pledged to offer equity grants to creators, for example, to encourage them to engage more on the platform.

Attracting new users in large numbers will be key to filling the TikTok void if a ban were to go into effect, said Matt Nichols, a partner at Commerce Ventures.

TikTok Shop succeeded because it had a unique combination of a large user base and an algorithm that could match those users with products they were likely to buy, Nichols said.

"Twenty years ago, retailers dictated what consumers purchased, and there was a long sales cycle," Nichols said. These days, there are "more quickly changing demand trends based on influencers, which has worked really well for TikTok Shop, but also hyper-fast retailers like Shein."

As an investor, he sees the best opportunities in startups working to help retailers and influencers succeed on other platforms that already have similarly big user bases, like Instagram and YouTube.

Former TikTok e-commerce leader Sandie Hawkins said in a recent interview with BI that the shopping experience TikTok made popular is likely to be imitated elsewhere.

She said social shopping creates a "community environment" where friends tell you what they think you should buy. "You're taking those recommendations right there, and you're closing the loop instead of having to send them to go someplace else," she said.

Here's a breakdown of some of the big deals announced in January in the social-commerce category:

• Livestream shopping app Whatnot closed a $265 million Series E round at a roughly $5 billion valuation. DST Global, Avra Capital, and Greycroft led the round, with participation from Andreessen Horowitz, Lightspeed Venture Partners, and Durable Capital Partners, among others.

  Whatnot's CEO Grant LaFontaine told BI the company planned to use its new funding to scale marketing, product, and engineering and expand into new markets like Australia.

• Gloss Ventures, an investment company focused on launching creator brands through social commerce and other channels, raised $15 million from private-equity firm Peterson Partners.

  Gloss Ventures' cofounder Quinn Roukema told BI the new funds would support its marketing efforts and plans to expand retail sales globally.

• Creator-affiliate platform ShopMy raised a $77.5 million Series B round led by Bessemer Venture Partners and Bain Capital Ventures. Menlo Ventures participated, as did previous investors Inspired Capital and AlleyCorp.

  Rein, ShopMy's CEO, told BI the company planned to use its funds to expand into new categories like hospitality and health and wellness, as well as to scale its performance marketing tech with new data analytics and measurement features.

• Influencer-marketing firm Later announced a $250 million acquisition of affiliate company Mavely. The deal was funded with a strategic investment from growth equity investor Summit Partners. CEO Scott Sutton told BI the purchase aimed to help Later offer clients a fuller picture of their marketing spend.
  
  He said Mavely has 120,000 creators driving sales of over $1 billion in merchandise value.
  
  "All of that data and all of that ability to track what's happening in the creator economy helps us to make money for creators, helps consumers discover the right types of products, and helps us deploy ad dollars for marketers in a really seamless way," Sutton said.

• Sandie Hawkins has joined Teikametrics as president, focusing on AI-driven e-commerce strategies.
• Hawkins previously led e-commerce at TikTok and saw how the platform changed consumer behavior.
• She predicts social commerce is here to stay even as TikTok's future is uncertain.

Sandie Hawkins led e-commerce at TikTok as the video platform was working to bring its shopping product to market. She saw firsthand how TikTok has dramatically changed consumer behavior and the implications it could have for the future of e-commerce.

Now, Hawkins has joined AI marketplace tech company Teikametrics, where she was recently hired as president.

The shopping experience TikTok Shop popularized will have a lasting effect on e-commerce, she said in a recent interview with Business Insider. Short-form videos like those on TikTok give shoppers details about items that photos and words just can't.

"People want to touch and feel, and you get that through hearing people talk about it and describe it and seeing it at the same time, versus writing about it and looking at a picture," she said.

It makes good business sense for social media platforms to build shopping marketplaces like TikTok did with Shop, as they allow users to go directly from inspiration to purchase without taking any intermediary steps.

"You have that community environment," she said. "You have all of your friends there with you and they're telling you what they think you should buy. You're taking those recommendations right there, and you're closing the loop instead of having to send them to go someplace else."

Hawkins predicts that consumers will continue to shop this way even as TikTok's future in the US remains uncertain. President Trump signed an executive order on January 20 that gave TikTok 75 more days to operate in the US. The app briefly went dark to comply with a law requiring ByteDance to either divest from TikTok or have it banned in the US.

Hawkins said that regardless of what happens to TikTok, more traditional marketplaces like Amazon or Walmart will start to bring elements of social commerce into their shopping experience.

While TikTok became more like Amazon, offering users an easy way to purchase without leaving the app, Amazon is simultaneously becoming more like TikTok. For example, Amazon listings now often display user-uploaded videos of what a product is like to use.

"They're moving toward the middle," Hawkins said.

'You need to either have a lot of people working on it, or you need to be using AI'

Hawkins is at the forefront of a different kind of disruptive technology in her new role at Teikametrics. The Boston-based startup uses AI to help brands optimize their performance on marketplaces. It focuses primarily on advertising spend but also has tools for optimizing pricing and inventory levels.

As president, Hawkins leads Teikametrics' go-to-market strategy. Part of her job is to help identify the platforms clients should be selling on, and what they need to do to succeed there.

Thriving in e-commerce today requires constantly changing things like product copy, imaging, and videos, she said.

"In order to do that, you need to either have a lot of people working on it, or you need to be using AI," she said. "Using AI really enables all brands to compete at the same level when it comes to being able to produce great content."

She used the example of a client for whom Teikametrics' AI-based tool had made around 75,000 changes related to keyword spending.

"I don't even know how many people you would need to make all of those changes," she said. "It just speaks to the power of using data and AI to help drive your business and results as quickly as possible."

• Shopify has laid off employees in its customer support organization, BI has learned.
• This division of the company has undergone multiple rounds of smaller, quiet layoffs since 2022.
• The e-commerce platform company continues to hire third-party customer support staff.

Shopify quietly laid off employees in its support division this week, five people familiar with the matter told Business Insider. It was not immediately clear how many employees lost their jobs, but one person estimated that it was at least a dozen.

Shopify's support teams troubleshoot issues for the millions of merchants who use the platform to sell products.

Employees who were affected by the job cuts lost access to company systems during or immediately after a brief meeting with HR, making it difficult for them to ascertain how many of their coworkers had also lost their jobs.

Shopify representatives did not immediately return a request for comment on the layoffs.

Shopify's support division has undergone many changes in recent years.

In early 2023, the company began "Code Yellow," a project aimed at improving customer service levels that leaders said had "deteriorated beyond acceptable ranges." As part of that project, it embraced using generative AI to handle some tasks that support employees had previously done, saying the technology had helped to "minimize toil, help us be more efficient and improve merchant experience." In 2024, company leaders told employees a reorganization of the division would be necessary to fix its ratio of managers to "crafters," which is Shopify's term for individual contributors.

Shopify has also continued to hire third-party vendors — some in other countries including the Philippines and some in Canada — to assist with customer-service tickets, which employees said has contributed to a decline in overall quality in response.

The support division has also seen a lot of turnover in its management ranks, with former leaders Glen Worthington, Clovis Cuqui, and Jen Bebb all departing Shopify in 2024.

Shopify conducted two rounds of mass layoffs in the years after a pandemic-era boom. In July 2022, it laid off 10% of its workforce, or roughly 1,000 employees, and in May 2023, it cut an additional 20% of staff while also selling off its logistics business.

Three people told BI that the company has quietly laid off workers several times since then, in a manner similar to this week's layoffs.

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Contact the reporter Jyoti Mann via email at [email protected] or via Signal at jyotimann.11. Reach out via a nonwork device.