On Wednesday, April 2, the U.S. government announced that starting next month, imported goods from mainland China and Hong Kong will no longer qualify for the U.S. "de minimis exemption" policy. The government also plans to apply similar measures to other countries in the future.

Starting May 2, imports from mainland China and Hong Kong that would previously have qualified for de minimis exemption will be subject to all applicable tariffs—unless they enter the U.S. via the international postal network. If shipped via the postal system, they will be subject to one of two tariff structures: either a 30% tax on the item’s value, or a flat fee of $25 per item (whichever is higher). Beginning June 1, the flat fee will increase to $50 per item. According to U.S. regulations, the U.S. Customs and Border Protection (CBP) may require postal packages to undergo formal entry procedures, at which point all relevant tariffs, taxes, and surcharges would apply.

Furthermore, under an executive order on reciprocal tariffs signed during the Trump administration, once the U.S. establishes an efficient and comprehensive tariff collection system, it may cancel the de minimis exemption for goods from countries subject to tariffs—except for a few specific scenarios. However, the exemption will still apply to eligible items and gifts carried by travelers.

This decision will expose a wide range of low-cost Chinese products to additional U.S. import duties. Currently, the U.S. already imposes a 20% tariff on Chinese goods and plans to increase that to 34% on some items starting April 9.

This policy adjustment brings more clarity for shippers who have depended on the de minimis exemption and have been trying to adapt to shifts in U.S. policy. Previously, the de minimis exemption for Chinese goods was briefly canceled in February but was reinstated within days as the U.S. government sought a more effective way to collect tariffs on affected imports.

Cindy Allen, CEO and Managing Director of trade consulting firm Trade Force Multiplier, said during a February webinar that the main challenge in implementing an effective tariff system lies in how to collect tariffs on packages shipped via the postal system.

When the U.S. government initially canceled the de minimis policy, the U.S. Postal Service (USPS) briefly stopped accepting inbound packages from China and Hong Kong’s postal systems. However, due to operational difficulties in collecting tariffs, USPS soon reinstated the exemption. The reinstatement primarily reflected the need for a robust tariff collection mechanism in the postal network, whereas other shipping channels already have such systems in place.

According to a U.S. government statement, the Secretary of Commerce will submit an assessment report within 90 days of the executive order, analyzing the impact of the policy and deciding whether to extend similar measures to packages from Macau.

The de minimis policy allowed packages valued under $800 to enter the U.S. duty-free. This greatly benefited e-commerce companies like SHEIN and TEMU, which lowered their shipping costs by shipping directly from Asian factories to U.S. consumers. This model allowed them to operate with light inventory and rapidly expand in the U.S. market. According to the U.S. Congressional Research Service (CRS), SHEIN and TEMU now hold a combined 17% share in the U.S. discount e-commerce market (fast fashion, toys, and other consumer goods). Market research firm eMarketer estimates that TEMU’s U.S. sales will reach $30 billion by 2025.

Additionally, many small brands and resellers that rely on direct shipping from China to the U.S. have also benefited from the policy. According to CBP data, 1.4 billion packages entered the U.S. under the de minimis policy in fiscal year 2024—almost double the number in 2022. CRS reports that the value of Chinese goods imported to the U.S. via de minimis jumped from $5.3 billion in 2018 to $66 billion in 2023.

However, the U.S. government, certain lawmakers, and customs officials have long criticized this trade tool, claiming that many shippers abuse the de minimis policy to hide prohibited items in low-value packages, making enforcement more difficult.

In recent years, the reliance on this rule has significantly increased among e-commerce platforms and retailers, supporting the business models of many sellers. Now, with the policy being canceled, not only major players like SHEIN and TEMU, but also small online retailers will be impacted.

Santiago Gallino, an associate professor at the Wharton School of the University of Pennsylvania, stated, “Any small seller relying on direct shipping from China will be affected. If the policy remains in place, some retailers may shift to bulk purchasing models and set up distribution centers in the U.S.”

Bank of America noted that the e-commerce sector will be “one of the most affected industries” under the new U.S. tariff policies. Changes to the de minimis policy could disproportionately hurt e-commerce platforms. Companies like Shopify and BigCommerce, which depend heavily on cross-border merchant transactions and logistics integration, are particularly vulnerable. If tariffs increase on imports, product traffic on these platforms could decline, merchant costs could rise, and overall revenue models could be impacted. In contrast, companies focusing on domestic customers and less reliant on global trade may be more resilient.

The Cato Institute estimates that canceling the de minimis policy could increase annual U.S. consumer costs by $11 to $13 billion, translating to an additional $35 to $80 in spending per person.

Yannis Bakos, an associate professor at NYU’s Stern School of Business, pointed out that U.S.-based retailers like Amazon, which rely on domestic warehouse distribution, may gain market share as their competitors are affected.

Moreover, due to their high shipping volumes, Chinese e-commerce giants typically use chartered flights and have direct commercial agreements with airlines. The policy change will inevitably impact air freight as well. However, the extent of the impact on e-commerce air cargo volume remains debated in the industry.

Some believe the de minimis rule has fueled recent air cargo growth and that its removal could disrupt the market. Others argue that because the affected goods are already very low-cost, even a few extra dollars in tariffs may have limited impact. Another viewpoint is that increased customs procedures could lengthen delivery times, degrading the customer experience.

The cross-border e-commerce supply chain may also undergo changes as a result. Chinese e-commerce companies might shift to more traditional distribution models, storing goods in local warehouses in the U.S. and increasing ocean shipping. Alternatively, they may reroute shipments through countries still eligible for the de minimis policy or enter the U.S. market via Mexico and Canada.

In fact, platforms like SHEIN and TEMU, though still primarily reliant on direct shipping from China, have already begun adjusting their logistics networks. They are partnering with more U.S. sellers, establishing local warehousing and distribution networks, and gradually transitioning to larger-scale bulk purchasing models to cushion the blow from policy shifts.

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