US to End Duty Exemption for Small Parcels, Raises Revenue and Stems Fentanyl Flow

The US duty exemption for small parcels ends on Friday, marking a permanent change. Administration officials say this move will raise revenue and help stem the flow of fentanyl into the country. Shippers can opt to pay a flat duty of between $80-$200 during a six-month transition period, depending on the country of origin. The change is expected to impact parcel carriers like FedEx and UPS, and some postal services around the world have suspended shipments to the US.

New York (AP) — The U.S. has ended its duty exemption for low-value imports, marking a significant shift in global trade and e-commerce. Effective Friday, August 29, 2025, international shipments worth $800 or less will no longer be exempt from import taxes. This change, part of President Donald Trump’s agenda to reduce dependence on foreign goods and reset global trade with tariffs, has sparked reactions from businesses and postal services worldwide.

Impact on E-commerce and Small Businesses

The de minimis exemption, in place since 1938, allowed millions of low-value parcels to enter the U.S. duty-free. However, the Trump administration argued that it had become a loophole exploited by foreign businesses to evade tariffs and smuggle illegal goods. The new policy requires all imported goods to be subject to the origin country’s applicable tariff rate, which can range from 10% to 50%.

Small businesses and online shoppers will be particularly affected. For the next six months, carriers handling orders can choose a flat duty of $80 to $200 per package instead of the value-based rate. This temporary measure aims to ease the transition but will still result in increased costs for many businesses.

Reactions from Businesses and Postal Services

Several businesses have expressed concern about the impact on their operations. Kristin Trainor, owner of a boutique in Connecticut, anticipates higher costs for European apparel, potentially leading to price increases or even closure. Shannen Knight, owner of A Sight For Sport Eyes, a store specializing in sports goggles, estimates a 50% price increase on Italian-made rugby goggles.

Postal services around the world have responded by suspending shipments to the U.S. due to uncertainty over processing and payment requirements. Japan Post, Korea Post, and several European carriers have paused deliveries, highlighting the potential disruptions in the global supply chain.

Potential Revenue and Security Benefits

Administration officials argue that the move will raise revenue and help stem the flow of fentanyl into the country. The de minimis exemption had been criticized for facilitating the entry of illegal goods, and the new policy aims to address this issue.

Conclusion

The end of the de minimis exemption for small parcels marks a permanent change in U.S. trade policy. While it presents challenges for e-commerce and small businesses, it also aims to address security concerns and raise revenue. The impact on global trade and the supply chain remains to be seen as businesses and postal services adapt to the new policy.

References

[1] https://apnews.com/article/de-minimis-exemption-end-date-dutyfree-48862fc5b6a563a077284e364fb14f08
[2] https://www.ainvest.com/news/japan-post-suspend-postal-items-wednesday-due-tariffs-termination-de-minimis-treatment-2508/