The United States has cancelled a decades-old tariff exemption that let imports under $800 enter duty-free, altering the retail landscape.
Starting Friday, small parcels will face customs inspections and tariffs, affecting millions of shipments daily.
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, fewer choices, and strain on small businesses.
Buenos Aires shoe designer Katherine Theobalds 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 were expensive to process.
Over decades, its rising threshold enabled e-commerce growth and allowed global retailers to ship directly to US consumers.
Companies like Shein and Temu thrived by sending low-cost goods straight from factories to buyers.
Many other businesses, both domestic and international, relied on the rule for supply chains and pricing strategies.
Coach parent Tapestry warned investors it expects a $160m profit hit this year, with one-third linked to the exemption’s removal.
Officials report that over 90% of US-bound cargo previously benefited from de minimis.
Both Donald Trump and Joe Biden criticised the exemption, saying it harmed US companies and allowed smuggling.
Trump adviser Peter Navarro said ending it will reduce fentanyl shipments and generate $10bn in annual revenue.
Trump accelerated the repeal through executive order, cancelling its planned 2027 expiry.
Shippers must now pay tariffs by origin country or choose a temporary flat fee of $80–$200 per package, available 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.
Fewer products, slower deliveries
Consumers may see reduced choice and longer shipping times as businesses adjust.
Small exporters now must declare the origin of every material, said logistics expert Tam Nguyen. That adds complexity and slows shipments.
Niche products 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 to protect US firms.
Postal services across Europe and Asia paused shipments to the US, citing uncertainty about the new rules.
Prices set to rise
Tariffs now depend on the country of origin.
Goods from the UK and Australia face 10%, while Brazil and India shipments may reach 50%.
Flat fees range from $80 to $200 depending on tariff levels.
Officials say the change strengthens the economy and improves safety for Americans.
Some US companies welcomed the move. Gap Inc. said the exemption allowed competitors to avoid paying fair duties.
Trade expert Deborah Elms warned that small firms face costly audits and may rely on expensive couriers, raising prices further.
UK-based 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 approach. “Even if prices remain stable, complex duties may discourage buyers,” she said.
China may gain an advantage
US retailers like Walmart and Target could benefit if imported goods become costly.
Chinese firms may adapt faster. Shein and Temu operate US distribution centres that reduce tariff impact.
Nguyen said Chinese exporters are months ahead in handling paperwork compared with competitors.
For smaller businesses, the rule’s repeal ends a low-cost entry point. “That pathway into the US market is gone,” Nguyen said.
