The U.S. Eliminates De Minimis Exemptions on Chinese Imports

E-commerce giants like Shein and Temu, which relied on de minimis to avoid import duties, will now face higher costs. This could potentially lead to increased prices and reduced demand in U.S. supply chains. 

Low-value shipments imported from China into the U.S. are facing tightened measures now that the additional 10% import tariffs have come into effect. 

These measures include ending de minimis exemptions for Chinese imports, which will impact the flow of small parcels from China and have significant effects on businesses, consumers, and logistics providers.

“For avoidance of doubt, duty-free de minimis treatment under 19 U.S.C. 1321 shall not be available,” as per an official Executive Order that refers to all goods produced in China.

On February 1, 2025, the White House had announced new U.S. import tariffs on Canada, Mexico, and China to address concerns over illegal drug trafficking and to protect national interests. 

This announcement came after Trump’s “America First Trade Policy,” which was released on January 20, 2025—on his first day in office.

Through this policy, the White House reaffirmed its commitment to protecting American workers and manufacturers by closing loopholes that allowed unchecked shipments into the country.

The policy emphasized the need to promote investment, strengthen industrial and technological advantages, and protect economic and national security. It called for investigations into trade deficits and unfair trade practices, with potential additional tariffs.

It also mentioned the need to review de minimis exemptions on Chinese imports due to its concerning role in facilitating the import of drugs like fentanyl.

The planned 25% tariffs on Canadian and Mexican imports into the U.S. and an additional 10% on imports from China were scheduled to come into effect on February 4, 2025.

While the U.S. agreed to a last-minute 30-day pause for Canada and Mexico—in exchange for tightened security along its northern and southern borders—the tariffs on China remained.

The impact of de minimis on the U.S. economy

The de minimis rule has long been a cornerstone of U.S. customs policy. It allowed goods valued below $800 to enter the country without duties or taxes.

This threshold was raised from $200 to $800 in 2016 to facilitate trade and reduce enforcement costs.

E-commerce platforms, particularly those based in China, have leveraged this provision to ship low-cost goods directly to U.S. consumers while expediting their entry and avoiding paying duties.

In 2023, the number of U.S. entries under the de minimis exemption reached 1 billion, a significant increase from approximately 153 million in 2015. According to Customs and Border Protection (CBP) officials, this “led to challenges in screening entries for imports that violate U.S. laws.”

Chinese e-commerce retailers played a significant role in this increase, with estimates suggesting they accounted for over 30% of daily packages shipped to the U.S. under the de minimis exemption.

China’s exports of low-value single packages rocketed from $5.3 billion in 2018 to $66 billion in 2023.

Terminating the de minimis exemption on Chinese imports is anticipated to cost U.S. consumers between $10.9 billion and $13 billion, as previously duty-free goods will now be subject to tariffs and customs duties.

Moreover, analysts project that prices for products previously shipped under the de minimis provision could increase by 55%, which would result in demand reaching up to half of its current levels.

Disruptions for logistics and postal services

The elimination of de minimis exemptions on Chinese imports has left postal services, logistics firms, and online retailers struggling to adjust their operations. Meanwhile, businesses and consumers caught in the transition face unexpected fees and potential delivery delays.

The U.S. Postal Service (USPS) initially suspended accepting inbound parcels from China and Hong Kong to adapt to the new regulations. However, the decision was reversed.

“The USPS and Customs and Border Protection are working closely together to implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery,” USPS announced through its website.

Private shipping firms like UPS, FedEx, and DHL have also warned that processing times will increase as more low-value shipments now require customs documentation, tariff calculations, and compliance verification.

This could result in increased shipping costs for consumers and logistical bottlenecks for businesses that depend on efficient, low-cost international shipping.

The air cargo industry feels the most effect

The air cargo sector could face the largest impact.

Last year alone, the U.S. imported over 2.5 million tons of air cargo from China. Approximately 1.3 million tons of this cargo included low-cost e-commerce goods that are now affected by the U.S. decision to eliminate de minimis exemptions on Chinese imports.

In 2023, major Chinese online retailers, including Shein and Temu, leveraged the de minimis exemption to legally avoid import taxes by shipping goods directly to consumers rather than to U.S. agents who would typically split containers in warehouses before distributing individual packages.

This business model heavily depended on airfreight, where Chinese e-commerce companies would charter entire freighters and secure dedicated cargo space on commercial airlines for fast delivery.

However, this model will need to change to accommodate the U.S.’s new trade measures.

“We can expect to see these companies begin shipping most items in bulk rather than single parcels, which will reduce speed to market and increase the amount of inventory held in the U.S.,” Tony Pelli, director of supply chain resilience at BSI Consulting, told FreightWaves.

“This could mean a permanent shift from air freight to ocean shipping,” Pelli continued.

China announces retaliatory tariffs on U.S. goods

In response to the U.S.’s additional 10% tariff and the termination of de minimis exemptions on Chinese imports, China has enacted a series of countermeasures targeting American goods and companies. These measures target key sectors of the U.S. economy, including energy and agriculture, which are significant components of American exports to China.

As part of its retaliatory plan, China will impose a 15% tariff on U.S. coal and liquefied natural gas (LNG) exports as of February 10, 2025. Moreover, a 10% tariff has been levied on crude oil, agricultural machinery, and certain large vehicles imported from the United States.

China has also reached out to the World Trade Organization (WTO) to express its concerns about the U.S. violating international rules.

The WTO has confirmed receiving notice of China’s request for consultations with the U.S. This triggers a 60-day period for both parties to address the issue, and, if they fail to reach a resolution, the case may be referred to a panel of three WTO judges.

Beyond tariffs, China has initiated an antitrust investigation into Google regarding the impact of its Android operating system on Chinese smartphone manufacturers.

Moreover, China has implemented export controls on critical minerals, such as tungsten and tellurium, that are crucial for advanced technologies, clean energy, and national security in the U.S.

The White House had indicated that the U.S. may escalate tariffs further if China continues to retaliate.

“Should the PRC retaliate against the United States in response to this action through import duties on United States exports to the PRC or similar measures, the President may increase or expand in scope the duties imposed under this Executive Order to ensure the efficacy of this action,” the White House stated on February 1, 2025.

For more information about the U.S.’s new trade measures against China and its potential impact on your business, please reach out to one of our trade professionals.