The United States is ending the “de minimis” exemption that allowed low-value commercial shipments to enter the country without facing tariffs. President Donald Trump signed an executive order on Wednesday, which will go into effect on August 29.
Why it matters: The closure of this loophole means any goods shipped through the international postal network will now be subject to tariff rates, potentially impacting e-commerce and international shipping. The move aims to level the playing field for U.S. businesses and curb the import of illicit substances.
The details:
- The exemption previously allowed packages valued at or under $800 USD to enter the U.S. without tariffs if sent outside the international postal network.
- Under the new rules, goods shipped through the postal system will face either an “ad valorem duty” matching the effective tariff rate of the package’s country of origin or, for six months, a specific tariff ranging from $80 USD to $200 USD depending on the country’s tariff rate.
- The use of the de minimis provision has significantly increased in recent years with the rise of online shopping, with ultra-cheap online retailers exploiting the loophole to ship packages directly from countries like China.
- The volume of de minimis shipments has surged to 309 million units so far this fiscal year, up from 115 million for the whole of the previous year, according to recent White House data.
What they’re saying:
- “For too long, countries like China have flooded our markets with duty-free, cheap imports,” said Republican U.S. Senator Jim Banks of Indiana, commending the Trump administration’s action.
- The Trump administration has described the de minimis loophole as a “big scam” that undermines American businesses.
The other side: Some retailers argue that the action is unlawful and threatens their business operations. Economic experts are divided on the potential impact, with some warning of potential price increases and disruptions in the supply chain.
What’s next: The new rules are set to be implemented starting August 29, 2025. Companies relying on imported goods will need to reassess their supply chains and potentially seek new suppliers within the U.S.
