The United States has scrapped its long-standing tariff exemption for low-cost imports, a move set to reshape shopping.
From Friday, parcels valued at $800 or less will no longer be duty-free and must clear stricter customs checks. Millions of shipments will be affected each day.
In 2023, more than 1.4 billion packages worth over $64bn entered America under this exemption, customs figures show.
Experts warn prices will rise, options will shrink, and small businesses may struggle to survive.
Buenos Aires shoemaker Katherine Theobalds fears for her brand Zou Xou. “It might be the end for us,” she said.
The story behind de minimis
The rule, first introduced in 1938, aimed to save money by avoiding collection of small tariffs.
Over the decades, the threshold grew, boosting global e-commerce and enabling direct-to-consumer shipping.
Companies like Shein and Temu thrived by sending cheap goods straight from factories to US buyers.
But countless other firms also built their models around the exemption.
Coach’s parent Tapestry warned investors of a $160m profit hit, with one-third linked to the rule’s end.
Shipments under de minimis made up over 90% of US cargo entries.
Both Donald Trump and Joe Biden criticised the exemption, claiming it hurt domestic firms and enabled illegal imports.
Trump adviser Peter Navarro said the repeal will cut drug inflows like fentanyl and generate $10bn annually.
Trump accelerated the change with an executive order, scrapping its planned 2027 phase-out.
Shippers must now pay tariffs by origin or choose a temporary flat fee between $80 and $200, available for six months only.
China and Hong Kong already lost access earlier this year, forcing Temu to suspend US sales. Gifts and letters under $100 remain untaxed.
Fewer choices and slower delivery
Analysts say US consumers will face fewer options and slower deliveries as companies adapt.
Smaller exporters now need to document each material’s origin, said logistics expert Tam Nguyen. That task makes shipping slower and more complex.
Niche items may disappear from international markets as sellers drop unprofitable exports.
Oregon-based psychologist and vinyl collector Christopher Lundell lost a $5 UK record order after the seller stopped shipping to the US. He called the policy “political theatre” but accepted the goal of protecting American firms.
Postal services across Europe and Asia suspended US deliveries this week, citing uncertainty and insufficient preparation.
Higher costs on the horizon
Tariffs will now apply based on country of origin.
Rates start at 10% for the UK and Australia but rise to 50% for Brazil and India.
Flat duties range from $80 for low-tariff nations to $200 for high-tariff ones.
Officials insist the shift benefits Americans by making them “safer” and “prosperous.”
Some US companies cheered. Gap Inc. said removing the loophole forces rivals to compete fairly on duties.
Yet trade expert Deborah Elms warned small sellers face costly audits and may turn to express couriers, raising prices further.
UK-based Wool Warehouse halted American exports, warning prices could rise 50%. It promised to publish tariff costs online for transparency.
At Zou Xou, Theobalds said she must rethink her strategy. “Even if prices stay stable, complex duties could scare off buyers,” she explained.
Could China come out ahead?
Big-box US retailers may benefit as shoppers return to Walmart or Target.
But Chinese giants may adapt faster. Shein and Temu have US distribution hubs that soften tariff costs.
Nguyen said Chinese firms are already months ahead in handling the paperwork.
For smaller firms, the repeal ends an era of easy entry. “That low-cost doorway has closed,” Nguyen concluded.
