In addition to the implementation of sweeping tariffs on United States global trading partners earlier this week, the Executive Order issued by the White House also included language regarding the end of the de minimis treatment, which allows goods under $800 sent from China and Hong Kong to the U.S. to not be subject to tariffs.
On Wednesday, the White House Executive Order, entitled “Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits,” 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 are 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 ends the de minimis treatment for shipments valued at $800 or less and will take effect on May 2 at 12:01 A.M. ET. 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.
For shipments not sent through the international postal system, these goods will now be hit with regular duties. If they are sent through the postal system, they’ll face a flat fee of either 30% of the item’s value or $25 per item, whichever is more. That fee will go up to $50 after June 1.
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.
The exemption has led to a flood of packages into the U.S.—1.4 billion last year alone, with more than 90% entering duty-free. Around 60% of those came from China.
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.
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.
Rob Martinez, Founder of San Diego-based parcel consultancy Shipware LLC, told LM that the White House’s move to eliminate the de minimis trade exemption for shipments from China and Hong Kong is going to have real consequences for carriers like FedEx and UPS, and the shippers that rely on them.
“That $800 exemption has been a major factor behind the explosion of small-package imports from platforms like Shein and Temu,” he explained. “According to U.S. Customs and Border Protection, over 1.36 billion shipments came in under de minimis in FY2024—more than double what we saw just four years ago. Without that exemption, those low-value shipments will now face duties and added customs scrutiny. That likely means fewer of them, and more delays and higher costs for the ones that do come through.”
And for shippers—especially those bringing in high-volume, low-margin goods from overseas—Martinez said they are going to feel that impact with this change.
“Costs go up, volumes may go down, and someone’s going to have to eat the difference, whether it’s the business or the end customer,” he said. Some of these businesses just won’t be able to make the numbers work. We’ll likely see some shops shut down or scale way back. Long-term, some businesses will probably try to shift sourcing away from China, or look for ways to manufacture closer to home. But that’s not something you just flip a switch on—it takes time and money. In the meantime, we’re going to see some growing pains across the board.
On the logistics side, he observed it could mean fewer jobs in warehouses or slower growth for last-mile delivery operations.
“You might also see carriers tightening their belts, shifting routes, or trimming services that aren’t profitable without that high import volume,” he said. “Bottom line: This is a big shift in how cross-border e-commerce works, and both carriers and their customers will need to adjust quickly. The ripple effects across parcel networks, pricing strategies, and customer expectations could be significant.”
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.”
Scott Sangster, General Manager, Logistics Services Providers, Descartes, noted that the most significant implication of the removal of de minimis is that it fundamentally alters the commercial considerations of importing lower value products. To that end, he said that adding significant duty charges to previously duty-free products may make their unit cost prohibitive to consumers, coupled with potentially more onerous ‘handling’ charges from logistics service providers to cover the new overhead of collecting and paying the duties.
From a modal perpsective, he said that the changes to the de minimis rule may not materially result in a modal shift from air to ocean shipments as these mode options have been utilized by shippers based upon transportation costs and time to market in the past.
“The changes to de minimis may be more impactful to the volume of goods imported into the U.S. and their country of origin than the mode of transportation,” said Sangster.
When asked how CBP and other agencies are evolving their inspection and compliance efforts, and what strategic options businesses have if they’ve relied on low-value shipments from Chin, Sangster said it is also unclear.
“When the de minimis exemption was previously cancelled earlier this year, it was almost immediately reinstated because CBP and the USPS were not in a position to process and collect the new duties,” he said. “There has been some speculation that the U.S. is considering the establishment of a new regulatory body called the External Revenue Service, which would have the mandate to collect new duties. This has not been officially confirmed by U.S. officials as yet.
