The Trump administration on Friday ended U.S. duty-free imports of packages worth less than $800, the so-called "de minimis" exemption that has fueled a surge in shipments, opens new tab from global sellers to U.S. consumers who will now likely face higher prices.
President Donald Trump announced on July 30 the repeal of duty-free treatment of parcels from every country effective a month later. The tariffs make shipments to the U.S. from overseas retailers more expensive, unless the sellers absorb the tariff costs.
With this, the administration has expanded a May move to impose tariffs on these shipments from China and Hong Kong, affecting retailers such as Shein and Temu, which primarily ship from China.
Here's what the new step means for U.S. buyers as well as some small U.S. businesses that work with overseas suppliers.
WHAT ARE REASONS FOR THE MOVE?
The Trump administration has cracked down on de minimis because it says the exemption has enabled traffickers to easily send parcels containing fentanyl into the country.
U.S. retailers and industry groups also opposed the exemption in the belief 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 declined to comment.
For example, prices of merchandise at Walmart (WMT.N), opens new tab or Target (TGT.N), opens new tab already reflect tariffs paid by the retailers when they import the goods, making them comparatively more expensive.
WHAT IT MEANS?
The de minimis exemption enabled a cross-border ecommerce surge as U.S. shoppers snapped up bargains like $12 dresses on Temu. Until May 2, orders landed on their doorsteps free of duties as long as their packages were valued at less than $800.
In fiscal 2024, 1.36 billion shipments arrived under de minimis with a declared value of $64.6 billion.
According to U.S. government data, about 73% of de minimis packages entering the U.S. originated from China in 2024.
WHAT COUNTRIES ARE MOST AFFECTED?
Canada, Mexico and the United Kingdom are the next biggest senders, according to CBP figures, opens new tab. Logistics provider Red Stag Fulfillment said other significant sources include South Korea, India, Vietnam and Thailand.
Since the China exemption was eliminated on May 2, de minimis volumes have already fallen by about a third, Red Stag said.
Small British businesses selling online to U.S. shoppers have already alerted customers to price increases. Sewing pattern and fabric company Merchant & Mills, for example, announced in an Instagram post that it would increase its U.S. prices by 15% to cover duties.
Number of shipments worth less than $800 entering the U.S. annually, from 2012 to 2024
WHAT ARE THE RIPPLE EFFECTS?
The change has caused turmoil in postal services across the world, with Australia Post, Britain's Royal Mail, Germany's DHL, Japan Post, Korea Post and others pausing shipments to the U.S. as they work to adapt.
"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 at Zonos, whose software helps businesses calculate, collect and remit duties.
U.S. Customs and Border Protection said it was taking the necessary actions to implement the order.
The new tariff regime will also increase paperwork for sellers as U.S. customs requires information on the origin and type of goods in packages.
In February, the Trump administration paused its initial ban on de minimis shipments from China, as packages piled up at U.S. customs.
Chart showing number of parcels from China, Canada, Mexico, UK, and Hong Kon entering the U.S. under "de minimis"
WHAT DOES IT MEAN FOR ONLINE RETAILERS?
Ecommerce giants Shein and Temu have had time to adapt to the change since May. While prices on Shein have started to increase, the latest change may put it in a better position than some rivals, said Yao Jin, 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's harder for small businesses to absorb tariffs, and some are planning to increase their prices to offset tariff costs.
Platforms like eBay and Etsy, where individuals and small businesses sell everything from vintage soccer shirts to electronics, are advising sellers to communicate with their customers about tariff-related price increases.
