U.S. Suspends De Minimis Exemption: Big Changes for Ecommerce Retailers
The U.S. government has suspended the de minimis exemption, a move that could significantly impact small ecommerce retailers, dropshippers, and fast-fashion sellers. This change, which came into effect in May for shipments from China and Hong Kong, and will be fully implemented in August 2025, means that all shipments, regardless of value, will undergo full customs procedures.
The de minimis exemption, initially set at $1 per package, had been gradually increased to $800. This allowed cross-border dropshippers and fast-fashion brands to flood the U.S. with low-value packages duty-free. However, the suspension of this exemption means that consumers may now face increased prices on these previously duty-free goods.
Major U.S.-based shipping and logistics firms like FedEx and UPS may see more profitable business in the long run. With all shipments now subject to full customs procedures, these companies can expect increased revenue from customs clearance and shipping services. U.S.-based retailers who adapt to the new import tariff processes and leverage tariff reductions from recent trade agreements may also find opportunities for profitability.
The elimination of the de minimis exemption changes the landscape for ecommerce businesses. While it may present challenges for small retailers and consumers in the short term, it aligns with the original aim of the 1930 U.S. Tariff Act to save money by removing low-cost imports from customs and duty processing. The U.S. Postal Service has a six-month phase-in period for the change, providing some time for businesses to adjust to the new rules.
