Trump tariffs: End of de minimis exemption to cause changes for online shoppers

With President Donald Trump planning an end to a major exemption to tariffs, consumers and small businesses are facing a major disruption to their purchasing habits.

Trump scheduled the de minimis exemption to tariffs for packages valued under $800 to end Aug. 29. Under the exemption, small packages were allowed to enter the United States duty-free.

The president eliminated the exemption for packages sent from China and Hong Kong in May, but now the exemption will end for packages sent from the rest of the world as well. Trump’s new rules will still allow gifts under $100 in value to enter the country without tariffs.

“The idea behind the de minimis exemption is that low-value items that a consumer might buy directly from an overseas seller, because they’re a small amount, it’s not worth it for customs to really track them and charge a small amount of import duties,” said Rudolf Leuschner, a professor of supply chain management at Rutgers University.

In his July 30 executive order ending the de minimis exemption, Trump cited national emergencies he’d declared involving alleged influxes of drugs and other illegal items from Canada, Mexico and China. Trump has previously claimed, “The fentanyl coming in through Canada is massive,” but just 0.2% of all illicit fentanyl entering the United States is seized at the Canadian border, CNN reported in February.

The president’s executive order also referenced “large and persistent annual U.S. goods trade deficits” and “unusual and extraordinary threats” in justifying the end of the de minimis exemption.

In response to the Trump administration’s decision, several countries, including Japan, Singapore, India, the United Kingdom, and Switzerland, have announced that they will stop shipping parcels to the United States. Letters may still be delivered from these countries, and at least some will still allow shipments of gifts valued under $100 in compliance with Trump’s new rules.

“As of August 26, Austrian Post will no longer be able to accept shipments containing goods for the USA (including Puerto Rico) until further notice,” the postal service in Austria said in a statement. “This is due to changes in customs regulations in the USA. The rule that goods with a value of less than 800 US dollars may be imported into the USA duty-free and tax-free has been abolished. At the same time, postal customs clearance processes have been changed, and there is currently insufficient information available on the customs clearance procedures that will be required in the future. This tightening of regulations poses major challenges for all postal companies worldwide when shipping goods to the USA.”

Leuschner said the suspension of shipments is one aspect of this situation that confuses him.

“It actually was very surprising to me that some countries decided to stop shipment on their end without really any reason, because customs duties are paid in the U.S. by the importer,” he said. “So if I’m the seller, I shouldn’t necessarily care about customs duties at all, because I’m not there locally. I’m not responsible for those customs duties.”

Jason Miller, a professor of supply chain management at Michigan State University, said he expects the end of the de minimis exemption to result in less product variety and fewer options for American consumers.

“Declining variety is not something that shows up in standard economic statistics, but it is a loss of consumer utility,” he said. “Your choice and maybe your ability to get that exact item you want is now curtailed.”

Small businesses may also see a disruption, he said.

On Aug. 25, CNN reported that many international small retailers and Etsy sellers were considering halting sales to the U.S.

“We’re expecting this is going to have major negative implications for cross-border e-commerce, and also just small businesses in general that in many times may be shipping relatively small quantities even to other businesses. So it’s not just business-to-consumer, but there’s also a business-to-business aspect there as well,” Miller said.

Prior to the end of the exemption for China, the Chinese online retailers Shein and Temu had made shipping small packages to the U.S. a core part of their business model, said Leuschner and Miller.

“If folks are paying attention and you pop on Etsy today and try to order something from the U.K., you might not be getting that for quite a while, and/or it may be a situation where the vendor says, You know what? We can’t get it to the U.S. in time, and so we’re not going to be willing to honor that purchase,” Miller said.

Despite the potential fallout, Miller said he suspects the de minimis exemption won’t return, at least not for a while. But nothing is certain. Tariff rules have frequently changed under the Trump administration, and it’s unclear whether the president will adjust the de minimis exemption rules in the future.

“I think,” Miller said, “this is another effort by the administration to find ways of collecting revenue. I don’t see this going away anytime soon, unless there is such an outcry from businesses.”