New Duty-Free Exemption Policies

The recent decision by the Trump administration to eliminate the duty-free exemption for low-value imports from China and Hong Kong is set to take effect soon. This policy change accompanies new tariffs, rising to 145%, framing a broader trade conflict between the United States and China. As both nations impose reciprocal tariffs, consumers are poised to experience significant changes in pricing and delivery times.

What This Means for Consumers

With the removal of the de minimis exemption, consumers in the U.S. may face increased prices and potential delays in receiving their packages. The associated customs processes necessitate duty payments and declaration, complicating what was once a straightforward delivery process.

Retailers such as Temu, a subsidiary of PDD Holdings, are adjusting their pricing structures to account for these new tariffs, which have reportedly resulted in drastic price increases. Customers shopping on Temu may now see “import charges” added to their orders. Similarly, Shein has communicated that tariffs are included in its listed prices to simplify the checkout experience for consumers.

The Concept of De Minimis

The de minimis rule was originally established to facilitate the processing of small packages valued at $5 (approximately $109 today). This exemption limit was increased to $800 in 2016, coinciding with a marked rise in low-value exports from China, which surged to $66 billion in 2023, up from just $5.3 billion in 2018. This substantial growth highlights the U.S. market’s significance in global trade.

On May 2, 2025, these exemptions will cease to exist, directly impacting how these low-value shipments are processed.

Consequences for Sellers and Carriers

As the new rules are implemented, parcel carriers will be responsible for collecting the applicable duties, leading to potential disruption in delivery services. Experts, including Ram Ben Tzion from Publican, warn that this added complexity could not only inflate costs but also disrupt shipping schedules. Major shipping companies like UPS and FedEx are preparing to collaborate with customs to enforce these new regulations.

Interestingly, the U.S. Postal Service will have the flexibility to either charge a 120% tariff on low-value packages or implement a flat fee starting at $100 per shipment, set to increase to $200 on June 1.