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We are sharing our exclusive client memo below with our broader network given its critical importance.
While subject to a temporary “pause,” on February 1, 2025, the Trump administration issued an Executive Order imposing new tariffs on imports from China. A significant aspect of this order is the suspension of the “de minimis” exemption for Chinese goods, meaning low-value shipments that previously entered duty-free will now be subject to tariffs. A February 10, 2025, amendment to the order has delayed this repeal, allowing the exemption to remain in place until the Department of Commerce establishes adequate systems to efficiently process and collect tariff revenue. This temporary pause is just that, a pause, and businesses that rely on de minimis should prepare now for its removal.
Understanding the De Minimis Rule
The de minimis rule allows shipments valued under $800 to enter the U.S. without duties or extensive customs procedures. This provision has been widely used by e-commerce platforms to ship inexpensive goods directly to American consumers, particularly from China. As we discussed in "De Minimis in E-Commerce: Best Practices for Regulatory Compliance," de minimis has been a game-changer for global e-commerce, but its growing exploitation has also led to regulatory scrutiny.
Executive Order Targets Chinese Imports
The February 1, 2025, Executive Order, titled Imposing Duties to Address the Synthetic Opioid Supply Chain in the People's Republic of China, explicitly suspends the de minimis exemption for goods originating from China. This means that even if a shipment is under $800, it will no longer be exempt from tariffs simply because it falls below the threshold. However, in response to concerns that U.S. Customs and Border Protection (CBP) would be overwhelmed by the administrative burden, the White House issued a February 10, 2025, amendment delaying the de minimis repeal until a functional tariff collection system is in place. Once the Department of Commerce deems the system ready, the exemption will be revoked.
For importers who believed that breaking up shipments into smaller parcels would keep their goods duty-free, the order will close that loophole once the pause has been lifted. This move is part of a broader strategy to combat the synthetic opioid crisis, which has been linked to precursor chemicals and illicit substances sourced from China. The U.S. government has made it clear: de minimis is no longer a shield against tariffs, particularly when it comes to Chinese imports.
Immediate and Future Impacts
Following the February 1, 2025, Executive Order, the U.S. Postal Service (USPS) initially announced a suspension of inbound packages from China and Hong Kong, citing the new tariffs and the removal of the de minimis exemption. However, this decision was quickly reversed, with USPS stating it would continue accepting packages while collaborating with CBP to implement a tariff collection process.
Despite this adjustment, e-commerce sellers who relied on de minimis as a cost-cutting measure will feel the impact almost immediately once the pause is lifted. As detailed in our previous analysis, "Your Life is About to Get More Expensive: How Tariffs Work," tariffs increase costs for businesses and consumers alike, meaning higher prices and longer shipping times.
Chinese e-commerce platforms like Shein and Temu, which have relied heavily on the de minimis rule to offer low-cost products to U.S. consumers, will face major challenges due to this policy change. Anticipating stricter regulations, these companies have been expanding their U.S.-based fulfillment operations. For instance, Shein opened a warehouse in Indiana in 2022 and established an office in Washington in 2024, while Temu has begun allowing U.S.-based vendors to manage logistics, marking products with a "local" badge to indicate domestic fulfillment.
These companies are adapting, but they cannot fully escape the cost implications of tariffs, and neither can you. Businesses that continue to rely on the de minimis strategy without adjusting their supply chains will find themselves facing unexpected costs and potential enforcement actions from CBP.
Broader Trade Implications
The suspension of the de minimis exemption for Chinese goods is part of broader U.S.-China trade tensions, as we covered in "China’s Anti-Foreign Sanctions Law Explained: Implications for Global Business" and "U.S.-China Export Controls in 2025: What to Expect After Trump’s Return."
Critics of the de minimis exemption have long argued that it facilitates the entry of unsafe goods and provides an unfair advantage to foreign sellers over U.S. businesses. The new policy aims to level the playing field and increase scrutiny of imports, particularly those that may pose health and safety risks.
The removal of the de minimis exemption for Chinese imports marks a pivotal change in U.S. trade policy, particularly affecting e-commerce and international shipping. While intended to curb the flow of illicit goods and address public health concerns, this policy shift may lead to higher prices and longer shipping times for consumers, as well as increased operational challenges for businesses that have benefited from the de minimis threshold.
While much attention has been focused on Chinese imports, it is important to note that similar restrictions apply to Canadian goods. Under the Executive Order on Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border, the U.S. has also suspended the de minimis exemption for affected Canadian products. Although the 25% tariffs on Canadian imports are currently on pause (as of this article’s publication) until March 4, 2025, once implemented, low-value shipments from Canada that previously entered duty-free will also be subject to duties.
How We Can Help
The delay in implementation does not mean businesses should wait. Companies that depend on de minimis should begin adjusting their supply chains, considering U.S.-based fulfillment centers, alternative sourcing strategies, or proactive compliance measures to mitigate the future tariff burden.
We help businesses navigate complex trade regulations and stay ahead of evolving policies like the suspension of the de minimis exemption. If your company relies on imports from China, we can assist with customs compliance, tariff strategy, and more.
With the U.S. tightening trade rules, having a legal partner to help you adjust your import strategy is more important than ever.
Interested in learning more about how the import process? Join us for "Importing 101: Navigating Tariffs, Duties, and Compliance," an informative session led by Deanna Clark, Esq. of the Clark-Esposito Law Firm, P.C., and Guy Bocicaut of the Haitian American Professionals Association of Connecticut (HAPAC). This event will break down important aspects of importing into the U.S., including tariff classification, customs valuation, and compliance best practices. Attend in person at the Norwalk Public Library in Connecticut or join us live via Zoom. Click here to register and learn more.
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