When the Trump management ends a duty-free provision on low-value imports from China on Friday, users can expect higher rates and longer delivery times.
Companies that have built their designs on sourcing production in China are also being forced to reevaluate their techniques in order to keep their prices down as a result of the validity of the so-called de minimis law, which has allowed up to 4 million low-value items to enter the US every day, mainly from China.
However, some people might actually gain from the removal of the work exemption. For example, US-based businesses may experience a boost in sales and comfort from the competition from cheap Chinese imports.
The move, which applies to products coming from Hong Kong and mainland China, comes in addition to President Donald Trump‘s new taxes totaling 145 % on China. Beijing has retaliated by imposing taxes of 12 % on the US, causing a trade conflict between the world’s two largest economy. Buyers are already observing cautious consumers.
Trump referred to the de minimis provision as” a big fraud against our land, against actually small businesses” on Wednesday.
” We put an end to it,” he said.
What does de minimis mean? The de minimis exception, which was introduced in 1938, was intended to facilitate the movement of small packages valued at no more than$ 5, or roughly$ 109 today. The threshold rose to$ 800 in 2016. However, the rapid expansion of cross-border e-commerce, fueled by China, has challenged the original purpose of the decades-old traditions different concept.
According to a report released in February by the Congressional Research Service, Chinese imports of low-value items increased to$ 66 billion in 2023 from$ 5.3 billion in 2018. And it has been a key destination for tourists to the US.
Former President Joe Biden made a suggestion last year that said foreign companies couldn’t avoid tariffs just by shipping items that they claimed were worthwhile$ 800 or less. Trump attempted to repeal the exceptions in February, but his original order was postponed within days when it became apparent that the US was unable to process and collect tariffs on the impending flow of packages.
What effect does it have on customers? Now that items will go through a more complex customs procedure involving charter and work pay, customers will have to pay higher rates and longer delivery times.
Businesses may include tariffs in the final cost or record them separately, just like they would with sales taxes. For example, Temu, which is owned by the Chinese e-commerce business PDD Holdings, then lists “import costs,” which have officially doubled the rates of many products. ( The retailer also has a “local warehouse” option for some products, which are shipped from within the US and thus avoid the import charge. )
Shein, who is now based in Singapore, has a checkout button that reads,” Tariffs are included in the price you pay.” You’ll never be required to pay extra for delivery.
Despite a report that sparked speculation that the e-commerce giant would soon display the new import charges, Amazon claims it won’t be doing so. The White House has made ominous comments denouncing the rumored change, and it comes amid a report that sparked rumors the White House has made fiery remarks denouncing the alleged change.
What about carriers and sellers? According to Ram Ben Tzion of the vetting platform Publican, parcel carriers will be burdened with collecting duties, and the paperwork required to comply with the new rule could cause more expensive goods as well as delays and even disruptions in delivery.
In accordance with local laws, including the new US rule, major commercial carriers like UPS and FedEx have stated that they are well-equipped and prepared to collect taxes on international packages.
Commercial airlines will be levying 145 % tariffs on declared values. A government agency that provides international mail service, the US Postal Service, has the option of imposing a 120 % tariff on low-value packages or a flat$ 100 per shipment, which will increase to$ 200 starting on June 1.
On May 2, 2025, the US Customs and Border Protection states that it is” stands ready to fully implement the restrictions on de minimis shipments and collect all revenue owed for these shipments.”
However, experts have expressed concern that the rise in the workload may pose a significant challenge.
More than 70 % of the 216 million packages entering the US came from China in January and February, according to CBP.
What effects does it have on businesses? Those who benefited from the de minimis exemption are now forced to make adjustments.
John Curry, the owner and CEO of HAPARI International, a swimwear company based in Arizona, had switched from bulk shipping to de minimis shipping about six months ago to improve cash flow, speed up delivery, and eventually end US-based warehousing. His business produces its goods in China and sells them through its own online storefront to US customers.
Curry said he intended to continue with the plan and pay the additional 145 % duty as he waited for the US and China to come up with a more sustainable strategy.
Both countries cannot survive in this way, Curry said, so there must be a solution.
Izzy Rosenzweig, the founder and CEO of the logistics company Portless, assists companies like HAPARI in using the de minimis exemption to ship goods from its China-based warehouse. Given the competitiveness of the manufacturing base and the supply chain in China, he claims US businesses are likely to remain there for the time being. However, prices can be expected to rise.
Businesses with good profit margins are likely to continue to ship from China, he said, but those with razor-thin profit margins are likely to “go local,” setting up more US-based warehouses to cover tariff costs.
Who benefits? Trade associations representing bike dealers and flag manufacturers said they anticipate the exemption’s end.
The Flag Manufacturers Association of America claimed in written comments on the US Trade Representative portal that its members have been bombarded by an abundance of imports of American flags, mainly from China, that are falsely promoted and significantly discounted. The group cited a decline in industrywide sales of American-made US flags last year of 25 % to 35 %.
Due to fierce competition from cheap imports, Larry Severini, CEO of Embroidery Solutions Manufacturing LLC, which produces the star fields for US flag manufacturers, had to shut down one of his two South Carolina plants earlier this year. He noted that sales have decreased 20 % since 2021, in part as a result of the de minimis exemption.
According to Severini,” we need duties to level the playing field to make it fair.”
According to Heather Mason of the National Bike Dealers ‘ Association, customers frequently check out a$ 2, 000 bike from a reliable brand like Trek and discover a similar one online for$ 1,200, often with lower-quality parts, no warranty, no service, and safety risks.
In an email to The Associated Press, she wrote,” Reputable brands follow strict safety, labor, and warranty standards. De minimis made it possible for bad actors to avoid these.
