U.S. Ends Duty-Free Exemption on Chinese Parcels: Price Hikes and Shipping Delays Expected

On May 2, 2025, the U.S. ended the duty-free exemption for low-value parcels from China and Hong Kong, eliminating the 'de minimis' rule for goods under $800. This policy, initiated by the Trump administration, imposes tariffs up to 145% and customs scrutiny, affecting consumer prices and delivery times. Businesses are adjusting logistics, with some shifting to U.S. warehousing. The change benefits domestic manufacturers but challenges e-commerce platforms like Shein and Temu, reshaping global supply chains and consumer behavior.

The End of De Minimis: A Historic Shift in Trade Policy

The de minimis exemption, first introduced in 1938, was originally designed to facilitate the flow of small, low-value packages by waiving duties on items below a certain threshold. That threshold was raised to $800 in 2016, a change that coincided with the explosive growth of Chinese e-commerce platforms like Shein, Temu, and Alibaba. By 2023, Chinese exports of low-value parcels to the U.S. had ballooned to $66 billion, up from just $5.3 billion in 2018, according to the Congressional Research Service.

The Trump administration’s decision to revoke the exemption for China and Hong Kong is part of a broader effort to clamp down on what it calls a “scam” that disadvantages American small businesses. “We put an end to it,” Trump said, calling the loophole a threat to domestic manufacturers.

What It Means for Consumers: Higher Prices, Slower Deliveries

For U.S. consumers, the most immediate impact is financial. Items that once arrived duty-free will now be subject to tariffs as high as 145% on declared values. The U.S. Postal Service, which handles a significant portion of international mail, has the option to charge either a 120% tariff or a flat fee of $100 per shipment—set to rise to $200 on June 1.

Retailers are already adjusting. Temu now lists “import charges” at checkout, which in some cases have doubled item prices. Shein, which has relocated its headquarters to Singapore, includes tariffs in its listed prices and assures customers they won’t face surprise fees at delivery. Amazon, meanwhile, has not yet implemented visible tariff disclosures, despite speculation.

Beyond cost, delivery times are expected to lengthen. Parcels must now undergo a more complex customs process involving declarations and duty payments. With over 70% of the 216 million packages entering the U.S. in early 2025 originating from China, the surge in processing requirements is straining logistics systems.

Business Response: From China to Local Warehouses

The end of the de minimis exemption is forcing a strategic reckoning for businesses that built their models around low-cost Chinese manufacturing and direct-to-consumer shipping. Companies with healthy profit margins may absorb the tariffs and continue sourcing from China. Others, especially those operating on thin margins, are exploring alternatives.

Some are shifting to U.S.-based warehousing to avoid the new duties. “Those that run on razor-thin profit margins are likely to ‘go local,’” said Izzy Rosenzweig, CEO of logistics firm Portless. His company previously helped brands like HAPARI ship directly from China using the de minimis rule. Now, he expects more clients to consider domestic fulfillment options.

John Curry, CEO of HAPARI International, had recently transitioned to de minimis shipping to improve cash flow and reduce warehousing costs. With the new tariffs, he plans to continue shipping from China and absorb the 145% duty—at least for now. “There has to be a solution because both countries cannot survive this way,” he said.

Winners in the Domestic Market

While many businesses are scrambling, some U.S. manufacturers see the policy change as a long-overdue correction. Domestic producers of American flags and bicycles, for example, have long complained about unfair competition from cheap Chinese imports.

The Flag Manufacturers Association of America reported a 25% to 35% drop in sales due to underpriced imports. Larry Severini, CEO of Embroidery Solutions Manufacturing, had to close one of his South Carolina plants due to declining demand. “We need duties to level the playing field to make it fair,” he said.

Similarly, the National Bike Dealers’ Association welcomed the move. “De minimis allowed bad actors to dodge” safety, labor, and warranty standards, said Heather Mason, the group’s president. She noted that consumers often chose cheaper, lower-quality imports over reputable brands, undermining the domestic industry.

Logistics and Enforcement Challenges

The U.S. Customs and Border Protection (CBP) has stated it is prepared to fully implement the new restrictions and collect all revenue owed by May 2, 2025. However, experts warn that the sheer volume of parcels could overwhelm the system. With millions of packages arriving daily, the added paperwork and inspection requirements could lead to significant delays and disruptions.

Major carriers like UPS and FedEx say they are ready to comply, but the burden of collecting duties and managing compliance will likely increase operational costs—costs that may ultimately be passed on to consumers.

A New Era for Cross-Border E-Commerce

The end of the de minimis exemption for Chinese parcels marks a turning point in U.S. trade logistics and consumer behavior. Platforms like Shein and Temu, which built their business models around direct-from-China shipping, now face a more complex and costly operating environment. Consumers, in turn, are being forced to reconsider the true cost of fast fashion and bargain electronics.

While some domestic industries may benefit from reduced competition, the broader impact is a reshuffling of global supply chains and a recalibration of e-commerce economics. For now, shoppers should brace for higher prices, longer waits, and fewer ultra-cheap deals from overseas.

References

• Cheap parcels from China will no longer be duty-free. Here's what it means for buyers and sellers
• Cheap parcels from China will no longer be duty-free. Here’s what it means for you
• A look into price hikes as US ends duty-free imports from China
• End of de minimis trade loophole could hit Shein, Temu shoppers hard
• Chinese e-commerce exports to US plummet by 65% in face of tariffs
• Cheap parcels from China will no longer be duty-free. Here's what it means for buyers and sellers