Key trade loophole 'de minimis' ends this week. What it means for shoppers.
- - Key trade loophole 'de minimis' ends this week. What it means for shoppers.
Kathryn Palmer, USA TODAYAugust 25, 2025 at 5:03 AM
Prices on imported low-cost goods are likely to rise soon, as a trade loophole allowing many retailers to avoid President Donald Trump’s tariff hikes is set to expire this week.
The exception, which applied to items shipped to the United States and valued at $800 or less, will end on Friday, Aug. 29, following the president’s executive order in late July, effectively sunsetting the "de minimis trade agreement" for all nations. In 2024, de minimis shipments were valued at more than $1.36 billion, according to U.S. Customs and Border Protection.
This means consumers may see higher costs and possible supply disruptions, as the Trump administration effectively ends the duty-free program across the board.
In preparation of the change, Reuters reports postal groups in several European counties have announced they will pause standard parcel shipments to the U.S. Austria's postal service cited both the scrapping of the de minimis exemption as well as uncertainty over future U.S. postal customs clearance as reasons for its move.
"This tightening poses major challenges for all postal companies worldwide when sending goods to the USA," Austria Post said.
Here's what to know about the de minimis exception and how its end could impact consumers.
85473960007
What is the de minimis exception?
The de minimis exemption refers to Section 321 of the Tariff Act of 1930, which allows the Secretary of the Treasury to waive some duties or fees where it is more inconvenient to collect the tax than the revenue would be worth. In practice, the policy allowed companies to ship low-value packages to the U.S. tariff-free. The Trump administration said in April, before the executive order ending the exemptions, that Customs and Border Patrol processes over 4 million de minimis shipments into the U.S. each day.
More: Key loophole impacting Shein, Temu closes. But customers are already affected.
The exception has been the subject of back-and-forth over the past few months between the Trump administration and China, and it hit an early speed bump. It was originally set to end in February, but it was then postponed after packages began piling up without time to plan and execute the policy change.
The Aug. 29 deadline comes a few months after the loophole was closed on May 2 for imports, specifically from China and Hong Kong, where behemoth low-value retailers like Shein and Temu ship a significant portion of their products from. Over half of all packages with de minimis exemptions come from China, and more than 30% of all daily packages shipped under de minimis are from Temu and Shein, Reuters reported in February.
Containers are stacked on the deck of cargo ship One Minato at Port Liberty New York in Staten Island, New York, U.S., April 2, 2025.
The two popular online retailers sell a wide range of products, including clothes and linens, toys, home goods and electronics. Both retailers gained popularity in the U.S. over the past several years, thanks in part to the de minimis exemption, which helped the companies keep prices low.
Both Temu and Shein experienced a sharp decline in sales growth and customer growth rates since Trump announced sweeping trade tariffs, according to data collected by consultancy Bain & Company, per Reuters. Engagement on Temu has also dropped significantly following the end of the de minimis exemption, said Morgan Stanley equity analyst Simeon Gutman in a May note.
How will the end of de minimis impact consumers?
With the end of the exception now just days away for imports from all other nations, the same impacts that Shein and Temu have wrestled with may soon hit other low-value goods retailers.
Ernie Tedeschi, director of economics at Yale Budget Lab, said the end of de minimis could affect health and beauty items, apparel, household goods and various bespoke or boutique items that are imported.
Items are displayed in a window at a Manhattan retail store on July 15, 2025 in New York City.
"For consumers that are shopping at a lot of big name-brand stores like Target, Walmart, Costco, this is not relevant to them," Tedeschi said. "Those stores have already been hit by tariff increases, and so that should be incorporated into those prices at the moment."
Yet, shoppers may see a disruption in availability or stock before they notice any price hikes, according to Tedeschi. He pointed to the package pile-up when Trump first tried ending the exemption, forcing the administration to put the order on hold after more than a million packages piled up at New York's John F. Kennedy International Airport.
"It's not clear to me that the administration has solved that problem yet," Tedeschi said. "All of that means that the initial effect that consumers see may not be an increase in price, at least initially, it may just be that goods are not there at all, goods that previously came in from de minimis."
Kathryn Palmer is a national trending news reporter for USA TODAY. You can reach her at [email protected] and on X @KathrynPlmr.
This article originally appeared on USA TODAY: De minimis exception ends this week, expected to hike low-cost imports
Source: “AOL AOL Money”
