While the major focus of the White House’s executive order issued on April 8 was the increase in tariffs on imported goods from China into the United States to 104%, the executive order also included updates to the de minimis exemption, which allows goods under $800 sent from China and Hong Kong to the U.S. to not be subject to tariffs.
This follows an executive order issued on April 4, entitled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” which said that the de minimis treatment would remain in place, “until notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expeditiously process and collect duty revenue.” That was followed by a separate Executive Order also issued on Wednesday, stating that adequate systems were now in place to process and collect tariff revenue for covered goods from the China otherwise eligible for duty-free de minimis treatment.
That effectively ended the de minimis treatment for shipments valued at $800 or less and will take effect on May 2 at 12:01 A.M. ET. As previously reported, this move could have a major impact on online retailers like Shein and Temu, which rely on sending goods directly to U.S. shoppers without paying tariffs. Reuters noted that White House said the Commerce Secretary Lutnick would submit a report within 90 days, from April 2, assessing the Executive Order’s impact and considering whether to extend these rules to packages from Macau.
In the April 8 executive order, the White House stated that the initially-announced tariff of 30% of an item’s value or $25 per item, whichever is more, will now be increased to 90% and $75 or more, effective on or after 12:01 A.M. ET on May 2. And it added that fee per postal item containing goods will be increased from an initially-announced $50 to $150, effective, set to take effect on or after 12:01 A.M. ET on June 1.
Adam Napoli, Director, Fulfillment Optimization, for San Diego-based parcel consultancy Shipware, told LM that shippers and brands are being forced to reassess their entire supply chain strategy due to tariff fluctuations and the end of the de minimis exemption in the U.S., adding that the potential to incur higher costs on smaller shipments requires businesses to explore alternative fulfillment strategies, such as using U.S.-based warehouses or shifting to countries with more favorable trade policies.
“The most successful brands will be those that can adjust quickly and efficiently to these new import rules…considering alternative routes, revisiting contracts, and adapting to market changes will be key to staying competitive,” said Napoli.
As for steps shippers can take as tariffs continue to rise in many regions, Napoli explained that it’s more important than ever for brands to stay competitive without compromising their bottom line. One strategy, he suggested, could be to review their entire supply chain to identify areas where they can reduce costs, which could include shifting production to countries with lower tariffs, consolidating shipments to reduce the number of customs transactions, or taking advantage of preferential trade agreements. Another option, he said, is to work with third-party logistics providers who specialize in navigating the complexities of international tariffs, noting their expertise can help ensure that they’re not overpaying on duties and can streamline companies’ international shipping processes.
With the removal of the de minimis exemption, carriers must now report shipment details to U.S. Customs and Border Protection, keep an international bond to guarantee payment, and pay duties on a set schedule. CBP can also require formal entry for any shipment, even if it qualifies for the new flat fee.
President Trump tied the move to the fentanyl crisis, blaming Chinese suppliers for fueling synthetic opioid shipments through small parcels. “President Trump is targeting deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages to exploit the de minimis exemption,” the White House said.
In February, President Trump issued an Executive Order designed to take temporary steps to reinstate the de minimis treatment until the aforementioned adequate systems were in place to fully and expediently process and collect tariff revenue.
A Reuters report noted that this action translated into the more than 1 billion small-value e-commerce packages arriving annually in the United States directly from China needing to switch to an entry process requiring additional information and duties, adding time and cost.
What’s more, United States Postal Service (USPS) said in February that it would no longer accept international inbound mail and packages from China and Hong Kong posts, in the United States Postal Service (USPS) but eventually reversed course on February 5, saying that in conjunction with Customs and Border Protection (CBP) the parties are, “working closely together to implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery.
The impetus for the USPS to initially say on February 4 that it would no longer accept China-originated mail and packages stems from China placing retaliatory tariffs on United States exports to China, following additional 10% tariffs on Chinese goods exported to the U.S., which went into effect on Tuesday, February 4.
John Haber, Chief Strategy Officer, for Transportation Insight, said that some larger shippers anticipating the removal of the de minimis treatment had made proactive moves to set up manufacturing operations in Mexico, while not anticipating the degree of the tariffs rolled out by the White House this week, and making the point that some of the largest announced tariffs were placed on countries that where manufacturing, in some cases, has exited China, like Vietnam and Malaysia, among others.
“This administration is well aware of what has been going on with the flooding the U.S. market with very cheap goods, with very cheap labor, and very cheap shipping costs,” said Haber. “The U.S. does not get the same type of playing field it exports, so there’s that component of it. A lot of this positioned heavily as being fentanyl related, but it’s not just fentanyl and counterfeit stuff. It is impacting companies in the U.S., but the U.S. is not getting this reciprocal treatment, which people argue about. Is it going to impact things? Yes, it’s going to impact all kinds of things, and it’s going to impact the U.S. economy in the short term, for sure, because it creates confusion, and people have to change what they’re doing, and everyone has to adapt to it. And people that have businesses set up that haven’t adapted to it also don’t have contingency plans. I mean, just, you know, the fact that we’re all having we’re talking about it. I mean, focus on business. This is going to have an impact on the economy, but it needed to be done.”
As reported by LM, under the Biden administration, the White House in 2024 said it was taking steps towards changing the rules around imports claiming the $800 de minimis exemption.
Noting that the majority of shipments claiming the import exemption originate from several China-founded e-commerce platforms (like Shein and Temu, among others) the White House proposed impactful changes in which the de minimis exemption might not be allowed for products to which Section 201, 301, and 232 duties might otherwise apply.
