US Ends "De Minimis" Rule: Tariff Exemption Ends for Low-Value Imports, Cost Increase for Consumers, China's Gain

The US will end the "de minimis" tariff exemption for international shipments worth $800 or less, affecting millions of daily shipments. This change comes nearly two years ahead of the original deadline set by Congress. The exemption allowed for duty-free imports, but now purchases will be subject to customs review and applicable US tariff rates. China is expected to benefit from the change as consumers may opt for cheaper options, giving Chinese companies like Shein and Temu a boost.

The United States has terminated the de minimis tariff exemption, effective August 29, 2025, nearly two years ahead of the original deadline set by Congress. This change eliminates duty-free imports for shipments worth $800 or less, subjecting these purchases to customs review and applicable U.S. tariff rates. The decision, made under Trump's Executive Order 14324, will significantly impact global e-commerce and logistics.

Impact on E-Commerce and Small Businesses

The de minimis exemption was a crucial lifeline for small businesses and e-commerce platforms like Shein, Temu, Etsy, and Shopify. These businesses thrived on low-value, high-volume shipments from China and other countries [1]. With tariffs now applicable to all shipments under $800, these businesses face a 24% to 60% price increase on goods such as clothing, supplements, and kitchenware [2]. For instance, a $120 pair of wireless earbuds from China now incurs a landed cost of $169.20 due to a 30% tariff and 9% state tax [3].

Small businesses, particularly those on platforms like Etsy, are scrambling to adapt. Many are consolidating shipments to domestic warehouses to reduce per-item costs or passing expenses to consumers, risking cart abandonment [4]. International postal services, including Swiss Post and Royal Mail, have suspended U.S.-bound deliveries to navigate new compliance requirements, exacerbating supply chain delays [5].

Opportunities in Logistics Tech and Compliance Services

The new regulatory environment has created a surge in demand for customs compliance technology and logistics optimization. Startups offering AI-driven solutions for automated tariff calculations, real-time documentation, and risk assessments are well-positioned to benefit [6]. For instance, companies like Flexport and DHL are expanding their services to help businesses navigate the complexities of formal customs entries [7].

Investors should also consider the rise of domestic e-commerce platforms that prioritize nearshoring. By shifting to localized fulfillment hubs, businesses can bypass cross-border tariffs entirely. This trend is evident in the growth of U.S.-based suppliers and the adoption of bulk importing strategies to reduce per-unit costs [8].

Legal Uncertainties and Long-Term Implications

The legality of Executive Order 14324 remains contested. Courts are reviewing whether the administration overstepped its authority under the International Emergency Economic Powers Act (IEEPA) [9]. If invalidated, the de minimis exemption could persist until July 1, 2027, when the One Big Beautiful Act (OBBA) would grant the President discretion over its implementation [10]. This uncertainty complicates long-term planning for businesses and investors, though the broader trend toward stricter trade compliance is likely to endure.

Conclusion

The end of the de minimis exemption is a pivotal moment for global e-commerce. While small businesses and platforms like Temu face immediate headwinds, the crisis also catalyzes innovation in logistics tech and domestic supply chains. Investors who position themselves in compliance services, nearshoring solutions, and AI-driven logistics tools are poised to capitalize on the evolving landscape.

References:
[1] https://www.ainvest.com/news/impact-de-minimis-tariff-exemption-global-commerce-small-businesses-2508/
[2] https://apnews.com/article/de-minimis-exemption-ends-august-29-edc26b9f0d7935ad7978c7eba5e3967c
[3] https://finance.yahoo.com/news/explainer-end-minimis-exemption-impact-040603220.html
[4] https://www.supplychaindive.com/news/de-minimis-change-2025-peak-season-impact/757600/
[5] https://www.cnn.com/2025/08/24/economy/de-minimis-package-delivery-small-business
[6] https://www.ainvest.com/news/de-minimis-policy-shift-implications-global-commerce-era-cross-border-trade-investment-opportunities-2508/
[7] https://www.whitecase.com/insight-alert/united-states-suspend-customs-de-minimis-entry-most-shipments-august-29-2025
[8] https://www.supplychaindive.com/news/de-minimis-change-2025-peak-season-impact/757600/
[9] https://www.jenner.com/en/news-insights/publications/as-president-trump-announces-new-tariffs-federal-circuit-questions-breathtaking-scope-of-trumps-claimed-tariff-authority
[10] https://www.hoganlovells.com/en/publications/de-minimis-customs-exception-for-small-packages-entered-into-the-united-states-to-end-in-august-2025