Online shopping expense increase imminent: reasons elaborated
The de minimis exemption, a U.S. trade rule that allowed low-value goods to enter the country duty-free and with minimal customs formalities, is set to come to an end on August 29, 2025. This marks the end of a 90-year-old policy that has significantly impacted global ecommerce and consumer prices.
Initially passed in 1938 to save customs officials time and paperwork, the de minimis exemption was designed to support consumers by lowering costs for online purchases from abroad. However, over the years, it has been exploited, leading to concerns about tariff evasion, unfair trade, national security risks, and illicit drug trafficking.
Starting August 29, 2025, the U.S. will eliminate the $800 de minimis exemption for most imported goods. This means all shipments coming into the U.S. valued at $800 or less, including those sent through the international postal system, will now be subject to import duties and taxes.
For goods arriving through the international postal network, importers will face new duty assessment methods. Either an ad valorem duty (a percentage of the shipment's value) based on the tariff rate tied to the country of origin or, for six months only, a specific duty charged per item (ranging approximately from $80 to $200), after which only ad valorem duties apply.
Certain personal exemptions remain for travelers bringing back up to $200 worth of personal items or bona fide gifts valued at $100 or less duty-free.
This change is expected to increase import prices on online purchases from outside the U.S., as duties and taxes will apply where previously none did, increasing the total landed cost for consumers and sellers shipping internationally. The removal of the exemption is motivated by U.S. government concerns about tariff evasion, unfair trade, national security risks, and illicit drug trafficking, particularly fentanyl.
The de minimis exemption was intended to allow the American economy to benefit from inexpensive consumer goods. However, its unintended consequences, including being used to ship synthetic opioids, have been seen as outweighing its benefits. The repeal of the de minimis exemption is part of the ongoing trade war, although its impact on the flow of fentanyl into the U.S. is unclear.
The de minimis exemption was first set at $1, which is approximately $23 today. It was raised to $800 in 2015, leading to an increase in de minimis imports. From 134 million packages in 2015, de minimis imports have increased to nearly 1.4 billion last year.
The repeal of the de minimis exemption will make online purchases from outside the U.S. more expensive starting August 29, 2025. Companies like Amazon, Shein, and Temu, which have benefited from the de minimis law by flooding the market with inexpensive goods, will now have to factor in the additional costs of duties and taxes.
In conclusion, the end of the de minimis exemption will lead to higher import costs and increased customs processing for low-value international shipments entering the U.S., effectively reducing the price advantage that small-value online purchases from abroad previously enjoyed.
- The de minimis exemption, a 90-year-old policy, aimed to save customs officials time and paperwork by allowing low-value goods to enter the country duty-free.
- However, the repeal of the $800 de minimis exemption set for August 29, 2025, will mean all imported goods valued at $800 or less will now be subject to import duties and taxes.
- This change could affect the prices of fashion items such as watches, as additional costs may be passed on to consumers due to duties and taxes on online purchases from outside the U.S.
- The repeal may impact major retailers like Amazon, Shein, and Temu, which have benefited from the de minimis law by offering affordable lifestyle and shopping options to consumers.
