What the end of the de minimis exemption could mean for your online orders

If you’ve purchased something from Chinese e-commerce giants Shein, Temu or Alibaba, then you may have benefited from a trade loophole called the de minimis exemption.

The longstanding exemption allows packages valued at under $800 to enter the U.S. without being subject to tariffs. The goal was simple: The government would save the expense of processing a tariff fee that is lower than what it costs to collect it. Many other countries have similar exemptions, though the U.S. has one of the highest thresholds.
“It doesn’t make sense to spend a dollar trying to collect 50 cents worth of tariffs or duties,” said Clark Packard, a research fellow at the Cato Institute, a public policy think tank based in Washington, D.C.

As part of his escalating trade war with China, President Donald Trump signed an executive order this month ending the decades-old exemption on packages coming into the U.S. from China and Hong Kong. It goes into effect May 2.

In response, Hong Kong’s postal service has suspended package delivery to the U.S. Chinese-based companies Shein and Temu have already announced they will raise prices for U.S. customers starting April 25, citing increased operating expenses. Companies and brands elsewhere, including Amazon, fulfill some orders in China and could also be subject to this executive order.

What does this mean for consumers? Likely some higher prices, and possibly some longer shipment times — but there are a lot of unknowns, too.

Why did Trump end the de minimis exemption?

The idea of ending the de minimis exemption is not new. Lawmakers and government officials have pointed to de minimis shipments as a “major pathway” for illegal drugs.

Trump’s executive order described ending the exemption as a way to stop “deceptive shipping practices by Chinese-based shippers, many of whom hide illicit substances, including synthetic opioids, in low-value packages.”

In September of 2024, 126 House Democrats signed a letter urging then-President Joe Biden to end the de minimis exemption for China. The letter, signed by both more centrist and progressive Democrats, claimed the influx of cheap goods from China “threaten U.S. manufacturers, hurt union workers and local retailers, and expose American consumers to great risk by flooding the market with fake and sometimes dangerous imported goods, including fentanyl and precursor chemicals from China.”

The Biden-Harris administration proposed new rules for the de minimis exemption in 2024, citing some of these concerns. This included changes to who is eligible for the exemption and more data about each shipment. It also called on Congress to pass more comprehensive legislation around the de minimis rule, including exclusions for apparel and textiles.

“The growing volume of de minimis shipments makes it increasingly difficult to target and block illegal or unsafe shipments,” the White House said in a 2024 statement.

Some industry experts, including those from the National Council of Textile Organizations, a trade group that lobbied for the de minimis shipments to end, are celebrating Trump’s decision, saying it will help U.S. manufacturers.

Critics and challenges

Packard and other experts have said ending this exemption may have limited effects in curbing illegal drugs, nor will it remove existing challenges for U.S. manufacturing.

Packages that arrive under the de minimis exemption are subject to the same review as other cargo, including being scanned for illegal substances. Most fentanyl and other synthetic opioids enter the U.S. through the southern border with Mexico, according to the federal government. Packard said that while China is a heavy producer of precursor chemicals used to produce fentanyl, focusing only on this country leaves out other large suppliers of the drug, such as India and Myanmar. Money spent on ending this exemption could be used to develop broader and more sophisticated tools for detection and intervention, he said.

Businesses could also side step the new rules by adding a new country where the de minimis exemption is still in place to the supply chain.

“This is what’s known as sort of the Tijuana two-step,” Packard said. “If you’re sending a $1,500 package from China that’s ultimately bound for the United States, what you can do is send it to Mexico, split it into two $750 packages and ship it from Mexico to The United States.”

It’s also not clear whether American manufacturers can produce such goods at the same price points as their foreign competitors, and whether American workers would be interested in textile manufacturing jobs required to meet market demands.

“I don’t believe that there’s an outcry or much demand [from] Americans looking to work in textile manufacturing these days.” Packard said. “Simply put, we’re a high-wage country and those tend to be pretty low paying jobs.”

What will the end of the de minimis exemption mean for American consumers?

Ninety-two percent of all cargo entering the U.S. falls under the de minimis exemption, according to Customs and Border Patrol.

Packages valued at or below $800 will face new tariffs and fees starting May 2, the White House said, with some increases planned for June.

American consumers should expect higher prices, Packard said, though it is not clear how companies will handle the new tariffs . In nearly identical statements from Shein and Temu announcing price hikes following the executive order, both retailers promised to, “keep prices low and minimize the impact on you.”

Aside from the new fees, the executive order could make packages take longer to reach your doorstep.

“One of the benefits of the exemption is that it helps speed up and facilitates the pretty seamless flow of goods to American consumers,” Packard said.

Now, shippers will have to report each package to U.S. customs, which could require further processing for tariff fees.

In early February, Trump ended the de minimis exemption briefly, for the first time, with little advance warning. “And in the two days that the exemption was suspended for China, something like a million packages sort of piled up at JFK,” Packard said.

A CPB official in 2024 testified that the agency processed more than 1 billion entries under the exemption and were on track to far surpass it that year. The official also testified that the average de minimis entry in 2023 averaged $54. Packard said questions remain around how U.S customs will process this high number of packages for duty fees.