Tariff loophole on cheap imports has closed: What it means for American shoppers

Tariff loophole on cheap imports has closed

For decades, American consumers benefited from a policy known as the “de minimis” exemption. It allowed goods valued under $800 to enter the country without tariffs or customs paperwork. The system made it simple to order inexpensive products from abroad and receive them quickly, often without any hidden costs. As of this week, that era has ended. President Trump has eliminated the exemption for all countries, after already applying the change earlier this year to China and Hong Kong. The administration’s justification is that the loophole enabled smuggling of fentanyl, encouraged tariff evasion, and left American manufacturers competing on unfair terms with foreign sellers who could avoid duties, the New York Times reported.

Why the rule change matters

The scale of the exemption’s use shows why its closure is so significant. In 2015, there were around 139 million de minimis shipments. By 2024, that number had exploded to more than 1.36 billion, or nearly four million parcels every day. These packages, often small boxes of clothing, electronics, and household items, became an essential part of U.S. consumer culture. The new tariffs will now apply to all such shipments, ranging between 10 percent and 30 percent depending on the product and its country of origin. The most immediate effect for consumers will be higher prices, as sellers are expected to pass along these duties rather than absorb them.

Impact on international shipping networks

One of the most disruptive aspects of the policy change involves international postal services. Previously, U.S. Customs and Border Protection handled the assessment of duties on incoming packages. Under the new rules, foreign postal authorities must calculate and pay tariffs before packages even arrive in the United States. Many postal systems lack the infrastructure to perform these tasks and have chosen to suspend shipments to America altogether. This has left thousands of foreign small businesses, particularly artisans and niche sellers, cut off from their U.S. customer base. For the next six months, there is a temporary provision allowing postal shipments to pay a flat fee between $80 and $200. Once that period ends, however, the tariff rates will apply in full, adding further complications.

Effects on major e-commerce platforms

Large e-commerce platforms are already feeling the consequences. When the exemption was first eliminated for Chinese goods in May, sales at Temu and Shein dropped sharply. Temu has struggled to regain momentum, with sales still lagging behind last year’s levels. Shein, however, has adapted more effectively by raising prices. According to consumer transaction data, Shein shoppers in July made 12 percent fewer purchases compared to a year earlier, but their overall spending increased by 23 percent. This suggests that while Americans may be buying fewer items, they are paying more per order, allowing Shein to recover much of its lost revenue. The company’s dominance in fast fashion has helped it weather the disruption better than smaller rivals.

Consequences for small businesses abroad

For small foreign businesses, the outlook is far less positive. Many relied on affordable postal networks to ship items like handmade crafts, specialty foods, or boutique clothing to U.S. customers. With postal shipments suspended and express carriers like FedEx and UPS charging much higher rates, many of these sellers have found themselves priced out of the market. A knitting yarn store in Montreal, for example, recently announced it could no longer serve American buyers because Canada Post was unable to handle the tariff calculations. For businesses like these, losing access to the U.S. market represents a major blow and could even threaten their survival.

Economic and political rationale

Supporters of the policy argue that eliminating the loophole will generate significant revenue and protect American jobs. Peter Navarro, senior counsellor for trade and manufacturing, said the move could bring in as much as $10 billion a year in tariff revenues. He also pointed to benefits in combating counterfeiting, piracy, and intellectual property theft, problems that often accompany small international shipments. Since May, Customs and Border Protection has already collected nearly $500 million in duties on Chinese and Hong Kong shipments that would previously have entered tariff-free. For the administration, these figures serve as proof that the policy is working as intended.

What remains exempt

Despite the sweeping changes, a few items remain untouched by the new tariffs. Letters that do not contain merchandise and genuine gifts valued at $100 or less can still enter without duties. For most consumer goods, however, the landscape has changed dramatically. Ordering from foreign sellers now means factoring in additional costs, longer shipping times, and in some cases, uncertainty over whether packages will arrive at all.

The road ahead for shoppers

For American consumers, the closure of the de minimis exemption marks the end of an era of cheap, hassle-free imports. Prices on fast fashion, low-cost gadgets, and even handmade goods from small foreign sellers are likely to rise. Some shoppers may choose to absorb the higher costs, particularly when buying from dominant platforms like Shein, while others may cut back on international purchases altogether. For foreign small businesses, the change threatens to sever a vital link to the U.S. market. Politically, the move represents a decisive break from decades of free-trade liberalization and underscores the Trump administration’s broader strategy of protectionism. Whether this ultimately strengthens American industry or simply raises costs for consumers remains to be seen, but one thing is clear: the tariff-free shopping spree that defined the past decade has now come to an end.