US ends duty-free rule for small shipments: How US shoppers will be affected by new tariff rules

Starting Friday, US shoppers will face higher costs for low-cost goods as the long-standing de minimis exemption rule comes to an end. This rule, which had allowed small shipments under $800 to enter the US without customs duties, is now being replaced with a more stringent system that imposes fees on nearly all packages.

The move, backed by the Trump administration, aims to curb the flow of low-cost goods while also addressing security concerns, but it could lead to price hikes for consumers and pose new challenges for businesses.

What is the De Minimis rule?

The "de minimis" rule, a Latin term meaning "about the smallest things," has been in place since 1938. Originally designed to avoid the administrative burden of collecting small import duties, it allowed goods under a certain threshold (initially $200, later raised to $800) to enter the US duty-free. This exemption fueled the growth of global e-commerce platforms, notably Chinese retailers like Shein and Temu, who leveraged the rule to ship cheap goods directly to consumers without warehouse overhead.

However, this system, which saw shipments under the exemption comprise over 90% of all cargo entering the US, has now been called into question. Critics argue that it has been exploited to smuggle illegal goods, such as fentanyl. As a result, the Trump administration has fast-tracked a move to eliminate this exemption ahead of its planned expiration in 2027.

What has changed with the new rules?

Effective from 12:01 a.m. EDT on Friday, all packages, regardless of value, will be subject to normal duty rates. Previously, shipments under the de minimis rule had been exempt from duties, but now, the US Customs and Border Protection (CBP) will begin enforcing full tariffs. The exception is for letters and personal gifts valued at less than $100, which remain duty-free.

For packages over the $800 threshold, shippers can choose between paying duties based on the country of origin's tariff rate or opting for a fixed fee. This fee ranges from $80 to $200, depending on the country, with countries like China, Brazil, and India facing the highest charges. The flat-rate option is only available for a six-month transition period, after which full tariff rates will apply.

How will this affect US shoppers and businesses?

While the rule is intended to create a more secure and regulated trade environment, it is expected to result in higher costs for consumers. Businesses that relied on the de minimis exemption, including Shein and Temu, will likely pass the added costs on to their customers. This could affect a range of industries, from fashion to tech, where low-cost goods were routinely shipped from overseas.

Additionally, companies like Tapestry, the parent company of Coach, have already noted that the new tariffs will negatively impact their profit margins. Tapestry has estimated a $160 million hit to its profits, with a third of that attributed to the end of the de minimis exemption.

For US shoppers, the price of small imports from overseas could rise significantly. Moreover, businesses may have to adjust their logistics strategies to comply with the new system, leading to potential delays in delivery and more paperwork.

The global impact

The shift in US customs policy isn't limited to American shores. It has already affected global e-commerce giants like Temu, which ceased direct sales to the US from China after the removal of the exemption. Other foreign postal services are also adjusting to the new rules. According to the White House, foreign postal services will need to decide whether they want to collect duties based on the value of the goods or pay a flat-rate tax for shipments to the US.