President Donald Trump’s executive order, which ends de minimis exemptions, is set to take effect on Friday. This will effectively close the duty-free shipping loophole that allowed small commercial packages worth $800 or less to enter the United States without being subject to taxes or tariffs.
Aimed At Tackling Drug Trafficking And Trade Deficits: White House
Late last month, Trump signed an executive order ending the duty-free treatment for low-value goods being shipped from all countries. Starting 12:01 a.m. Eastern time on Aug. 29, all such shipments, regardless of their origin, mode of transport, or declared value, will be subject to customs duties, taxes and fees.
The order cites ongoing national emergencies declared in earlier executive orders, tied to illicit drug trafficking, such as fentanyl and persistent trade deficits.
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“The risks of evasion, deception, and illicit-drug importation are particularly high for low-value articles that have been eligible for duty-free de minimis treatment,” the order notes.
As a result, postal carriers are now required to either apply the tariff rate of the item's country of origin, or collect a flat fee of $80, $160, or $200 per package, depending on the applicable tariff band. The order notes that the flat-fee option is only available for six months.
A White House fact sheet accompanying the order notes that de minimis shipments account for 90% of all cargoes seized in the U.S. They also account for 98% of narcotics seizures and 97% of intellectual property right seizures, totaling 31 million counterfeit items in 2024 alone.
Scrapping De Minimis Will Hurt Consumers
The U.S. Customs and Border Protection agency says the country received 1.4 billion de minimis shipments in 2024, more than double the 636.7 million in 2020.
Mary Lovely, a senior fellow at the Peterson Institute for International Economics, says the move can have major implications for consumers. “For the consumer, it can be quite a big price increase,” she says, according to a report by CNBC.
Rathna Sharad, CEO of FlavorCloud, a cross-border logistics firm, calls it a “massive change for the U.S. consumer,” saying that the cheap items that are purchased online and arrive at the doorstep will now be slapped with tariffs.
Postal Services Halt Shipments, Headwinds For eCommerce
Throughout the past week, several international postal services have halted shipments to the U.S. This includes most European countries, as well as South Korea’s Korea Post.
These suspensions are temporary, as postal services scramble to comply with the new rules and duties imposed by the United States.
The ending of de minimis exemptions creates headwinds for e-commerce companies such as Amazon.com Inc. (NASDAQ:AMZN), Alibaba Group Holding Ltd. (NYSE:BABA) and PDD Holding Inc.’s (NASDAQ:PDD) platforms such as Temu and Shein, which relied on de minimis exemptions.
Shopify Inc. (NASDAQ:SHOP), Commerce.com Inc. (NASDAQ:CMRC), and Lightspeed Commerce Inc. (NYSE:LSPD), which primarily cater to small merchants, are similarly bracing for impact due to this move. Shares of Etsy Inc. (NASDAQ:ETSY) similarly tumbled early this week, as the platform expects disruptions to its global marketplace.
| Stocks | Year-To-Date Performance |
| Amazon.com Inc. (NASDAQ:AMZN) | +5.17% |
| Alibaba Group Holding Ltd. (NYSE:BABA) | +40.75% |
| PDD Holding Inc. (NASDAQ:PDD) | +26.14% |
| Shopify Inc. (NASDAQ:SHOP) | +31.63% |
| Commerce.com Inc. (NASDAQ:CMRC) | -24.60% |
| Lightspeed Commerce Inc. (NYSE:LSPD) | -21.09% |
| Etsy Inc. (NASDAQ:ETSY) | +1.43% |
Photo Courtesy: Karolis Kavolelis on Shutterstock.com
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