Executive Summary
- The Trump administration eliminated the U.S. duty-free import policy for packages valued under $800, known as the “de minimis” rule, effective August 29.
- This policy reversal is projected to reduce U.S. consumer welfare by an estimated $11 billion to $13 billion annually, increasing costs for imported goods.
- The change aims to address concerns raised by critics, including President Trump, regarding fair trade, product safety, and the alleged use of the rule to import illegal substances and evade tariffs.
The Story So Far
- The Trump administration eliminated the long-standing “de minimis” rule, which allowed duty-free imports under $800, to address concerns that the policy unfairly disadvantaged domestic businesses, facilitated the entry of unsafe products and illegal substances like fentanyl, and enabled tariff evasion. This decision follows a significant surge in low-value imports, particularly from China, after the exemption threshold was raised in 2016.
Why This Matters
- The Trump administration’s elimination of the de minimis rule for imports is projected to cost American consumers $11-13 billion annually through higher prices or shipping charges, as low-value goods previously exempt from tariffs will now incur duties. This significant policy shift, intended to address concerns about fair trade, product safety, and the import of illegal substances, has already caused global shipping services to pause deliveries to the U.S. for operational adjustments, indicating immediate logistical challenges for importers and consumers alike.
Who Thinks What?
- The Trump administration and critics of the de minimis rule eliminated the policy to address concerns that it unfairly disadvantaged domestic businesses, allowed unsafe products to enter the country, facilitated the import of illegal substances like fentanyl, and was used to evade tariffs.
- The National Bureau of Economic Research, along with economists, projects that the elimination of the de minimis rule will reduce consumer welfare by up to $13 billion annually, leading to higher costs for American consumers through increased retail prices or added shipping charges.
- Historically, proponents of the de minimis rule argued that it provided U.S. consumers with access to foreign goods at lower prices.
The Trump administration has officially eliminated the U.S. duty-free import policy for packages valued under $800, known as the “de minimis” rule, with the change taking effect on Friday, August 29. Announced on July 30, the policy reversal ends a nearly 90-year-old exemption and is projected to reduce consumer welfare by up to $13 billion annually, according to a 2024 National Bureau of Economic Research paper. The move aims to address concerns raised by critics, including President Trump, regarding fair trade and product safety.
Economic Impact on Consumers and Trade
The elimination of the de minimis rule means that low-value imports, previously exempt from tariffs, are now likely to incur higher costs for American consumers, either through increased retail prices or added shipping charges. The National Bureau of Economic Research estimates that this change could cost U.S. consumers between $11 billion and $13 billion annually, which equates to roughly $35 to $80 per person.
In anticipation of the new requirements, shipping services globally have already paused deliveries to the U.S. to adjust their operations. This policy shift applies worldwide, with limited exceptions for personal letters and gifts valued under $100.
Historical Context and Import Volume
The de minimis exemption has been a part of U.S. trade law for decades, originally exempting packages valued at $200 or less from tariffs. In 2016, under the Trade Facilitation and Trade Enforcement Act signed by then-President Barack Obama, the threshold was raised significantly to $800.
This increase in the exemption threshold led to a dramatic surge in low-value imports. Shipments entering the U.S. under the de minimis rule grew from 140 million in 2014 to 1.36 billion in the 2024 fiscal year, with a total declared value of $64.6 billion. Approximately 73 percent of these parcels originated from China.
New Requirements for Imports
Previously, imports into the U.S. were processed based on value, with de minimis shipments under $800 bypassing duties and broker requirements entirely. Shipments between $801 and $2,500 followed a simpler process with fixed fees, while those over $2,500 required full documentation, a customs bond, and a licensed broker.
Now, commercial carriers, which handle the majority of de minimis parcels, are required to file either informal or formal entry documentation and pay the applicable tariffs. Postal services have a temporary option during the first six months to be charged standard U.S. tariff rates or flat fees ranging from $80 to $200, depending on the country of origin.
Business Adjustments and Policy Rationale
Businesses may choose to absorb these added costs, but economists anticipate that they will more likely be passed on to consumers, either indirectly through higher retail prices or directly by charging buyers for duties. The actual impact on consumers will vary based on factors such as country-specific tariffs and how sellers adjust their pricing strategies.
Proponents of the de minimis rule previously argued that it provided U.S. consumers with access to foreign goods at lower prices. Conversely, critics, including President Trump, contended that the rule unfairly disadvantaged domestic businesses, allowed unsafe products to enter the country, and facilitated the import of illegal substances such as fentanyl.
The White House stated that the rule had been utilized to “evade tariffs and funnel deadly synthetic opioids as well as other unsafe or below-market products that harm American workers and businesses into the United States.”
The elimination of the de minimis rule marks a significant shift in U.S. trade policy, ending a long-standing exemption for low-value imports. While intended to address concerns about fair competition and product safety, the change is projected to have a substantial economic impact on American consumers through increased costs for imported goods.
