The United States has cancelled a decades-old tariff exemption that allowed parcels under $800 to enter duty-free, upending global e-commerce.
From Friday, small shipments will face customs inspections and tariffs. Millions of packages every day will be affected.
Customs data shows that in 2023 nearly 1.4 billion packages worth over $64bn entered the US under the de minimis rule. Analysts warn higher prices, reduced choice, and major challenges for small businesses.
Katherine Theobalds, founder of Buenos Aires shoe brand Zou Xou, said: “It might be the end for us.”
The de minimis exemption and its impact
The de minimis rule started in 1938 to avoid collecting minor tariffs that cost more to process than they brought in.
Its rising threshold over decades fueled e-commerce growth and allowed global retailers to ship directly to US consumers.
Companies such as Shein and Temu relied on the exemption to deliver low-cost goods straight from factories.
Many other domestic and international businesses also built supply chains and pricing strategies around it.
Coach parent Tapestry expects a $160m profit hit this year, with one-third tied to the rule’s removal.
Officials report over 90% of US-bound cargo previously benefited from de minimis.
Both Donald Trump and Joe Biden criticised the exemption, saying it hurt US businesses and enabled smuggling.
Trump adviser Peter Navarro said ending it will reduce fentanyl shipments and add $10bn annually to federal revenue.
Trump fast-tracked the repeal via executive order, cancelling its planned 2027 expiry.
Shippers must now pay tariffs by origin country or opt for a temporary flat fee of $80–$200 per parcel for six months.
China and Hong Kong lost the exemption in May, forcing Temu to halt direct US sales. Gifts and letters under $100 remain exempt.
Fewer products and slower delivery
Consumers may see limited options and longer shipping times as businesses adjust.
Small exporters must declare the origin of every material, logistics expert Tam Nguyen said. This adds complexity and slows shipments.
Some niche items may disappear as sellers avoid compliance costs.
Portland vinyl collector Christopher Lundell had a $5 UK record order cancelled. He called the move “political theatre” but acknowledged the goal of protecting US firms.
Postal services across Europe and Asia paused shipments to the US due to uncertainty over the new rules.
Prices set to rise
Tariffs now depend on the country of origin.
Goods from the UK and Australia face 10%, while shipments from Brazil or India may reach 50%.
Flat duties range from $80 for low-tariff countries to $200 for higher-tariff ones.
Officials say the change strengthens the economy and improves safety for Americans.
Some US companies welcomed the repeal. Gap Inc. said closing the loophole ensures all importers pay fair duties.
Trade expert Deborah Elms warned small firms face costly audits and may rely on expensive couriers, raising prices further.
UK retailer Wool Warehouse paused US shipments, warning prices could rise 50%. The company will display tariffs online for transparency.
At Zou Xou, Theobalds said she must rethink her business model. “Even if prices stay stable, complex duties may discourage buyers,” she said.
China may gain advantage
US retailers like Walmart and Target could benefit if imported goods become expensive.
Chinese firms may adapt faster. Shein and Temu operate US distribution centres to reduce tariff impacts.
Nguyen said Chinese exporters are months ahead in handling paperwork compared with competitors.
For smaller businesses, the repeal closes a low-cost entry point to the US market. “That pathway is gone,” Nguyen said.
