Tariff exemption ends for low-value packages, reshaping US trade

By Al Mayadeen English
Source: Agencies
Today 13:00

The United States has officially ended its tariff exemption for low-value package imports under $800, applying full US tariffs to all global parcels, expected to impact shipping costs, e-commerce firms, and raise retail prices.

Listen

FILE - Shipping containers are seen ready for transport at the Guangzhou Port in the Nansha district in southern China's Guangdong province on Thursday, April 17, 2025. (AP Photo/Ng Han Guan)

As of Friday, August 29, the US has officially terminated its long-standing tariff exemption for international package shipments valued under $800, a move set to significantly reshape shipping models, increase costs for businesses and consumers, and mark a shift in customs regulations.

Under new guidance from US Customs and Border Protection (CBP), all global parcel imports, regardless of value, origin, or shipping method, are now subject to standard US tariffs.

This change ends the "de minimis" exemption that had allowed duty-free import of low-value items, a policy in place since 1938.

A flat-rate duty option between $80 and $200 will temporarily apply to parcels handled by foreign postal services, but only until February 2026, when full ad valorem duties based on item value will take effect.

Trump administration expands tariff policy

The policy shift follows the Trump administration’s May decision to end the exemption specifically for packages from China and Hong Kong, citing efforts to combat the import of fentanyl and its precursors. The broader elimination now applies globally.

“President Trump's ending of the deadly de minimis loophole will save thousands of American lives… and add up to $10 billion a year in tariff revenues,” White House trade advisor Peter Navarro said Thursday.

A senior administration official confirmed the change is permanent, stating that reinstating exemptions for select trade partners is “dead on arrival.”

Impact on E-commerce, small businesses, and consumers

Retail analysts predict the removal of the tariff exemption will raise prices for goods sold via online platforms, as many e-commerce sellers will now face import costs similar to those of large retailers like Walmart, which already pay tariffs on bulk imports.

Since its last increase in 2015, the exemption has allowed small businesses to flourish on digital marketplaces by avoiding extra shipping costs. But it also spurred a boom in direct shipments from China-based fast-fashion retailers like Shein and Temu, an unintended consequence of earlier US tariff hikes.

The National Coalition of Textile Organizations praised the move as a “historic win” for US manufacturers, citing unfair competition from firms exploiting the exemption to avoid tariffs and bypass labor regulations.

Shipping industry adjusts to new customs regulations

The CBP reported that low-value parcel imports surged from 139 million in 2015 to 1.36 billion in 2024, nearly 4 million per day. The agency collected over $492 million in duties since exemptions on Chinese and Hong Kong shipments were lifted in May alone.

Express carriers such as FedEx, UPS, and DHL will apply full US tariffs immediately, as these firms are better equipped to manage customs data and duty collection compared to traditional postal agencies.

Foreign postal services can temporarily collect flat-rate duties, $80 from countries with tariff rates below 16%, $160 from those between 16–25%, and $200 from nations exceeding 25%, including China, Brazil, India, and Canada. However, all will be required to adopt full ad valorem collection by February 2026.

Some foreign postal services have already suspended shipments to the US in response, but American officials say they are coordinating with partners and the US Postal Service to reduce disruptions.

Kelly Ann Shaw, a former senior trade official under the Trump administration, expects initial complications but believes they will be manageable.

“There will be growing pains as this unfolds, but it is US law,” said Shaw. “There will be a bit of a transition time while CBP figures out how to process these low-value shipments, which it hasn't had to do in many years.”