De minimis is a duty-free exemption on Chinese imports to the US valued at or under $800. It’s being removed by the Trump administration as of May 2, 2025, as part of a raft of extensive tax adjustments.
The regulation’s removal is bad news for any business that has built a model on top of sourcing production to China and Hong Kong, from dropshippers to many tech hardware companies. Consumers, meanwhile, can expect to see delays in package deliveries in addition to hikes in prices.
Here’s how the change could impact your business, and how you can respond.
What Is the De Minimis Exemption?
The de minimis was created in 1938 for the same reason you’d expect: To encourage the sales of small packages. Not only did qualifying packages avoid paying tariffs, but the package carriers didn’t need to file paperwork for them, either.
Ecommerce has boomed in the years since the exemption threshold rose to $800 back in 2016, with annual sales of low-value China and Hong Kong exports totalling $66 billion in 2023, a big jump from the $5.3 billion total in 2018. Those numbers refer to global exports, but the US is China’ biggest trade partner (a status that recent tariffs seem set to change).
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Trump initially announced the exemption’s removal from China exports in February and had to pause the process, but has now officially gotten rid of it, effective Friday, May 2, 2025.
The official exemption — as provided by 19 U.S. C. § 1321(a)(2)(C) — allows for one shipment of goods (per person, per day) valued at or under $800 to enter the U.S. with no duty and import taxes. It’s still in effect for other countries outside of China and Hong Kong for now, but that could change in the future.
How Does This Impact Sellers?
Parcel carriers are the ones who will be charged with collecting the new duties, giving them a bunch of additional paperwork to figure out. Those extra costs will likely be passed on in the form of higher prices for deliveries, and the sheer legwork required will probably also cause shipping delays.
In other words, sellers will be faced with higher prices and slowing shipping times. They’ll need to figure out if they’re going to eat the costs themselves, pass the higher costs on to their customers, or some combination of the two responses.
The right choice depends in part on the market cost for your industry, and how your rivals are handling it. But it’ll also depend on your business fundamentals: Can you afford the changes? Many businesses won’t be able to handle the higher costs and can’t shift production to the US (or another country) quickly enough. Those businesses will have to shutter.
How High Will Costs Get?
Currently, the effective tariffs that US sellers sourcing products from China through commercial carriers will have to pay: 145% of the value of the product.
Since the US Postal Service is a government agency, it can charge slightly less: Postal Service tariffs on low-value packages will be either 120% or a flat $100 per shipment. It’ll get more pricy, though: On June 1, that flat rate will increase to $200.
A package that would have cost $12 earlier this year (assuming a 20% tariff on a $10 item) will now cost $22 from the Postal Service or $24.50 from commercial carriers like UPS or FedEx.
How Does It Impact Consumers?
Ecommerce sites are already increasing their costs to account for the hike in taxes.
According to shoppers’ reports, prices are up at fast-fashon sites like the Chinese e-commerce site Temu and its competitor, Shein. Amazon even got in trouble with Trump himself earlier this week, when reports surfaced that the company was considering adding tariff costs as a separate surcharge on the checkout page.
Amazon has since clarified that this plan was “never approved” and won’t be happening. Still, the tariff costs will no doubt lead to an increase in prices on Amazon items.
Are We in for a Secondhand Clothing Boom?
One potential option for cash-strapped customers: Opting for a secondhand market. Brands like Depop, ThredUp, and Poshmark all offer secondhand clothing. A new ThredUp report found that this industry grew 14% last year, thanks in part to Gen Z interest, and with the de minimis exemption rollback, a much larger audience might be opening up.
Some additional bulletpoints from that report:
- The global secondhand apparel market is expected to reach $367 billion by 2029, growing at a compound annual growth rate (CAGR) of 10%.
- The U.S. secondhand apparel market is expected to reach $74 billion by 2029.
- The U.S. secondhand apparel market grew 14% in 2024, seeing its strongest annual growth since 2021 and outpacing the broader retail clothing market by 5X.
- In 2024, online resale saw accelerated growth for the second consecutive year at 23%, growing at its strongest rate since 2021. It’s expected to nearly double in the next 5 years, growing at a CAGR of 13% to reach $40 billion by 2029.
Naturally, there are only so many secondhand clothes to go around… meaning that tariff-driven interest will likely lead to price increases in that market as well.
$22B Impact to Global Freight Over Next 3 Years
Overall, the global impacts could be huge. According to experts who spoke with logistics news site The Loadstar, the price tag might be around $22 billion across the next three years.
That’s according to Derek Lossig, founder and senior industry advisor of ecommerce and transportation at Cirrus Global Advisors, who says that “The number of flights directly tied to e-commerce volumes over the Pacific is going to drop by as much as 90%, because China to US is the number-one airfreight tradelane in the world […]”
Another expert in the same article summed it up this way: “If ecommerce shippers sneeze, the rest of the world gets a cold.“
Cargo sellers might have long-term commitments for capacities that they’ll now have an unexpectedly hard time accomodating, adding extra stress. This month, or June at the latest, China-US cargo will likely dramatically slow down.
