Buffalo, N.Y. (WBEN/AP) - Low-value imports lost their duty-free status in the United States on Friday as part of President Donald Trump's agenda for making the nation less dependent on foreign goods and resetting global trade with tariffs.
An executive order eliminated a widely used customs exemption, also known as the "de minimis" exemption, for international shipments worth $800 or less as of 12:01 a.m. ET, nearly two years earlier than the deadline set in the tax cuts and spending bill approved by Congress.
Jim Wholey, special counsel with Phillips Lytle LLP and their Customs and International Trade Team, says the impact that consumers will feel first will be a possible increase of prices, or delays in delivery for a lot of online business due to many businesses having been using the exemption for purposes of digital fulfillment.
"A lot of online ordering, a lot of companies, relatively small companies or big enterprises that work with small companies like Etsy or eBay or Shopify, they're going to find that products may not be as readily available, prices surely will go up until various shipping authorities and businesses figure out how to work with the new rules, how they're going to be administered," said Wholey in an interview with WBEN. "They are likely to be some extended delivery delays, but just remember, for all of the small businesses that work with Etsy and through eBay and small manufacturers abroad, Shopify, there are also giants like Amazon who have taken full advantage of this as well."
While President Trump has terminated this exemption nearly two years before the deadline, Wholey says it was the Biden administration in Washington that had initiated a crackdown on the "de minimis" exemption in September of 2024.
"The exemption, lawyers call it the Section 321 exemption, it goes back to the 1938 Tariff Act, but between then and now, it's undergone a lot of changes and reiterations and inflation additions and everything else. But what the Biden administration observed is from the time in 2016 where the exemption went up to having an $800 cap, the estimated traffic had gone from about 150 million worth of trade goods a year to over a billion a year. They were concerned about the evasion of trade laws, Section 301 or 232 restrictions, and, of course, the anti-drug stuff. There was also, frankly, a concern about the disadvantage to purely domestic producers. This was all under President Biden and the last Congress, the 118th Congress, which was the year before President Trump was re-elected."
Wholey adds there were no fewer than eight measures introduced in Congress to either limit, restrict, or eliminate the "de minimis" exemption, and they were bipartisan. So while Congress already passed a law eliminating the de minimis exemption slated to expire in July of 2027, President Trump elected to eliminate it well in advance.
As for the upside of the elimination of the "de minimis" exemption, Wholey admits it's going to be a bit difficult to see right now.
"The upside is intended to be, as far as I can tell, tighter control and enforcement of our trade laws, goods that aren't supposed to be shipped into the United States without certain extra duties or tariffs, or in the case of illicit narcotics at all, and possibly rooting more of this business production and manufacturing back on shore," Wholey said.
"It's hard for us to predict, because it's become such a global economy. It's hard for us to really predict how well that's all going to work, but that's the hope."
Saying they received too little time and information to start collecting duties on small parcels, the national postal services of more than 30 countries have temporarily suspended sending some or most U.S.-bound packages. They include the mail systems of Australia, New Zealand, India, Japan, Mexico, Thailand and almost every country in Europe.
"Some of the big outfits like DHL, they've suspended or curtailed shipments. DHL, I think, is still doing premium service, but until they figure out just how the United States plans to administer this; I don't think it's because UPS or FedEx or DHL don't want to do business between these countries, and those countries don't want to sell to the United States, it's because they're just not sure what the process is going to be, which is one thing you don't see much reference to," Wholey noted.
Purchases that previously entered the U.S. without needing to clear customs will require vetting and be subject to their origin country's applicable tariff rate, which can range from 10%-to-50%. For the next six months, mail carriers can instead apply a flat duty of $80 to $200 to packages sent through the global postal network. After that, both mailed parcels and those handled by private courier services will be subject to the value-based tariff rate.
Although the president previously ended the “de minimis” rule for inexpensive items sent from China and Hong Kong, having to pay import taxes on small parcels from everywhere else likely will be a big change for some small businesses and online shoppers. In addition to bringing new costs, the withdrawal of duty-free treatment is likely to delay orders, according to logistics experts.
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