A US tariff exemption for small orders ends Friday. It's a big deal to
some shoppers and businesses
[August 27, 2025] By
MAE ANDERSON
NEW YORK (AP) — Low-value imports are losing their duty-free status in
the United States this week 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 signed last month eliminates a widely used customs
exemption for international shipments worth $800 or less starting
Friday, nearly two years earlier than the deadline set in the tax cuts
and spending bill approved by Congress.
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.
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, carriers handling orders sent through the global mail
network also can choose a flat duty of $80 to $200 per package instead
of the value-based rate.
In response, the national postal services of more than a dozen countries
said they would temporarily suspend sending some or most U.S.-bound
packages due to confusion over processing and payment requirements.
Japan and Switzerland on Monday joined Australia, Austria, Belgium,
Finland, France, Germany, India, Italy, Norway, Spain, Sweden, Denmark,
Thailand, the U.K. and New Zealand in saying they would pause shipments.
Exemption created in 1938 for $1 imports
The Trump administration says the exemption has become a loophole that
foreign businesses exploit to evade tariffs and criminals use to get
drugs, counterfeit products and other contraband into the U.S. Former
President Joe Biden and members of Congress also discussed the issue.
Other countries have similar exemptions, but the threshold is usually
lower. For example, 150 euros ($175) is the value limit in the 20
European Union countries that use the euro as their official currency.
The U.K. allows foreign businesses to send parcels worth up to 135
pounds ($182) without incurring tariff charges.
In the U.S., the “de minimis” — Latin for lacking significance or
importance — exemption started in 1938 as a way to save the federal
government the time and expense of collecting duties on imported goods
with a retail value of $1 or less. U.S. lawmakers eventually increased
the eligibility cutoff to $5 in 1990, to $200 in 1993 and to $800 in
2015, according to the Congressional Research Service.
Since then, the number of shipments claiming de minimis treatment has
exploded. A total of 1.36 billion packages with a combined value of
$64.6 billion reached the U.S. last year, compared to 134 million
packages sent under the exemption in 2015, the U.S. Customs and Border
Protection agency reported.
About 60% of the 2024 shipments came from China and Hong Kong, according
to an analysis logistics firm Flexport prepared based on U.S. government
data. Multiple countries and regions accounted for the remainder,
including Canada, Mexico, the European Union, India and Vietnam.
Boutique owner anticipates higher costs for European apparel
Proponents of limiting the exemption argue that it has served as a way
for China-founded retail platforms like Temu and Shein to flood the U.S.
with low-priced goods. The National Council of Textile Organizations
said the move would help close a "backdoor pipeline for cheap,
subsidized, and often illegal, toxic and unethical imports.” But some
smaller American companies that rely on imported products and materials
benefited from the exemption too.
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Rugby eye-ware made by the Italian brand Raleri is displayed at A
Sight For Sport Eyes, a brick-and-mortar and e-commerce store for
sport goggles, Aug. 20, 2025, in West Linn, Ore. (AP Photo/Jenny
Kane)
 Kristin Trainor is worried the end
of de minimis will also mean the end of Diesel and Lulu's, her
3-year-old boutique in Avon, Connecticut. Over 70% of the women's
clothes and accessories she stocks comes from small fashion houses
in France, Italy and Spain. Trainor places small batch orders each
week that fall under the $800 threshold.
“Our business model is to provide casual chic and unique clothes at
affordable prices,” she said. “The added customs and duty charges
that will go into effect on Aug. 29 will eliminate that
affordability. ”
Trainor said she was looking to replace her European vendors with
ones based in the U.S. But her bestselling product categories, such
as apparel made of Italian linen, come from other countries. She
estimates a simple linen sundress that cost $30 wholesale at the
beginning of the year will rise to $43 next month.
After a corporate career, Trainor opened the store to have more time
with her 9-year-old son and her 91-year old father. Raising the
boutique’s prices to absorb part of the import charges would help
offset higher shipping and logistics costs, but Trainor worries her
customers will balk at higher prices.
“I have not made any official announcements to my customers just
yet, although they have started to ask if I will stay open as they
understand the economic impacts that are occurring,” she said. “At
this point, I am leaning more and more towards closing the boutique,
sadly.”
Trade agreement doesn't shield products from Mexico and Canada
Ken Huening started CoverSeal, his business making and selling
protective covers for cars, motorcycles, grills and patio furniture,
in 2020. The company is based in Los Gatos, California, and the
covers are manufactured in Mexico and China. When a customer places
an order, it ships from Mexico.
Although a trade agreement that took effect in 2020 has made most
goods from Mexico and Canada exempt from country-specific U.S.
tariffs, the withdrawal of the de minimis rule applies to all
countries.
Huening said he'll either have to raise prices or end free shipping
now that his products will be taxed when they are sent from Mexico
to U.S. customers. He's looked at setting up a U.S. production and
logistics network but says domestic sewing facilities and textile
manufacturers do not exist for the engineered fabric used in
CoverSeal's products.
“We are often asked why we don’t just establish a U.S. supply
chain,” he said. “It is not possible in the short term. By the time
the infrastructure is established, many companies and small
businesses will be out of business.”
Shannen Knight imports hard-to-find sports goggles and glasses as
the owner of A Sight For Sport Eyes, her online store and shop in
West Linn, Oregon. She routinely received shipments from the U.K.,
the Netherlands and Italy that fell under the de minimis dollar
cutoff.
Knight estimated that she would need to raise the retail price of
the rugby goggles she gets from Italy by 50%. It took the
International Rugby Board two years of testing to approve the
Italian-made goggles, a specialty item without strong prospects for
stateside production, she said.
“There are products that it just makes sense to be made
internationally, where there is the stronger demand for them, but
there still is some demand for in the U.S.," Knight said.
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