This is a huge, historic change to e-commerce that is currently unfolding. The federal de minimis exemption, which allowed items sent to individuals worth under $800 to be imported into the United States without duties, has lapsed. It has sparked concern with the recent shift, motivated by a push for tighter trade regulations. Consumers and industry experts have expressed concern over its potential impact on shopping behavior and prices.
This de minimis exemption has been key in helping create, and then reshape, how millions of Americans shop online. For years, it enabled consumers to bypass tedious inspections and paperwork, facilitating a smooth process for receiving goods from overseas. Research shows that overwhelmingly, most of these shipments came from China and Hong Kong. Meanwhile, U.S. Customs and Border Protection (CBP) boasted record-breaking figures for the past fiscal year. Nearly 1.36 billion packages came into the U.S. through this loophole.
Advanced ultra-low-cost e-commerce platforms such as Shein, Temu, and AliExpress have become experts at exploiting the de minimis exemption. In doing so, they’ve deluged American consumers with an inundation of cheap goods. Almost 50% of our de minimis packages were delivered to economically disadvantaged zip codes. By contrast, just 22% were sent to more affluent neighborhoods. This is indicative of a broader trend in how these platforms have been serving the needs of American consumers.
The end of the de minimis exemption will create a radically different purchasing experience for most Americans. Tariffs on goods from China and Hong Kong that are shipped through any of the major carriers – UPS, DHL, and FedEx – will now be subject to a baseline rate of 145%. In particular, consumers should brace for the first thing they see—the price tag for whatever they want to buy online—to go up immediately.
“And we’ve ended, we put an end to it.” – Donald Trump
The U.S. Postal Service (USPS) went so far as to temporarily suspend deliveries from China in response to these alterations. As the flat fee for de minimis imports is set to increase to $200 come June 1, it will distill abstract trade policy into something much more tangible: a receipt reflecting higher costs for everyday items.
E-commerce behemoth Shein has even started training their consumers for the coming price increases. In a recent public notice, Shein announced that global trade rules and tariffs were evolving. Operating costs have naturally gone up as a result. In order to continue providing you with the quality products you are accustomed to, we have made the decision to raise our prices. They emphasized their commitment to maintaining affordability: “We’re doing everything we can to keep prices low and minimize the impact on you.”
All these reassurances aside, consumers are starting to revolt at the dramatic increases they are incurring. Rena Scott, an avid shopper, remarked, “I can’t afford to buy from Temu now, and I already couldn’t afford to buy in this country.” During this discussion, it became clear just how difficult this is for lower-income consumers, who have largely relied on these affordable shopping alternatives.
The impact of the end of the de minimis exemption goes well beyond the average online shoppers. De minimis imports accounted for over 80% of total U.S. e-commerce shipments in 2022. The upcoming changes could turn this happy trend upside down, putting Americans’ newfound appreciation for online shopping on the chopping block.
With e-commerce driving the biggest changes in global trade we’ve seen in decades, these tariffs are sure to have widespread effects across many industries. In light of shifting consumer preferences and a more complicated regulatory environment, retailers will have to adjust and refine their approaches.