A nearly 100-year-old trade rule that let Americans import small packages without paying duties has been removed by President Donald Trump’s administration, a change that could hit low-income families the hardest.
Why It Matters
The “de minimis” exemption allowed packages worth under $800 coming into the U.S. to avoid customs duties and paperwork. On August 29, the Trump administration officially ended the rule, which covered 1.36 billion shipments valued at $64.6 billion in fiscal year 2024.
Earlier this year, the exemption was removed for shipments from China and Hong Kong, the biggest sources of such imports. The August 29 decision extends the policy to every U.S. trading partner. Because of this, more than 30 countries’ postal operators, including India, Mexico, and Japan, restricted or stopped shipments to the U.S. in advance.
Supporters say the move protects American businesses and prevents unsafe products from slipping through. Trump called the old exemption “a big scam going on against our country, against really small businesses, and we’ve ended it.” The White House also said the rule was being used to avoid tariffs and even to smuggle illegal substances such as fentanyl.
What To Know
A 2024 National Bureau of Economic Research paper estimated that getting rid of the exemption could lower consumer welfare by as much as $13 billion a year, with poorer households feeling the biggest impact.
The study described the de minimis exemption as a “pro-poor trade policy.” Without it, the burden shifts. Tariffs on shipments to low-income zip codes are projected to jump from 0.5 percent to nearly 12 percent, while wealthier areas would see a smaller increase—from 1.5 percent to about 6.5 percent.
In addition, every package will now face an administrative fee. Researchers say this hurts low-income households the most, since they rely more heavily on these small, inexpensive imports.
“Lower-income households that rely on inexpensive imported goods such as clothing, household items, and phone accessories will be hardest hit,” said Usha Haley, Barton distinguished chair in international business at Wichita State University, in an interview with Newsweek.
“For these consumers, even small increases in the prices of everyday items are a larger share of their discretionary spending, making the policy regressive in practice.”
Commercial carriers must now file customs entries and pay tariffs for these shipments. Postal services are temporarily allowed to charge flat fees between $80 and $200, but soon they will switch to the origin country’s tariff rate. Sellers are expected to pass these costs on to buyers.
Sean Henry, CEO and co-founder of supply chain company Stord, said the higher prices will hit poorer communities the hardest. “A disproportionate amount of shipments entering the U.S. under the de minimis program were going to lower-income zip codes,” he told Newsweek.
“Consumers of a lower-income level have often found these extremely cheap products from platforms like Shein and Temu, and those product categories will feel the impact most acutely.”
Why Is De Minimis Being Removed?
The White House and U.S. Customs and Border Protection (CBP) argue that criminals misused the exemption.
According to CBP, smugglers undervalued or mislabeled goods to sneak drugs and weapons into the U.S. The White House said the exemption allowed the flow of “deadly synthetic opioids as well as other unsafe or below-market products that harm American workers and businesses into the United States.”
What Happens Next
The end of de minimis affects everyone, not just low-income families. All U.S. consumers will likely pay more for foreign-made goods.
“In the short term, consumers are likely to see immediate price hikes,” said Robert Khachatryan, CEO at Freight Right Global Logistics, in an interview with Newsweek. “Low-dollar items such as $10 accessories or fast-fashion staples will face double-digit percentage increases once merchandise processing fees and duties are applied.”
