The de minimis exemption\u2014a tariff loophole that for years made millions of direct-to-consumer imports duty free\u2014is gone, and its end marks a structural shift for American shoppers and logistics providers.\u00a0<\/p>\n
Up until Friday, U.S. consumers could order up to $800 in goods per package from overseas without paying any tariffs or taxes. Now, this landscape is changing, adding to inflationary pressures that will squeeze everyday purchasing power, particularly for low- and middle-income Americans<\/a>, experts tell Fortune.<\/p>\n \u201cIt\u2019s a different shock to the system at a different level than what we\u2019ve seen with the tariffs on large industrial goods,\u201d Rob Haworth, senior investment strategy director at U.S. Bank, told Fortune. \u201cIt does start up another near-term challenge for consumers and for businesses and spending overall.\u201d<\/p>\n The de minimis exemption ended in May for imports from China<\/a>, where an estimated three-quarters<\/a> of goods under the $800 threshold came from, with a large share coming from e-commerce companies Shein and Temu. The de minimis suspension for parcels from all other countries implemented Friday now means the American dollar won\u2019t buy as much as it used to, when it comes to shoppers purchasing goods made overseas.<\/p>\n \u201cCategories like footwear and apparel will see some of the highest impacts, estimated at 15%-25% increased end consumer pricing, given the manufacturing origin often being China,\u201d Sean Henry, CEO of Stord, an e-commerce and fulfillment company, told Fortune.<\/p>\n A senior Trump administration official said<\/a> that the U.S. Customs and Border Protection agency has collected more than $492 million in additional duties on packages shipped from China and Hong Kong since ending the exemption. <\/p>\n And tariffs on goods that previously fell under de minimis could raise as much as $10 billion a year, U.S. trade advisor Peter Navarro told reporters<\/a> Thursday. Putting that into perspective, the 2024 trade deficit in goods was $1.2 trillion<\/a>.<\/p>\n \u201cThe net number (of tariff revenue without de minimis) is not all that meaningful in terms of how big the deficit is,\u201d Baird<\/a> Investment Strategist Ross Mayfield told Fortune. \u201cThe bigger difference is going to be the extent to which the government is levying these bigger, kind of broader swaths of tariffs.\u201d<\/p>\n Over the past decade, the number of shipments entering the U.S. de minimis surged by more than 600%, from approximately 139 million in 2015 to almost 1.4 billion, according to U.S. Customs and Border Protection<\/a>. However, the amount of revenue generated by these new tariffs depends on whether consumers are willing to continue to purchase cheap products from abroad.<\/p>\n \u201cNearly 40% of online shoppers abandon their carts when faced with these extra tariff and duty surcharges at checkout,\u201d Stord CEO Henry said.<\/p>\n Lee Klaskow, a senior analyst of transportation and logistics at Bloomberg Intelligence, told Fortune he expects spending on these largely \u201cdiscretionary\u201d purchases to decrease.<\/p>\n \u201cThat Shein shirt that you really want that\u2019s $5\u2014maybe you\u2019ll think twice about getting it because it\u2019s going to be more expensive,\u201d Klaskow said.<\/p>\n Prior to the pandemic, consumers had a \u201chuge appetite for cheap things,\u201d but Klaskow expects consumer behavior to flip in response to the change.\u00a0<\/p>\n U.S. Bank\u2019s Haworth said he\u2019s more focused on how the government will implement the change, as it will require new systems, investment, and infrastructure to collect on small purchases.\u00a0<\/p>\n He added the whole purpose of de minimis was to streamline the process of bringing small imports into the country, since they are more complex to track. The government has previously said<\/a> this allowed illicit substances like fentanyl to cross into the U.S. more easily. Still, the system will need to recalibrate to adhere to the new rules.<\/p>\n \u201cOriginally why you had a de minimis exemption is so that you weren\u2019t spending a lot of time on small transactions that didn\u2019t net anything,\u201d Haworth said. \u201cSo that\u2019s kind of an interesting or challenging cost that is going to come into the business system.\u201d\n<\/p>\n