Long-standing tax exemptions have made people skip import fees for Friday’s small value kits, leaving small businesses and Postal Services All over the world rush to apply Donald Trump’s tariffs Arrived in millions of goods.
Experts say that as businesses adapt to changes, the change could mean up to $13 billion in additional costs and delay consumer shipping. This is what we know about the end of the exemption.
What is minimis?
De Minimis exemption allows for tax-free shipment of parcels worth less than $800 to the United States. The exemption comes from the Tariff Act of 1930.
U.S. Customs and Border Protection (CBP), overseeing customs collection and packaging inspections at ports and airports, Estimated The 1.36 billion goods shipped to the United States to the United States were De Minimis for the 2024 fiscal year. Total value The De Minimis cargo reached US$64.6 billion that year, the second highest since 2020.
Which retailers are affected?
The end of the exemption does not affect major retailers such as Target, Costco and Walmart, as these companies are typically shipped in bulk containers worth more than $800 and already taxed.
Instead, the exemption is largely applicable to businesses with a direct consumer model, including Chinese e-commerce brands Shein and Temu, as well as small businesses overseas.
Other businesses, such as manufacturers that sell directly to consumers on platforms such as Amazon and Walmart stores, also account for a large proportion of the De Minimis package.
Cargo from China once constituted more than half of all De Minimis goods entering the United States, although Trump ended his exemption to China and Hong Kong in May. In late July, Trump signed a surprise executive order announcing that he would end all countries’ waivers.
What does this mean for the price?
These companies are now making challenging pricing decisions, and major retailers have been thinking about it for months: How much should the price rise due to tariffs?
While low-cost retailers like Shein and Temu may have cheaper items than traditional retailers, shoppers may still notice price increases, said Erin McLaughlin, a senior economist at the conference committee. Shein and Temu now have to act like traditional retailers whose shipping chains are more complex.
“They will still offer some of the cheapest outfits and other things because these outfits are cheaper in the beginning, and even if you buy through a more traditional retailer, they still have the tax on it,” McLaughlin said. “But maybe the variety might be smaller because the item has to be stored in a warehouse.”
Why is the exemption stopped?
The White House said the exemption was a loophole that hurts U.S. manufacturers and also poses a risk to national security, claiming that bad actors used exemptions to smuggle illegal drugs into the country.
“Many shippers do their best to evade law enforcement and hide illegal substances from imported substances through international trade,” Trump said in a Trump Trump. Executive Order End exemptions to all countries.
Unlike Trump’s tariff order, the De Minimis exemption has come under bipartisan scrutiny after the volume of goods soared during the pandemic. Last year, the Biden administration Proposed Rules This will reduce the minimum quantity of goods and “stop abuse of exemptions.”
The Tariff Act of 1930 sets a minimum threshold to any packaging worth $1. In 2015, the threshold rose from $200 to $800, allowing companies to ship large quantities of low-cost goods without tariffs.
That’s why postal services like Royal Mail and German DHL say they’re Stop shipping of small packages.
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“In a sense, it’s an operational nightmare because we’re talking about small value, but large capacity cargo,” said Li Chen, a professor of manufacturing management at Cornell University. “The quantity is huge and every packaging needs to be tracked.”
While there are few immunities in other countries, the threshold is usually below $800 and usually below $200.
Who will be hit the hardest?
one Research papers From earlier this year, the De Minimis exemption is a “poor trade policy” because the goods covered by the exemption are often shipped to poorer postal codes.
Yale professor of global affairs and economics, one of the authors of this article, said in an email to The Guardian that the end of de Minimis is seen as an increase in tax revenue for low-income Americans.
“Low-income consumers tend to spend more on goods entering through the De Minimis channel, which tend to be relatively more from China,” Khandelwal said. “Because China’s high tariffs mean that ending the minimum will basically look like a tax increase that increases.”
With huge growth in other countries, e-commerce giants like Shein and Temu may be able to survive the end of De Minimis even if they transfer higher costs to consumers.
Instead, the end of the exemption will harm small businesses abroad, which are shipped directly to their platforms through platforms such as Etsy and Tiktok Shop.
Small businesses abroad warn customers that they either temporarily terminate freight to the United States or raise prices due to tariffs.
exist Notice For customers, South Korean skincare retailer Olive Young said the country’s current tariff rate is 15%, which will be placed on all products with terminations. Etsy warn Tariffs may increase the price tag sellers and encourage them to communicate with buyers about how tariffs affect prices.
“When you communicate with buyers about their orders, remember that some buyers may not have paid tariffs before,” the company said.
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A wellness enthusiast and certified nutrition advisor, Meera covers everything from healthy living tips to medical breakthroughs. Her articles aim to inform and inspire readers to live better every day.
