In his forty-plus years in the textile industry, Larry Severini has seen hundreds of factories close, as companies moved women’s wear and home furnishings and then other textile manufacturing overseas.
But Severeni was able to maintain two factories that make the blue backgrounds and white stars for American flags—until January 31, 2025. On that day, he closed his factory in Gaffney, S.C., for good, getting rid of millions of dollars of machinery and laying off dozens of workers, some of whom had been laboring there for decades.
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“People are buying flags from China at an artificially low price that we can’t compete with,” says Severini, who still has one factory open, in Kingstree, S.C., which makes star fields for the flag and other textiles.
It may sound strange to hear of a manufacturing company closing right now. In the second Trump Administration, the President has promised—and levied—tariffs on countries including China, Canada, and Mexico in an effort to boost American manufacturing. Trump also levied tariffs on Chinese goods in his first term that the Biden Administration maintained. “This administration is leaving 40 years of failed industrial policy behind and bringing American manufacturing BACK!” Vice President JD Vance wrote on X recently.
But despite the bravado, many of those working in the textile industry say conditions are tougher than ever, with 27 textile factories shuttering in the last 20 months, according to Kim Glas, president and CEO of the National Council of Textile Organizations, a lobbying group.
They blame a once-obscure trade provision, called de minimis, which has been thrust into the spotlight in recent months. President Trump ended de minimis in a February executive order before reversing himself days later as chaos ensued. The White House said de minimis would resume when “adequate systems are in place” to deal with the shipments.
Created by Congress in 1938, de minimis allows people to import packages worth less than $800 without paying tariffs on those packages or going through formal customs paperwork. It was created as a nod to consumer fairness: travelers were able to bring back a certain amount of goods from overseas without paying customs on those goods, supporters reasoned, so people who couldn’t travel should have the same privilege. In 2016, Congress raised the threshold from $200 to $800.
Retailers like Severini say that the de minimis provision allows Chinese factories to send cheap goods, such as American flags, to the U.S. without the same tariffs that they would have to pay to send the same product to China. Severini says he suspects that sellers on e-commerce websites like Amazon order large quantities of American flags, avoid paying tariffs on them through de minimis, and then sell them online, sometimes labeling them as made in the U.S.A.
“It’s a major hurdle that our industry really needs some breathing room from,” he says.
There are a huge number of goods that come into the country under de minimis. In 2023 alone, the U.S. saw $54.5 billion worth of de minimis imports, or about 1 billion total shipments, up from $0.05 billion, or 110 million shipments, in 2012. About 30% of de minimis shipments are goods that Americans buy on sites like Shein and Temu.
“It’s essentially a free trade agreement for China and the rest of the world,” says Glas, of NCTO.
Ironically, there’s evidence that Trump’s first-term trade war was what helped expand de minimis shipping. After the U.S. imposed tariffs on Chinese imports, Chinese exporters looked for new ways to ship things to the U.S. and avoid tariffs, and landed on de minimis.
Whether ending de minimis could really jumpstart industries like textiles is up for debate. Most of the goods that people buy through de minimis are inexpensive, and so a 25% or even 40% tariff wouldn’t raise the cost of it very much. There are American flags listed on Temu, for example, for less than $3.
Avoiding de minimis saves importers money in other ways, says Amit Khandelwal, a Yale economics professor who recently co-authored a paper on what would happen if de minimis went away. Importers who don’t have the benefit of de minimis have to go through customs paperwork and logistics challenges that can increase the price of a package by as much as $20 apiece, which significantly raises costs.
Still, because of the cost of labor and materials overseas, Chinese and other manufacturers may still be able to make cheaper goods than those made in the U.S., Khandelwal says. “Domestic producers claim they will benefit from the end of de minimis,” he says. “I’m not so sure.”
In his research, Khandelwal also found that consumers who live in lower-income zip codes and those with higher shares of minorities disproportionately benefit from de minimis. They’re more likely to shop at sites like Temu and Shein and to buy goods that have come into the country under the provision. “If you remove de minimis, it’s going to look like a regressive tax,” says Khandelwal, meaning that it hurts lower-income people the most.
Severini argues that these people are getting goods at an artificially low price. After all, countries like Mexico and China have much lower de minimis limits, he says. He hopes that Congress will get rid of the loophole entirely, which looks increasingly likely to some observers.
Doing so, Severini says, would help get his Kingstree factory back up to three shifts a day, which it was running before the pandemic—and before de minimis shipments started taking off.
Workers in the factory make $16 an hour plus performance incentives, Severini says. One of his former workers laid off from the Gaffney did find a job, he adds—at an e-commerce warehouse helping sort goods that come in from overseas.
