For years, a little-known trade rule allowed millions of low-cost products to pour into the United States duty-free. It was called the “de minimis” exemption, and it became the backbone of fast-fashion and ultra-low-cost marketplaces. In a sweeping policy change, that era has ended. As a result, the de minimis exemption ended on August 29, 2025. This marks a significant shift in global trade. This change, which removes a key tariff advantage, is already causing major disruption for companies. It will soon affect millions of consumers who have grown accustomed to near-instant, duty-free access to inexpensive goods from overseas.
What Was the De Minimis Exemption?
The de minimis rule is a century-old trade provision. It allowed packages valued at $800 or less to enter the U.S. duty-free and with minimal customs inspection. Originally, this rule was designed to simplify customs processes for small shipments and gifts. However, over the last decade, e-commerce giants and platforms like Shein and Temu leveraged this rule. They used it to ship billions of individual consumer orders directly from their factories in Asia to U.S. buyers. By bypassing traditional bulk freight and warehousing, these companies avoided hefty import tariffs. In short, this allowed them to offer products at incredibly low prices, often undercutting domestic brands.
Why the De Minimis Exemption Ended
The U.S. government took decisive action to suspend the exemption globally. In fact, officials cited two main reasons. First, they argued that people exploited the rule to evade tariffs and to facilitate the flow of counterfeit goods. A recent White House fact sheet confirmed that 98% of narcotics seizures in FY24 originated from these small packages. Second, the enormous volume of de minimis shipments created significant financial losses for the U.S. government. From 2015 to 2024, the volume of these shipments skyrocketed from 134 million to over 1.36 billion. Therefore, this change is presented as a measure to protect U.S. national security, enforce fair trade, and recover lost revenue.
The Immediate Impact on Shein and Temu
The immediate fallout from the de minimis exemption ended news has been most visible for platforms like Shein and Temu. Their entire business model relied on this one rule. Now, they must pay a duty on every package they ship into the country, no matter its value. Industry experts say this will likely lead to two main outcomes. The companies will either absorb the extra cost, which will reduce their profit margins, or they will pass the costs on to the consumer. For instance, early data already shows a decline in active users for these apps as consumers grow wary of potential price increases. Both companies are scrambling to adapt. They are exploring new strategies, such as setting up warehouses in the U.S. to fulfill orders domestically.
The Broader Consequences for Consumers
For the average online shopper, the end of the de minimis exemption ended era means one thing: higher prices. Products that were once a few dollars will now include an additional tariff. This will impact consumer behavior and spending habits. It is no surprise that analysts are predicting a significant shift in the market. The cost of international fast-fashion and small electronic accessories will rise. Consequently, this will make domestic products and sellers more competitive. Consumers will also have to contend with slower delivery times. Customs officials will now inspect a far greater number of packages, leading to logistical delays at major ports.
What’s Next for Global E-commerce
The elimination of the de minimis exemption is a game-changer for global e-commerce. It marks a shift away from a system that prioritized speed and low cost. The new policy levels the playing field for American businesses. They had long argued that the rule put them at an unfair disadvantage. As a result, domestic e-commerce could see a resurgence. On the other hand, cross-border businesses will need to completely overhaul their supply chains. They must figure out how to manage new costs and delays. The era of the simple, duty-free package is over.
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