U.S. Ends Duty-Free Rule for Low-Value Imports, Reshaping E-Commerce

The longstanding “de minimis” exemption, which allowed goods valued at $800 or less to enter the United States without paying duties or undergoing full customs clearance, will officially be suspended on August 29 under a sweeping executive order signed by President Donald Trump.

The move, which accelerates the repeal already slated for 2027 under the newly enacted One Big Beautiful Bill (OBBBA), is being presented by the administration as a national security measure aimed at curbing trade abuses and illicit smuggling through international parcel networks. While the political justification is framed around economic and public safety priorities, the more immediate and tangible consequence will be sharply felt by consumers and small businesses that rely on inexpensive international e-commerce shipments.

The change affects all countries—not just China and Hong Kong, which were previously singled out earlier this year. Under the executive order, all shipments entering the United States, regardless of value, will be required to undergo formal customs clearance, complete import declarations, and pay the applicable duties and taxes. This ends decades of streamlined entry for low-value parcels and fundamentally reshapes how cross-border e-commerce operates.

For customers, this means higher prices, slower delivery times, and increased complexity. What once arrived at your doorstep within days from a foreign seller will now likely pass through multiple layers of processing, with importers (often individual consumers) bearing the cost of compliance.

The de minimis threshold was originally implemented to ease the administrative burden on U.S. Customs and Border Protection (CBP) by waiving tariffs on negligible-value imports. Over time, however, it became a central pillar of global direct-to-consumer commerce, particularly for Chinese platforms like Shein, Temu, and AliExpress. These companies built entire logistics strategies around this exemption, sidestepping traditional import processes by shipping individual parcels via airfreight directly to U.S. consumers.

U.S. Customs data underscores the scale of this practice: de minimis shipments surged from 134 million in 2015 to over 1.36 billion in 2024, with daily volumes averaging more than 4 million parcels. According to industry estimates, over half of all goods shipped by air from China to the U.S. last year were low-value e-commerce shipments—1.2 million metric tons of them.

By invoking the International Emergency Economic Powers Act, Trump declared the abuse of de minimis as a national emergency, citing its role in tariff evasion and, more controversially, in the trafficking of fentanyl and other illicit goods. The administration argues that the exemption has functioned as a loophole for subsidized, substandard, and in some cases dangerous products to enter the country without oversight.

Since the removal of de minimis privileges for Chinese-origin goods in May, sales from fast-fashion platforms like Shein and Temu reportedly declined by as much as 50%. The drop-off has already rippled across global air cargo markets. According to trade data, airfreight volume from Asia to the U.S. declined 10.7% within two months of the exemption’s repeal. Major express carriers such as UPS and FedEx have confirmed significant volume decreases—UPS reported a 35% drop in daily China-to-U.S. shipments in May and June.

Now that the exemption is being revoked globally, the disruption will expand beyond China. Retailers based in Europe, Latin America, and Southeast Asia who rely on low-cost parcel delivery to reach U.S. consumers will face the same hurdles as their Chinese counterparts. And while some larger enterprises may shift to bulk shipping and establish domestic fulfillment networks, smaller online sellers and mom-and-pop businesses are unlikely to afford the transition.

Logistics providers, particularly those based in the United States, are expected to benefit from the pivot. With the new rules forcing inventory into domestic warehouses, there will be increased demand for freight forwarding, customs brokerage, and last-mile delivery services. PNG Logistics is closely monitoring developments related to the de minimis repeal and the ripple effects on international shipping and fulfillment. We are advising clients on updated compliance obligations, import filing requirements, and adjusted timelines and costs for shipments entering the U.S.

Importantly, the executive order does not merely shift the burden to the sender. For the millions of U.S.-based buyers who’ve grown accustomed to $2 socks, $5 electronic accessories, or $10 fashion items arriving duty-free, the reality starting August 29 is that each shipment will now require a customs entry. For many, that means either becoming the importer of record or purchasing from a U.S.-based seller who assumes that role.

To ease the transition, the executive order allows a flat-rate option on parcels for the first six months. Depending on the origin country’s tariff designation, goods will be charged a set amount—ranging from $80 to $200 per item—instead of the standard ad valorem rate. But this is still a significant cost increase for items previously entering tariff-free. Countries that fail to negotiate new tariff deals with the U.S. could face even steeper rates. Currently, most U.S. trading partners are operating under a temporary 10% tariff umbrella that expires on August 1. Without formal deals in place, they risk exposure to double-digit emergency tariffs.

Postal operators are also affected. The U.S. Postal Service (USPS) lacks the infrastructure to interface directly with CBP’s entry systems. As a result, air carriers and freight consolidators moving goods through the postal system must now collect and remit duties on behalf of customers—an administrative and financial responsibility that few are eager to take on. Since May, neither China Post nor Hong Kong Post has sent parcels to the U.S., with trade experts citing carrier reluctance to assume liability for duty payments.

Even though CBP says it is now ready to handle the increased processing burden, the logistics of managing millions of new formal entries daily remain daunting. U.S. Customs is rolling out additional automation tools, but the transition could result in delays, errors, and bottlenecks—especially in the early months. PNG Logistics is in ongoing contact with its carrier and customs partners to ensure that clients receive timely updates and that disruptions are minimized.

The de minimis repeal has also been lauded by domestic manufacturers and trade groups. The National Council of Textile Organizations (NCTO) released a statement praising the executive order, describing it as a necessary step to “restore fairness” for U.S. manufacturers and eliminate a channel used for illegal and unethical imports. According to the NCTO, the previous policy placed American textile producers at a competitive disadvantage by allowing cheap foreign alternatives to flood the market without duties or regulation.

Supporters of the repeal argue that it will foster domestic job growth, encourage more robust trade compliance, and level the playing field for American businesses. But the short-term pain is likely to be most acutely felt by end consumers, especially those who rely on affordable online purchases during a time of rising inflation.

Cross-border e-commerce as we know it is being redefined. Platforms that once thrived on the ability to ship directly from overseas warehouses to U.S. mailboxes in three to five days must now reconfigure their logistics strategies entirely. Either they will pass the new costs on to consumers, consolidate shipments into bulk imports for U.S. distribution, or retreat from the American market altogether.

For U.S.-based e-commerce sellers, this moment presents both risk and opportunity. Domestic fulfillment becomes more attractive, but those who source internationally must now evaluate whether absorbing compliance costs or shifting to a warehousing model makes business sense. PNG Logistics is helping customers explore these scenarios, with a particular focus on optimizing landed cost structures, updating Incoterms, and minimizing customs delays through proper documentation and routing.

Ultimately, the repeal of the de minimis exemption is not just a technical trade regulation—it’s a structural shift in global commerce. The playing field has been altered, and companies operating in this space must adapt quickly. At PNG, we are staying on top of every regulatory update, market shift, and carrier policy to ensure our clients can navigate this evolving landscape with confidence and precision.

For those who have built their businesses around the old model, the transition will not be easy. But as with any disruption, those who move fastest to adapt will stand the best chance to thrive.