President Donald Trump has temporarily halted the implementation of tariffs on low-value packages arriving from China. This decision appears to provide federal agencies with the necessary time to establish a system for managing the millions of such shipments that cross the U.S. border daily without incurring taxes.
The executive order, issued on Wednesday, did not specify an end date for the pause but indicated it would conclude once the Department of Commerce could implement “adequate systems” to “efficiently process and collect tariff revenue.”
John Lash, group vice president of product strategy at the supply chain platform e2open, commented, “This demonstrates our swift action, although the full implications of these regulations are not yet clear.” He noted that Trump’s order impacts a significant number of small packages, many of which are already in transit.
“The volume is truly staggering,” Lash remarked. “Suddenly, these shipments transition from not needing tariff filings to requiring comprehensive documentation, which is a complex undertaking.”
The decision to end tariff exemptions on inexpensive packages from China enjoys widespread bipartisan support in Washington. Trump made this move following a 10% increase in tariffs on Chinese goods earlier this week. Consequently, goods sent through duty-free packages are now subject to existing tariffs—25% for many Chinese products—as well as the newly imposed 10%.
This action represents yet another pause in Trump’s policies just weeks into his second term, including previously announced tariffs on Mexico and Canada, which were suspended after those countries took measures to address his concerns regarding border security and drug trafficking.
The U.S. Postal Service, which would be responsible for collecting tariffs on small packages, initially announced on Tuesday that it would not accept parcels from mainland China and Hong Kong, only to reverse that decision the following day. The agency stated it would collaborate with Customs and Border Protection to establish a collection process for the new tariffs.
“This situation illustrates how rapid changes can leave people unprepared.”
Established in 1938, the de minimis exception was designed to streamline the importation of small packages valued at no more than $5, which is roughly equivalent to $106 today. This threshold was raised to $200 in 1994 and further increased to $800 in 2016. However, the surge in cross-border e-commerce, particularly from China, has put the original purpose of this long-standing customs exception under scrutiny.
Read more: USPS has suspended parcel shipments from China due to Trump-era tariffs
According to a recent report from the Congressional Research Service, Chinese exports of low-value packages reached $66 billion in 2023, a significant increase from $5.3 billion in 2018. The U.S. has emerged as a primary market for these goods.
In 2023, U.S. customs processed over 1 billion such packages for the first time, a dramatic rise from 134 million in 2015. By the end of the previous year, Customs and Border Protection reported handling approximately 4 million small shipments daily, many originating from China via online retailers like Shein and Temu.
Critics argue that this practice has facilitated not only tariff evasion but also the entry of unsafe products, including counterfeits and illegal drugs, into the U.S. Conversely, proponents contend that it has helped maintain affordable prices for American consumers and small businesses.
Following the elimination of the exemption by the Trump administration, analysts suggested that this policy change could result in increased prices and delivery delays as U.S. customs officials face a surge of packages requiring inspection.
Neil Saunders, managing director at research firm GlobalData, noted, “We are talking about millions of packages every week that currently just basically get treated like domestic shipping.” He added that Temu has already adapted by enhancing its warehousing capabilities in the U.S. over the past year and shipping products in containers.
Lash indicated that the removal of the de minimis exception would fundamentally alter the cross-border e-commerce landscape, as tariffs and additional paperwork would raise costs, leading international sellers to shift towards bulk shipping methods.
