By Anne d’Hynenzio and Didi Tang
NEW YORK (AP) — Consumers can expect higher prices and delivery delays once the Trump administration ends its tax exemption for low-value imports starting Friday.
The expiration of the so-called De Minimis rule, which allowed as many as 4 million low-value plots to come to the US every day, has forced companies, primarily from China, to rethink their practices to keep costs down.
However, in reality, some people benefit from the end of their obligation exemption. For example, companies that manufacture goods in the US may feel easing from competition for cheaper Chinese imports and experience a brighter sales outlook.
The move applies to products derived from mainland China and Hong Kong, adding to President Donald Trump’s new tariffs totaling 145% in China. Beijing is retaliating with 125% tariffs in the US, promoting a trade war between the two largest economies of the world. Sellers are already looking at the cautious consumers.
On Wednesday, Trump called the De Minimis exemption “a big scam happening against our country, against really small businesses.”
“We’ve finished it,” he said.
What are the rules of De Minimis?
Introduced in 1938, the DE Minimis exception aims to promote the flow of small packages under $5, worth about $109 today. Threshold rose to $800 in 2016, but the rapid rise in cross-border e-commerce pushed by China challenges the intent of customs exception rules decades ago.
China’s low-value package exports surged in 2023 from $5.3 billion in 2018 to $66 billion, according to a February report from Congressional Research Services. And the US market was a major destination.
Former President Joe Biden last year proposed a rule that stated that foreign companies cannot avoid tariffs simply by delivering goods they claim to be worth less than $800. Trump attempted to end the exception in February, but his first order was stopped within days when the US seemed unprepared to process and collect tariffs in a massive flood of incoming parcels.
What is the impact on shoppers?
Consumers face higher prices and delivery delays as they go through a more complicated customs process to enter the US with declarations and obligation payments.
Companies can charge customs duties to their final price or list them individually, just like sales tax. For example, Temu, owned by Chinese e-commerce company PDD Holdings, lists “import fees” that are reportedly doubled the prices of many items. (Retailers also have a “local warehouse” option for some products. These products ship from within the US, so they avoid import charges.)
Meanwhile, Shein, currently based in Singapore, has a checkout banner that says, “Taxes are included in the price you pay. There is no need to pay any additional fees when you deliver.”
The White House committed a fiery comment, saying it doesn’t plan to add tariff costs next to the site’s product price despite reports that the e-commerce giant immediately sparked speculation indicating a new import fee.
What about the sellers and the airlines?
Parcel airlines will be burdened with collecting duties, and documents to comply with the new rules could not only cause price increases, but also delays and disruptions in delivery, said Lamb Ben Zion, public, review platform.
Key commercial officials such as UPS and FedEx say they are ready and ready to collect duties on international compartments in compliance with local laws, including new US regulations.
Commercial personnel collect 145% customs duties on declared value. The US Postal Service, a government agency that provides international postal services, can choose to charge a 120% tariff on low-value packages or a flat rate of $100, which is expected to rise to $200 on June 1st.
The US Customs and Border Protection states that it is “ready to fully implement the restrictions to collect all income paid for these shipments on May 2, 2025.”
However, experts have expressed concern that a surge in workloads could become a serious challenge.
According to CBP, more than 70% of the 216 million packages that enter the US came from China in January and February.
What is the impact on the company?
Those relying on the De Minimis exemption should be adjusted.
John Curry, owner and CEO of Arizona-based swimwear business Hapari International, had switched to minimal shipping about six months ago to improve cash flow, accelerate delivery, and ultimately eliminate US-based warehouses. His company manufactures products in China and sells directly to US customers via its own online storefront.
Curry said he plans to stay on the course and add one parcel (one parcel) while waiting for the US and China to resolve a more sustainable approach.
“Both countries cannot survive this way, so we need a solution,” Curry said.
Izzy Rosenzweig, founder and CEO of Logistic Company Portless, helps companies such as Hapari use De Minimis exemptions to ship items from China-based warehouses. He says that US companies are likely to remain in China for now given the competitiveness of their manufacturing bases and China’s supply chain, but can expect to raise prices.
And while companies with good profit margins will likely continue to ship from China, they said that companies operating at a thin razor profit margin would likely be “going locally” and would set up more US-based warehouses to cover tariff costs.
Who will benefit?
The trade group representing flag manufacturers and bicycle dealers said it expects to benefit from the end of the mandatory exemption.
For example, in a written comment on the US Trade Representative Portal, the American Flag Manufacturers Association said its members were hit by an onslaught of imports of American flags, primarily made in China, which were sold incorrectly and were heavily discounted. The group cited a 25% to 35% decline in industry-wide sales of American-made American flags last year.
Larry Severini, CEO of Embroidery Solutions Manufacturing LLC, manufactures US flag maker Starfield and had to close one of South Carolina’s two plants earlier this year due to tight competition from cheap imports. He said it has declined 20% since 2021 and since 2021 due to the minimum exemption.
“We need to have an obligation to level the arena to make it fair,” Severini said.
According to Heather Mason of the National Bike Dealers’ Association, shoppers check out $2,000 bikes from trusted brands like Trek and have a look online for $1,200.
“Reputable brands follow strict safety, labor and assurance standards,” she said in an email to the Associated Press. “de Minimis allowed bad actors to dodge these.”
Tan was reported from Washington.
Original issue: May 1, 2025, 1pm
