In a significant policy change, U.S. President Donald Trump has signed an Executive Order ending the de minimis exemption. This exemption once made it possible for every single package valued under $800 from China to enter the country duty free and not go through normal customs processes. This would result in at least $10.9 billion in new expenses, disproportionately harming lower-income and minority households. With uncertainty growing, businesses and consumers are both trying to figure out what this decision means for them.
As economists Pablo Fajgelbaum and Amit Khandelwal recently explained, removing de minimis will most harm disadvantaged communities. This expected jump in expenses is hitting just as many families are experiencing major financial strains. Last year, almost 1.4 billion of these packages came to the U.S. using the de minimis exemption. That equals out to over 3.7 million packages per day and this transition has the potential to significantly alter consumer behavior and purchasing power.
For affected small businesses, the end of de minimis is a very real burden. Indochino, makers of made-to-measure men’s suits made in China, is understandably alarmed by the new policy. They’ve done so in strikingly clear and emphatic terms. The industry has been raising alarm on this exemption’s expiration. They believe it represents an enormous existential threat to the future viability of their business model. From a corporate perspective, Indochino has made mighty strides to reduce its dependency on Chinese factory production. Months ago, that company ceased new orders from China, bracing for the likely disruption.
Consumers are already experiencing the effects. Deborah Grushkin, an enthusiastic online shopper from New Jersey, voiced her panic upon hearing about the end of de minimis. “I felt like maybe it was my last sort of hurrah,” she reflected, emphasizing the emotional weight of this shift for avid online shoppers.
Krystal DuFrene, a 57-year-old retired worker from Mississippi who lives primarily on disability payments, expressed fears about the economic effects. “I don’t know who pays the tariff except the customer,” she stated. DuFrene is dismayed that consumers will bear the brunt of these new costs. Millions of Americans living paycheck to paycheck feel the same way.
The effects of these shifts go beyond what they save members one-by-one to larger social costs. Kiavash Asghari warned against inflation. He added that it would be sad if folks who are making less than quadruple the median household income were not able to afford diapers and milk. The main point of worry here is not just about the cost burden, but inequity that could grow as expenses escalate.
Gee Davis, a 40-year-old speculative fiction writer and educator, from Missouri, has experienced these changes firsthand while planning his new house purchase. He started shopping for these lower-cost, small purchases on new online platforms like Temu. He selected one electric can opener and one set of kitchen cabinet organizers for his house. With higher tariffs on these purchases just around the corner, he has no idea what future shopping trips will look like.
Experts warn that the quickening pace of these changes may still be surprising to many businesses. Companies will take too long (if they ever do) to pivot. Steven Borelli, an industry analyst, noted that “the speed at which everything is happening is too fast for businesses to adjust.” As companies adjust their business models to new and increasingly dynamic tariff structures and regulatory environments, consumers are left to shop in an increasingly confusing marketplace.
While safety should always take precedence, in these conversations some pro-consumer advocates still push for the total abolition of de minimis. Lori Wallach, director at Rethink Trade, said ending this exemption will enhance consumer health and safety. By setting the bar higher for imported goods, we can do more to protect American consumers. The possible monetary consequences for consumers are still a hot topic.
The end of de minimis is an important step in the wrong direction. It will have outsized effects on the business and consumer sides of the equation. Households are already bracing for a spike in costs. At the same time, businesses are re-evaluating their supply chains. Everybody may see the real effect of this choice in the months ahead.