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By executive order, the De Minimis Tariff Exemption ends August 29.

Key Changes

• Suspension of the Rule: The de minimis provision, which allowed shipments under $800 to be exempt from duties, is being suspended by presidential executive order. 
• Effective Date: The new rules become effective on August 29, 2025. 
• Affected Shipments: The change applies to most low-value imports, regardless of their country of origin or method of entry. 

International Shipments

• Non-Postal Shipments: Goods not shipped through the international postal system will be subject to the same duties, taxes, and fees as any other import.
• Ad Valorem Duty: A duty equal to the applicable tariff rate based on the product’s country of origin. 
• Specific Duty: A flat fee based on the tariff rate applicable to the country of origin (e.g., $80, $160, or $200). After six months, the ad valorem method will be the only option for postal shipments. 

Impact on Consumers and Businesses

• Consumers: Expect higher prices on goods shipped from overseas, potentially leading to more cautious spending and a shift to domestic brands or resale markets.
• Businesses: Companies need to immediately review their supply chains, recalculate duties and costs, and adjust fulfillment strategies to comply with the new rules.
• International Impact: The change has already caused some European postal services to pause shipments to the U.S. as they work to implement the new procedures.

What the Section 321 Suspension Means for Ecommerce

Red Stag Fulfillment explains What the Section 321 Suspension Means for Ecommerce

For years, e-commerce businesses have relied on Section 321 to import products with a retail value of up to $800 into the U.S. duty-free. This provision, known as the de minimis exemption, was a cornerstone of many international supply chains and fulfillment strategies.

That era is over. The U.S. government has suspended the de minimis exemption for all commercial shipments, effective August 29, 2025. This is one of the most significant shifts in U.S. trade policy in years, and it directly impacts how you source, ship, and sell your products, especially for ecommerce brands.

New Duties for Shipments

• For Private Carriers (e.g., FedEx, DHL, UPS): Shipments will be subject to the standard duties and tariffs based on the product’s classification and country of origin (ad valorem).
• For the International Postal Network: These shipments face a transitional duty structure. For the first six months, a flat fee ranging from $0.80 to $2.00 per item will apply, depending on the origin country’s tariff rate. This will later shift to a full ad valorem system.
• Limited Exceptions Remain: The suspension does not affect non-commercial exemptions. U.S. travelers can still bring back up to $800 in personal items, and individuals can receive bona fide gifts valued at $100 or less, duty-free.

Strategic pivots: adapting your supply chain to the end of de minimis

1. Shift from Parcel to Freight (Consolidation is Key): The single most important strategy is to stop thinking in terms of individual packages and start thinking in terms of bulk freight. Shipping individual orders from overseas will now incur duties and fees on every single parcel, destroying margins. The new winning strategy is to consolidate your products into larger freight shipments (Less-than-Container Load or Full Container Load) to be imported into the U.S. at once. This drastically reduces the per-item customs processing costs.
2. Embrace Domestic Fulfillment: With consolidation as the new import model, having a U.S.-based fulfillment center is no longer a luxury—it’s a necessity. By importing goods in bulk to a 3PL partner like Red Stag Fulfillment, you can warehouse your inventory domestically. This allows you to pay duties once on the bulk shipment and then fulfill orders to your customers quickly and efficiently from within the U.S., completely avoiding the new per-package complexities.
3. Recalculate Your Landed Costs: Your product pricing must be updated. The true landed cost of your goods now includes not only the product cost and shipping but also the newly applied tariffs and duties. Failing to account for these will lead to unsustainable losses. You must re-evaluate your margins and adjust your consumer-facing prices accordingly.
4. Prioritize Customs Compliance: With formal entry required for all shipments, the risk of costly delays, penalties, and seizures for incorrect documentation is higher than ever. Ensure your HTS classifications are correct and your valuations are accurate. Partnering with experienced customs brokers and 3PLs who understand these new regulations is critical to avoiding compliance issues and ensuring full supply chain visibility.

What happens if I don’t comply with the new rules?

Non-compliance with formal entry process procedures can lead to significant penalties, including fines, seizure of your goods, and lengthy shipping delays. Given the increased scrutiny from US customs, prioritizing customs compliance is more important than ever.

Frequently Asked Questions

Can I still import one shipment per day under the old rules?
No. The “one shipment per person per day” rule was a condition of the Section 321 exemption. Since the exemption is suspended, this rule is no longer relevant for avoiding duties. All commercial de minimis imports are now subject to duties regardless of how many are sent per day.

Does this suspension affect shipments from all countries?
Yes. While the de minimis exemption was first suspended for China and Hong Kong (affecting many Chinese goods), the executive order effective August 29, 2025, applies to commercial shipments from all countries.

Four Strategic Pivots

Read the above four strategic pivots closely.

All consumers and most small businesses will struggle with all four. Even those who shift from parcel to freight via larger order, still have to pay the tariff.

Physical Inspection and Verification

• Screening: Customs scans every incoming international package using X-ray or other technology to verify that the contents align with the customs forms.
• Targeted inspections: An officer may open a package for closer inspection if:
  • Information doesn’t match: The screening reveals discrepancies with the declared contents.
  • Irregularities are found: The shipment appears suspicious, for example, due to undeclared items or questionable pricing.
  • A package is randomly selected: Customs performs random checks to ensure overall compliance with trade regulations.
• Investigation of discrepancies: If customs finds that the declared value is untruthful or inaccurate, they can take further action to determine the proper value. This can involve using alternative valuation methods if the stated “transaction value” is deemed unreliable. 

From AI: When shipping a personal package from overseas, you are legally required to declare its value on a customs form. This is mandatory even if the items are used, have little monetary worth, or are gifts.

Customs authorities use the information provided in shipping documents to determine ad valorem duty, but they can and do open packages to verify the contents and declared value. This is done to ensure compliance, protect against smuggling, and prevent revenue fraud. 

Nothing Too Small to Escape

The Wall Street Journal notes The Petty Package Tax Arrives

No cardboard box or envelope is too modest to escape President Trump’s tariff gaze. On Friday he sealed the crack in his trade wall that let packages under $800 pass without paying heavy import taxes. Like many protectionist policies, this could backfire. The Chinese retailers Mr. Trump wants to punish have already adapted, but small U.S. importers are about to get hit.

Four months after Mr. Trump suspended the de minimis tariff exemption for shipments from China and Hong Kong, he has now ended it for goods from all nations. The exemption had been a duty-free threshold for purchases up to $800, and it benefited everyone from college freshmen to custom car mechanics. Last year it covered more than 1.3 billion packages.

The President in May called de minimis “a big scam going on against our country,” saying Chinese companies, including discount retailer Temu and clothing seller Shein, used the exemption to flood the U.S. with cheap goods. Republicans in Congress got on board, adding a provision to their big, beautiful bill to repeal the legal basis for de minimis by July 2027. Mr. Trump couldn’t wait and ended the policy in time for Labor Day sales.

Yet the Chinese companies adjusted after Mr. Trump closed the tiny zero-tariff door in their faces. Temu and Shein opened U.S. warehouses to distribute goods instead of shipping direct to American buyers. Some of these items are imported at Mr. Trump’s 30% tariff rate on China, but the retailers have also shifted their supply chains, sourcing more products from places such as Mexico and Vietnam. Temu’s parent company on Monday reported higher-than-expected revenue growth, with the U.S. making up a third of its sales.

The worldwide ending of the de minimis rule will be a bigger jolt for small buyers and sellers, and it’s also an administrative nightmare. Several national postal carriers, including in Australia, India, Japan and the U.K., paused shipments to the U.S. Some private carriers like DHL did the same, while FedEx and UPS added fees to U.S.-bound packages. That adds to tariffs on the actual goods, which will jump from zero to any of the countless rates that Mr. Trump has imposed by country.

Mr. Trump is a tariff maximalist and couldn’t bear to see gaps in his trade wall. But there will be little to show for ending de minimis, other than millions of price increases scattered around the country.

Expect a Legal Challenge

The Wall Street Journal provides the rationale.

“Republicans in Congress got on board, adding a provision to their big, beautiful bill to repeal the legal basis for de minimis by July 2027. Mr. Trump couldn’t wait and ended the policy in time for Labor Day sales.”

The best way forward is a class action suit. And it should not be that difficult to find willing parties with proper standing to file suit.

Meanwhile …

For personal goods, the shipper will place the valuation. Unless the shipper says it will eat the tax, the consumer will pay the tax.

It’s also possible the shipper will claim to pay the tax, most likely by increasing the price.

Small American businesses and consumers are certain to take a hit.

Unfortunately, There will be no recourse for any companies that go out of business over this madness.

Hopefully, most of the stockpiled many months of materials. But even if so, that’s an unnecessary up-front cost.

Related Tariff Issues

August 29, 2025: Full Appeals Court Rules 7-4 Against Trump’s Reciprocal Tariffs

In a very much expected (by me) ruling, the appeals court rejects Trump’s global tariffs.

August 30,2025: Trump Moans About Tariff Ruling, Puts Direct Pressure on 4 Supreme Court Justices

Pressure is on Justices Thomas, Gorsuch, Kavanaugh, and Alito.

I have not studied the legal issues surrounding de minimus as closely as reciprocal tariffs.

Perhaps Congress opened up a can of worms for Trump by specifying a legal end date to de minimis tariffs that Trump totally ignored.

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