The United States has scrapped a long-standing tariff exemption that supported the flow of low-cost imports.
From Friday, goods valued at $800 or less will no longer enter duty-free and will face stricter customs checks. The change will affect millions of shipments every day.
Last year, nearly 1.4 billion parcels worth more than $64bn arrived in the US without paying duties under the de minimis rule. Experts warn that the end of the exemption will raise prices and reduce choice, with small businesses hit hardest.
“I’ve reached the point of acceptance, but when I first heard the news, I thought my business might not survive,” said Katherine Theobalds, founder of Argentine shoe label Zou Xou.
The origins of the de minimis exemption
The exemption was first introduced in 1938 to avoid the cost of collecting very small tariffs.
Over time, the threshold increased, allowing global retailers and e-commerce platforms to thrive by shipping goods directly to buyers.
Chinese platforms like Shein and Temu popularised the model, sending low-cost items from factories to consumers without warehousing. But businesses worldwide adopted it for their supply chains.
Tapestry, the parent company of Coach, told investors it expects a $160m profit loss from tariff changes, with one-third caused by the end of de minimis.
Coach grew strongly in recent years, fuelled by Gen Z buyers, but the new rules add challenges.
US customs said more than 90% of incoming cargo benefited from the exemption.
Donald Trump and Joe Biden both argued the rule harmed US companies and enabled smuggling. Trump adviser Peter Navarro said its removal would “save lives” by reducing narcotics in the mail and bring in $10bn annually.
Trump accelerated the repeal with an executive order, years ahead of its planned 2027 expiry.
Now shippers must either pay tariffs based on the country of origin or use a temporary fixed fee of $80–$200 per package. This option will last only six months.
China and Hong Kong lost access in May, prompting Temu to stop direct US sales. Personal gifts and letters under $100 remain exempt.
Fewer goods and slower shipping times
Consumers may soon face reduced choice as businesses adjust to new customs paperwork.
Small companies are most vulnerable, since they were previously shielded from such requirements. Logistics specialist Tam Nguyen said sellers must now detail the origin of every material, often sourced globally. That complexity will slow shipments.
Some exporters may withdraw entirely, cutting off niche markets.
Christopher Lundell, a psychologist and music hobbyist in Portland, said his $5 UK vinyl purchase was cancelled due to shipping barriers. He now prefers US sellers but views the suspension as “political theatre.”
Several major postal operators in Europe and Asia-Pacific paused deliveries to the US this week, citing confusion and lack of time to prepare.
Prices heading upward
Businesses will now face tariffs set by the US depending on origin.
Rates run from 10% for the UK and Australia to 50% for Brazil and India.
Fixed duties will be $80 for countries under 16% tariffs, $160 for those up to 25%, and $200 for higher rates.
A US official dismissed concerns, claiming the change makes Americans “safer” and “more prosperous.”
Some US firms welcomed the policy. Gap Inc. called the end of the exemption a step toward fairer competition.
Yet trade expert Deborah Elms said small companies face high compliance costs and may struggle to keep prices stable. Sellers could rely on costly couriers while postal shipments remain stalled.
British firm Wool Warehouse has paused US orders. Managing director Andrew Smith expects prices to rise up to 50% and plans to add tariff details to its website for transparency.
In Argentina, Theobalds of Zou Xou said larger shipments were already taxed, but sending small orders to the US was only viable thanks to de minimis. She now reconsiders her business model and how to explain costs to customers.
“Our clients value artisanal quality,” she said. “But they may decide the process isn’t worth it.”
Could China benefit most?
Some analysts expect US retailers like Walmart and Target to gain if imports become too costly.
But Chinese platforms may still profit. Shein and Temu built US distribution centres to offset tariffs and are already prepared for the paperwork.
Nguyen said China is months ahead of competitors in adapting to the new requirements. Smaller firms elsewhere face steep challenges, making it harder to launch e-commerce ventures.
“It used to be easy: build a site, list products, and ship. That low-cost entry point has vanished,” Nguyen said.
