A big change to all the “cheap goods” Americans order just went into effect.
For nearly a century, low-value packages of goods from abroad have entered the United States duty free, thanks to what’s known as the “de minimis rule,” which as of 2015 has applied to packages worth less than $800.
The loophole has reshaped the way countless Americans shop, enabling many small businesses globally to sell goods to US consumers with relative ease and allowing, in particular, ultra-low-cost Chinese e-commerce sites like Shein, Temu and AliExpress to sell everything from clothing to furniture to electronics directly to American shoppers, escaping many duties in place for packages exceeding the $800 threshold.
But those days are over. As of one minute past midnight Eastern Time, all imported goods — regardless of their value — are now subject to 10% to 50% tariff rates, depending on their country of origin. (In certain cases, they could face a flat fee of $80 to $200, but only for the next six months.)
A headache for delivery services
Ahead of the expiration of the de minimis rule, a slew of delivery services across Europe, as well as Japan, Australia, Taiwan and Mexico suspended deliveries to the United States, citing logistical compliance challenges.
International shipper UPS, meanwhile, said in a statement to CNN Thursday: “We stand ready for the new changes and do not anticipate any backlogs or delays.”
DHL, which suspended service for standard parcel shipments from Germany but is continuing to ship international packages to the United States from all other countries it serves, told CNN that shipments “may experience delays during the transitional period as all parties adjust to the changes in tariff policy and regulation.”
The United States Postal Service and FedEx declined to comment on whether customers should anticipate delays.
“Our systems are fully programmed and equipped to support the seamless implementation of these changes. CBP has prepared extensively for this transition and stands ready with a comprehensive strategy, having provided clear and timely guidance to supply chain partners, including foreign postal operators, carriers, and qualified third parties to ensure compliance with the new rules.
Susan Thomas, the acting executive assistant commissioner for Customs and Border Protection’s Office of Trade, told CNN in a statement that the agency’s systems “are fully programmed and equipped to support the seamless implementation of these changes.”
“CBP has prepared extensively for this transition and stands ready with a comprehensive strategy, having provided clear and timely guidance to supply chain partners, including foreign postal operators, carriers, and qualified third parties to ensure compliance with the new rules,” she said.
A potential benefit for some American small businesses
While some small businesses, like some individual consumers, have benefited from the de minimis exemption by purchasing goods duty-free, the end of the exemption may benefit some, too.
For Steve Raderstorf, co-owner of Scrub Identity, which sells scrubs and other medical apparel at two stores located in Indianapolis, the tariff change will “level the playing field” for him and, he believes, other small business owners, he said.
A 2023 report by Coalition for a Prosperous America, a group that advocates for US producers and manufacturers, estimates that e-commerce giants like Amazon and Walmart took in hundreds of billions of dollars in revenue in 2022 through their networks of third-party sellers who took advantage of the loophole.
Raderstorf said almost all the goods he sells are imported. But as a small business, he doesn’t have the ability to set up a third-party network to tap into the exemption. Instead, his imported goods are all subject to applicable tariffs.
Additionally, many of the foreign manufacturers from whom he purchases goods in bulk in order to get a better price have benefited from de minimis by setting up sites to sell directly to people who could have otherwise shopped at his stores.
With de minimis gone, he feels small businesses have a better chance to compete more fairly with mega retailers and also support their local communities more.
“When somebody comes to my door and they want me to support the local football team or baseball team, I have money to do that then, and then it gets back into the community,” he told CNN. “When it goes to China, it never, ever stays in the United States — it’s gone for good.”
Since the de minimis exemption was closed for China and Hong Kong, CBP has seen packages that would have otherwise qualified for duty-free status go down from an average of 4 million a day to 1 million, White House officials told reporters Thursday.
Raderstorf is empathetic to Americans who are concerned about the increased cost of goods — but at the same time, he’s hopeful it’s “going to push them back out into their communities to meet their local retailers.”
