The Trump administration on Friday ended the U.S. duty-free import of packages valued at less than $800, a policy known as the “de minimis” exemption. This change, which previously fueled a surge in shipments from global sellers to U.S. consumers, will likely lead to higher prices for buyers.
On July 30, President Donald Trump announced the repeal of this duty-free treatment for parcels from all countries, effective a month later. These new tariffs will make shipments from overseas retailers more expensive unless the sellers choose to absorb the costs. This decision expands on a move made in May to impose tariffs on shipments from China and Hong Kong, which had primarily impacted retailers like Shein and Temu.
Here is an overview of what this new measure means for U.S. buyers and some small American businesses that rely on overseas suppliers.
Why Was This Decision Made?
The Trump administration has cracked down on the de minimis exemption, citing concerns that it enabled traffickers to easily send parcels containing fentanyl into the country. Additionally, U.S. retailers and industry groups have long opposed the exemption, arguing that it gave an unfair advantage to foreign e-commerce companies such as Shein and Temu, as well as some third-party sellers on Amazon. Amazon, Shein, and Temu all declined to comment.
For context, the prices of goods at retailers like Walmart or Target already include the tariffs they pay on imported products, making them relatively more expensive compared to duty-free imports.
What Does It Mean for Consumers?
The de minimis exemption had previously powered a surge in cross-border e-commerce, as U.S. shoppers sought out bargains like $12 dresses on Temu. Until May 2, orders were delivered to their doorsteps free of duties as long as the packages were valued at less than $800.
In fiscal year 2024, 1.36 billion shipments arrived under de minimis, with a declared value of $64.6 billion. U.S. government data shows that approximately 73% of de minimis packages entering the U.S. in 2024 originated from China.
Which Countries Are Most Affected?
According to U.S. Customs and Border Protection (CBP) figures, the next largest senders after China are Canada, Mexico, and the United Kingdom. Logistics provider Red Stag Fulfillment noted that other significant sources include South Korea, India, Vietnam, and Thailand.
Red Stag said that since the exemption for China was eliminated on May 2, the volume of de minimis shipments has already fallen by about one-third. Some small British businesses that sell online to U.S. shoppers have already notified their customers of upcoming price increases. For example, the sewing pattern and fabric company Merchant & Mills announced on Instagram that it would raise its U.S. prices by 15% to cover the new duties.
What Are the Ripple Effects?
The change has created chaos for postal services worldwide. Australia Post, Britain’s Royal Mail, Germany’s DHL, Japan Post, and Korea Post, among others, have temporarily stopped shipments to the U.S. as they work to adapt to the new rules.
“It’s very challenging for the post to go into an environment where they have to collect duties, when they’ve never collected duties,” said Clint Reid, founder and CEO of Zonos, a company whose software helps businesses calculate, collect, and remit duties.
U.S. Customs and Border Protection said it is taking the necessary actions to implement the order. The new tariff regime will also increase the amount of paperwork for sellers, as U.S. customs will require more detailed information on the origin and type of goods in packages. In February, the Trump administration had briefly paused its initial ban on de minimis shipments from China after packages began to pile up at U.S. customs facilities.
How Does This Affect Online Retailers?
E-commerce giants Shein and Temu have had time to adapt since May. While prices on Shein have already begun to increase, the latest change might put it in a better position than some of its rivals, according to Yao Jin, an associate professor of supply chain management at Miami University.
“It is now economical to ship out of China on a relative basis, simply because the cost of shipping direct from other countries has also risen,” Jin said.
How Are Small Businesses Affected?
It is more difficult for small businesses to absorb the cost of tariffs, and many are planning to increase their prices to offset these costs. Platforms like eBay and Etsy, where individuals and small businesses sell everything from vintage soccer shirts to electronics, are advising their sellers to communicate with customers about tariff-related price hikes.
