The United States has scrapped a key tariff exemption that for decades allowed cheap goods to enter duty-free.
Starting Friday, imports valued at $800 or less will face customs duties and stricter checks. The change will hit millions of parcels arriving daily.
In 2023, nearly 1.4 billion shipments worth over $64bn entered without charges under the de minimis rule, customs data shows.
Experts say the policy shift will raise costs for shoppers and make life harder for small businesses.
Shoe designer Katherine Theobalds, who runs the Buenos Aires-based brand Zou Xou, fears for her company’s future. “It might be the end for us,” she admitted.
What was the de minimis exemption?
The rule, introduced in 1938, prevented US authorities from wasting resources on collecting tiny tariffs.
Over the decades, its rising threshold opened the door for online retailers to ship directly to Americans.
Companies like Shein and Temu built fast-growing businesses on the model, offering low prices with no warehouse costs.
But the exemption became a cornerstone for many global supply chains, not just Chinese giants.
Tapestry, owner of Coach, expects a $160m loss due to new tariffs, one-third linked to the exemption’s end.
More than 90% of incoming US cargo relied on the rule, officials confirmed.
Both Donald Trump and Joe Biden criticised the system, saying it hurt US firms and enabled smuggling. Trump adviser Peter Navarro claimed its end would cut fentanyl inflows and raise $10bn a year.
Trump accelerated repeal with an executive order, cancelling the 2027 expiry.
Shippers now must either pay tariffs tied to origin or use a temporary flat fee of $80 to $200 per parcel. That option expires in six months.
China and Hong Kong lost access earlier in May, prompting Temu to halt direct US deliveries. Letters and gifts under $100 remain exempt.
Less variety and slower deliveries
Consumers should expect fewer product choices and longer waits as businesses adapt to new paperwork.
Smaller sellers, once shielded from red tape, now must declare the origin of each material. Logistics consultant Tam Nguyen warned this will delay shipping.
Some niche markets may shrink as exporters decide it is not worth the effort.
Vinyl collector Christopher Lundell in Oregon said his $5 record order from the UK was cancelled. He believes the move is “political theatre,” though he accepts the need to protect US producers.
Postal firms in Europe and Asia have paused US deliveries, citing confusion over how tariffs will work.
The cost of imports climbs
Tariff rates now depend on where goods come from.
Items from the UK or Australia face 10% duties, while those from Brazil or India could reach 50%.
Fixed fees range from $80 for low-tariff nations to $200 for higher ones.
A senior official argued the policy would make the country “safer” and “more prosperous.”
Some American companies applauded the decision. Gap Inc. said it would stop unfair advantages for competitors exploiting the loophole.
Yet trade expert Deborah Elms warned small firms will face steep compliance costs, forcing them to raise prices. Many may turn to pricey couriers while postal services hesitate.
British retailer Wool Warehouse paused exports to the US, its largest market, and warned prices may rise up to 50%. It plans to update its website with tariff information for transparency.
In Argentina, Theobalds of Zou Xou said she must rethink her model. “If the process feels too complicated, buyers may walk away,” she said.
Could Chinese firms gain ground?
Large US chains like Walmart and Target may win customers if overseas goods become too costly.
But Chinese firms could keep an edge. Shein and Temu already operate US distribution centres, lowering tariff exposure.
Nguyen said China is far ahead of others in mastering the paperwork required.
For small online shops, the shift removes a low-cost entry point. “It used to be easy—build a site and start shipping. That’s over now,” Nguyen explained.
