The United States has cancelled a decades-old tariff exemption that allowed parcels under $800 to enter duty-free, transforming e-commerce.
From Friday, small shipments will face customs checks and tariffs. Millions of packages daily 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. Experts warn higher prices, fewer choices, and significant challenges for small businesses.
Katherine Theobalds, founder of Buenos Aires shoe brand Zou Xou, said: “It might be the end for us.”
How de minimis shaped trade
The de minimis exemption began in 1938 to avoid collecting minor tariffs that cost more than they generated.
Its rising threshold over decades supported 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 firms 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 exemption’s removal.
Officials report over 90% of US-bound cargo previously benefited from de minimis.
Both Donald Trump and Joe Biden criticised the policy, arguing it hurt US firms and enabled smuggling.
Trump adviser Peter Navarro said ending it will reduce fentanyl shipments and bring $10bn annually to federal revenue.
Trump accelerated the repeal via executive order, cancelling its planned 2027 expiry.
Shippers must now pay tariffs by country of origin or use a temporary flat fee of $80–$200 per parcel for six months.
China and Hong Kong lost the exemption in May, prompting Temu to halt US sales. Gifts and letters under $100 remain exempt.
Slower deliveries and fewer options
Consumers may face reduced product choice and longer shipping times as businesses adjust.
Small exporters must now document the origin of every material, said logistics expert Tam Nguyen. That adds complexity and slows shipments.
Some niche items may disappear as sellers avoid costly compliance.
Portland vinyl collector Christopher Lundell had a $5 UK record order cancelled. He called the suspension “political theatre” but understood the goal of protecting US businesses.
Postal services across Europe and Asia paused shipments to the US due to uncertainty over the new rules.
Rising prices for consumers
Tariffs now vary by 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 nations to $200 for higher-tariff ones.
Officials say the policy strengthens the economy and improves safety for Americans.
Some US companies welcomed the move. Gap Inc. said closing the loophole ensures all retailers 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 remain stable, complex duties may discourage buyers,” she said.
China may gain advantage
US retailers like Walmart and Target could benefit if imported goods become more 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 removes an easy, low-cost entry into the US market. “That pathway is gone,” Nguyen said.
