The United States has terminated a long-standing tariff exemption for low-value goods, altering how Americans shop.
Starting Friday, parcels worth $800 or less will no longer enter duty-free and will face stricter customs inspections. Millions of packages daily will be affected.
In 2023, 1.4 billion shipments valued at over $64bn entered the US under this rule, according to customs data.
Experts warn the change will raise prices, reduce product choice, and challenge small businesses.
Katherine Theobalds, founder of Buenos Aires shoe brand Zou Xou, said: “It might be the end for us.”
Understanding the de minimis rule
Introduced in 1938, the de minimis exemption saved US authorities from collecting small, costly duties.
The threshold increased over time, supporting e-commerce growth and allowing global retailers to ship directly to American consumers.
Companies like Shein and Temu thrived by using the rule to deliver low-cost products straight from factories.
But many other businesses worldwide also built operations around the exemption.
Tapestry, owner of Coach, expects a $160m profit drop this year, with one-third linked to the exemption’s end.
US customs reported that over 90% of cargo previously entered duty-free under de minimis.
Both Donald Trump and Joe Biden criticised the exemption, saying it harmed US companies and facilitated illegal imports.
Trump adviser Peter Navarro said ending the rule will reduce fentanyl shipments and add $10bn to federal revenue.
Trump fast-tracked the repeal with an executive order, cancelling the planned 2027 expiration.
Shippers must now pay tariffs by origin country or choose a temporary flat fee of $80 to $200 per package. The fee option lasts six months.
China and Hong Kong lost access in May, causing Temu to suspend direct US deliveries. Letters and gifts under $100 remain exempt.
Reduced selection and slower delivery
US shoppers may see fewer products and longer delivery times as businesses adapt.
Small exporters now must record the origin of every material, logistics expert Tam Nguyen said. That slows shipments and complicates operations.
Some niche items may disappear as sellers avoid unprofitable exports.
Oregon vinyl collector and psychologist Christopher Lundell had a $5 UK record order cancelled. He called the suspension “political theatre” but acknowledged the intent to protect American firms.
Postal services in Europe and Asia paused shipments to the US, citing uncertainty and preparation time constraints.
Higher prices for consumers
Tariffs now apply according to the origin country.
Goods from the UK and Australia face 10%, while Brazil and India may reach 50%.
Fixed duties range from $80 to $200 depending on the tariff rate.
Officials say the move will strengthen the economy and improve safety for Americans.
Some US companies praised the change. Gap Inc. said the end of the loophole forces fair competition among retailers.
But Deborah Elms, a trade expert, warned that small firms face costly audits and may turn to expensive express couriers, raising prices further.
British retailer Wool Warehouse paused US orders, warning prices could rise up to 50%. The company will display tariffs online for clarity.
At Zou Xou, Theobalds said she must rethink her business model. “Even if prices stay similar, complicated duties may discourage customers,” she explained.
Will China benefit?
US retailers like Walmart and Target could gain if overseas goods become too expensive.
Yet Chinese companies may adapt faster. Shein and Temu operate US distribution centres that reduce tariff costs.
Nguyen said Chinese exporters are already months ahead in mastering customs paperwork compared with other countries.
For smaller businesses, the repeal ends a low-cost entry point. “That easy path into the US market is gone,” Nguyen said.
