Executive Summary
- The “de minimis” tariff exemption, which allowed goods valued at $800 or less to enter the U.S. duty-free, is set to expire this Friday, stemming from President Donald Trump’s trade agenda.
- Multiple international postal services, including Singapore’s SingPost, India’s Department of Posts, DHL, and Britain’s Royal Mail, are suspending shipments to the U.S. due to the impending policy change.
- The elimination of the exemption is expected to significantly impact U.S. consumers and various online retailers, leading to increased costs, with some businesses passing tariffs directly to shoppers or suspending sales to the U.S.
The Story So Far
- The current widespread disruption in international postal services and trade to the U.S. is a direct consequence of the impending expiration of the “de minimis” tariff exemption, which previously allowed goods valued at $800 or less to enter the country duty-free. This policy shift, stemming from President Donald Trump’s trade agenda, means that such packages will now be subject to new duties, leading to significantly increased costs and operational complexities for global businesses and postal services.
Why This Matters
- The expiration of the de minimis tariff exemption, a direct result of President Trump’s trade agenda, is causing widespread disruption as numerous international postal services suspend shipments to the U.S. This policy shift will lead to significantly increased costs for businesses, which are either passing duties onto consumers or halting sales, thereby reducing U.S. consumers’ access to international goods and online retailers and impacting the flow of over a billion small packages annually.
Who Thinks What?
- President Donald Trump’s administration initiated the policy shift to eliminate the de minimis exemption, aiming to tighten trade regulations.
- International postal services, including SingPost, India’s Department of Posts, DHL, and Royal Mail, are suspending shipments to the U.S. as they grapple with the new requirements and increased costs.
- Businesses like Olive Young and Wool Warehouse are responding by either passing on additional tariff costs to shoppers or suspending sales to U.S. customers due to the financial burden and operational complexities.
International postal services are suspending shipments to the United States as a key tariff exemption for small packages is set to expire this Friday. This policy shift, stemming from President Donald Trump’s trade agenda, is expected to significantly impact U.S. consumers and a wide array of businesses globally. The “de minimis” exemption, which previously allowed goods valued at $800 or less to enter the U.S. duty-free, will be eliminated, leading to widespread disruptions.
Policy Change and Immediate Impact
The upcoming expiration marks a further tightening of trade regulations. In May, the Trump administration had already suspended this rule for packages originating from China and Hong Kong. This earlier change saw duties, though reduced from 120% to 54%, particularly affect low-cost sellers such as Shein and Temu.
In response to the impending change, multiple European and Asian postal services have announced plans to halt shipments. Singapore’s SingPost and India’s Department of Posts stated they would temporarily suspend certain shipments to the U.S. DHL, a major international service, confirmed August 25 as its final day for accepting U.S.-bound shipments, aligning with European counterparts like the Austrian Post, which will cease operations on August 26.
Affected Businesses and Consumers
The elimination of the de minimis exemption is anticipated to affect various online retailers and marketplaces that connect U.S. consumers with global businesses. This includes discount sellers like Amazon Haul and TikTok Shop, as well as online platforms such as Etsy and Shopify.
U.S. Customs and Border Protection data highlights the scale of previous activity, with more than 1.36 billion de minimis shipments entering the country last fiscal year. The agency typically processes over 4 million such shipments daily, underscoring the volume now subject to new regulations.
New Costs and Business Responses
Businesses now face potential charges ranging from $80 per item for countries with a tariff rate below 16%, up to $160 per item for rates between 16% and 25%, and $200 per item for rates exceeding 25%. On August 7, the U.S. imposed new tariff rates on numerous trading partners, with Brazil experiencing the highest rate at 50%.
Some companies are already passing these additional tariff costs directly to shoppers. Korean cosmetics brand Olive Young announced that, starting August 27, a 15% duty would apply to all orders, regardless of the purchase amount, once the exemption ends. Wool Warehouse, a U.K.-based yarn and crafting company, estimated its exports to the U.S. could incur an average of 50% more in charges. Doubting customer willingness to absorb these costs, the company opted to suspend shipping on August 21.
Britain’s Royal Mail will also halt services for U.S. shipments beginning Tuesday, with the suspension expected to last approximately two days while a new system for the revised shipping requirements is implemented. Etsy has advised its sellers to pay duties and other fees when purchasing shipping labels, enabling tariff-inclusive prices to be displayed and calculated on the platform for a more seamless shopping experience. Despite this, some Etsy sellers have indicated plans to suspend sales to U.S. customers.
The impending expiration of the de minimis tariff exemption represents a significant shift in international trade policy, directly impacting the flow of goods to the United States. Businesses worldwide are grappling with increased costs and operational changes, with many choosing to suspend services or pass on duties to consumers. This widespread disruption underscores the far-reaching effects of President Trump’s trade policies on global commerce and consumer access to international products.
