The United States has scrapped a decades-old tariff exemption that let imports under $800 enter duty-free, shaking e-commerce worldwide.
From Friday, small parcels must clear customs and pay tariffs, affecting millions of shipments every day.
In 2023, nearly 1.4 billion packages valued at over $64bn entered the US under the de minimis exemption, according to customs data. Analysts warn higher prices, fewer choices, and tougher conditions 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 began in 1938 to avoid collecting minor tariffs that cost more than they generated.
Its rising threshold over decades enabled e-commerce growth and allowed retailers to ship directly to American consumers.
Companies such as Shein and Temu built their business models around the exemption, sending low-cost goods straight from factories.
Many other domestic and international firms also relied on the rule for supply chains and pricing strategies.
Coach parent Tapestry expects a $160m profit drop this year, with one-third linked to the exemption’s end.
Officials say over 90% of US-bound cargo previously benefited from de minimis.
Both Donald Trump and Joe Biden criticised the exemption, claiming 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 accelerated the repeal through executive order, cancelling its planned 2027 expiry.
Shippers now must either 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 direct US sales. Personal gifts and letters under $100 remain exempt.
Slower deliveries and fewer options
Consumers may face limited choices and longer shipping times as businesses adapt.
Small exporters must now 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 costly compliance.
Portland vinyl collector Christopher Lundell had a $5 UK record order cancelled. He called the move “political theatre” but recognised the aim of protecting US companies.
Postal services across Europe and Asia paused US shipments this week due to uncertainty over the new rules.
Costs set to rise
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 fees range from $80 for low-tariff nations to $200 for higher-tariff ones.
Officials say the change strengthens the economy and improves safety for Americans.
Some US companies welcomed the move. Gap Inc. said ending the loophole ensures all retailers pay fair duties.
Trade expert Deborah Elms warned small firms face costly audits and may rely on expensive couriers, pushing prices higher.
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 strategy. “Even if prices stay stable, complex duties may discourage buyers,” she said.
China may gain an edge
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 impact.
Nguyen said Chinese exporters are months ahead in managing paperwork compared with competitors.
For smaller businesses, the repeal removes a low-cost entry point. “That easy pathway into the US market is gone,” Nguyen said.
