The US tariff exemption for package shipments valued under $800 ended on Friday, raising costs and disrupting supply chain models for e-commerce companies, small businesses using online marketplaces and consumers alike.
The US Customs and Border Protection (CBP) agency began collecting normal duty rates on all global parcel imports, regardless of value, on Friday. It offered a flat-rate duty option of $80 to $200 per package shipped from foreign postal agencies for six months.
The move broadens US president Donald Trump’s cancellation of the de minimis exemption for shipments from China and Hong Kong in May as part of an effort to halt shipments of fentanyl and its precursor chemicals into the US.
“President Trump’s ending of the deadly de minimis loophole will save thousands of American lives by restricting the flow of narcotics and other dangerous prohibited items, and add up to $10 billion a year in tariff revenues to our Treasury,” White House trade adviser Peter Navarro told reporters.
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“This is a permanent change,” said a senior administration official, adding that any push to restore the exemptions for trusted trading partner countries was “dead on arrival.”
The de minimis exemption has been in place since 1938 and was raised from $200 to $800 in 2015 as a means to foster small business growth on e-commerce marketplaces.
But direct shipments from China exploded after Mr Trump raised tariffs on Chinese goods during his first term, creating a new direct-to-consumer business model for e-commerce firms Shein and Temu.
Many of these packages entered without screening, and the Trump administration has blamed the exemption for allowing fentanyl and its precursors to flow into the US.
Retail analysts say that the end of de minimis will likely raise prices for many goods sold through e-commerce companies, as goods that previously avoided tariffs because of the exemption will ultimately be charged duties. This may put such firms on a par with costs for more established retailers like Walmart, which tend to import merchandise in bulk containers that are subject to tariffs.
CBP has estimated that the number of packages claiming the de minimis exemption jumped nearly 10-fold from 139 million in fiscal 2015 to 1.36 billion in fiscal 2024.
A second senior Trump administration official said that CBP has collected more than $492 million in additional duties on packages shipped from China and Hong Kong since their exemptions were eliminated on May 2nd.
Full tariff rates will apply to all packages shipped by express carriers such as FedEx, United Parcel Service and DHL, with the firms collecting the duties and processing the paperwork.
Foreign postal agencies can opt to collect and process the duties based on the value of the package contents, or opt for the flat rate method by collecting a flat tax based on Mr Trump’s “reciprocal” tariff rates currently in place on goods from the country of origin.
Based on CBP guidance issued on Thursday, parcels would be charged $80 from countries with Trump-imposed duty rates below 16 per cent, such as Ireland, the rest of the European Union and Britain, $160 from countries between 16 per cent and 25 per cent, such as Indonesia and Vietnam, and $200 from countries above 25 per cent, including China, Brazil, India and Canada.
The change has caused turmoil in postal services across the world, with Australia Post, Britain’s Royal Mail, Germany’s DHL, Japan Post, Korea Post and others pausing shipments to the US as they work to adapt. - Reuters
