Ecommerce after De Minimis Tariff Exemption

The aim of the 1930 U.S. Tariff Act was to eliminate low-cost imports from customs and duty processing, thereby saving money. Initially pegged at $1 per package, the so-called “de minimis” threshold gradually increased to $800. The exemption became crucial for cross-border dropshippers, fast-fashion brands, and other ecommerce sellers.

President Trump eliminated the de minimis exemption effective August 29, 2025. Most U.S.-bound shipments valued at $800 or less will incur applicable duties, taxes, fees, and other charges, although the change affected packages from China and Hong Kong as of May. The U.S. Postal Service, in collaboration with other domestic postal providers, has a six-month phase-in period.

President Trump eliminated the de minimis exemption effective August 29, 2025, although the change took effect in May for China and Hong Kong.

Nonetheless, the change represents a dramatic shift for ecommerce. For nearly a decade, cross-border sellers and platforms such as Shein and Temu leaned on the exemption to flood the U.S. with low-value packages.

Meanwhile, American retailers shipping to other countries paid tariffs, hired brokers, and navigated customs compliance. Now, with the exemption gone, the playing field looks different.

Some businesses will suffer due to import complexities and expenses, but others stand to gain.

Scope

The American de minimis rule had been unprecedented. Many countries have similar exemptions for relatively low-value imports, but none come close to an $800 ceiling.

European Union nations typically cap their customs duty at the equivalent of $175, but charge a value-added tax from the first penny. Canada’s exemptions for customs duties and taxes max out at $150 CAD, or approximately $100 USD. Mexico allows shipments of up to $50 USD for a de minimis value. China offers minimal exemptions, and most other countries peak at about $75.

America’s high exemption created an opportunity for foreign ecommerce businesses and some enterprising U.S.-based merchants.

According to the White House, the volume of shipments entering the U.S. duty-free rose from approximately 134 million packages in 2015 (when the limit was $200) to more than 1.36 billion last year.

An estimated 60% of these de minimis, duty-free packages entering the U.S. — hundreds of millions of parcels annually — originate from China.

Harm

The U.S. de minimis suspension will hurt three types of ecommerce companies:

• Dropshippers. Merchants that manufacture, warehouse, or acquire products offshore for direct, per-item importing will now have to pay standard duty and taxes. This group includes large sellers, such as Temu, as well as many small and retail arbitrage businesses utilizing AliExpress and DSers.

• Fast-fashion sellers. China’s Shein and similar brands that depend on producing rapidly trendy clothes could face relatively higher landed costs and, as a result, thinner margins.

• Small ecommerce retailers. The de minimis exemption applied to both direct-to-consumer sales and bulk orders so long as the total value was $800 or less. Thus merchants that place tiny minimum orders from suppliers could also be impacted.

The suspension does not prevent any of these businesses from operating or shipping to the United States, but it does change their economics and presumably increase prices for consumers on goods that were previously duty-free.

Benefit

The suspension is not universally harmful, however, as many American businesses stand to gain.

First and foremost, the suspension could be a boon for merchants and brands that source products in America. This is particularly true for small direct-to-consumer businesses that pay U.S. wages while competing with goods manufactured offshore in markets with extremely low labor costs.

The second group to benefit could be every domestic retailer that already pays import duties.

A retail chain with 15 stores, an ecommerce website, and a requisite marketplace seller account is already paying standard import duties when importing a container load of goods.

In some cases, these retailers had to compete with foreign sellers or arbitrage operations that could offer an identical item at a lower cost due to the de minimis exemption.

Outlook

President Trump suspended the de minimis treatment discussed here on July 30, 2025, by executive order; however, he might change his mind.

The Trump administration often uses trade policy as a form of leverage. If foreign governments such as China make concessions to the United States, the administration could restore or modify the exemption.

Regardless, the de minimis treatment would have ended permanently in 2027. Earlier this year, the U.S. Congress voted to kill the exemption for the vast majority of small imports. The new law appears to aim to close what lawmakers believed was a loophole that has harmed American manufacturers and consumers while benefiting drug traffickers.

The suspension is disruptive for some ecommerce sellers. Yet the industry has adapted before, through sales tax implementations, shipping disruptions, and pandemic-era supply chain crises. It will adapt again.

What began as a convenience rule in the 1930s grew into a key component of global ecommerce. The end of the de minimis exemption may mark the start of something new and promising for American ecommerce businesses.

Charts: European Views on U.S. Tariffs

YouGov is a U.K.-based research and analytics firm operating in Europe, North America, the Middle East, and Asia-Pacific. A recent YouGov survey (PDF) explores public opinion on tariffs across Western Europe.

YouGov surveyed 9,455 adults in March 2025 in the U.K. (2,155), France (1,002), Germany (2,196), Denmark (999), Sweden (1,011), Spain (1,061), and Italy (1,031).

The survey consisted of four questions, starting with, “If the U.S. were to place tariffs on E.U. goods imported to the U.S., would you support or oppose the E.U. responding by placing tariffs on American goods imported to the E.U.?”

Most respondents back retaliatory tariffs, with support highest in Denmark at 79%.

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Next, the survey asked, “How much impact, if any, do you think that the U.S. placing tariffs on E.U. goods imported to the U.S. would have on the E.U. economy?” and “the [country’s] economy?

Seventy-five percent of German respondents believe tariffs will have “a lot” or “significant” impact on their national economy.

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The final survey question addressed fairness: “Do you think the E.U. has been fair or unfair in its trade dealings with the U.S. in recent years?

Charts: Global Consumer Views on Tariffs

The Boston Consulting Group provides strategy and advisory services to enterprises worldwide. The firm’s occasional “Consumer Radar Survey” queries global shoppers to study their behaviors, preferences, and sentiments.

In February 2025, BCG surveyed 7,285 consumers in the U.S., the U.K., Germany, France, Japan, China, India, and Brazil, soliciting their views on tariffs.

Most surveyed consumers anticipate that tariffs will negatively impact them.

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According to the survey, a minority of consumers think their country will benefit from tariffs.

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In addition, consumers who support tariffs generally have a negative financial outlook.

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Moreover, no age-group majority supports tariffs. Millennials are the top supporters at 40% of respondents.

Q&A: Passport CEO Talks Tariffs

President Trump’s tariffs have merchants scrambling to gauge the impact on imports, exports, and overall cost. There’s no better authority to assess that impact than Alex Yancher. He’s the CEO and co-founder of Passport, a global provider of cross-border logistics, localization, and support for ecommerce sellers.

He and I recently spoke on the state of tariffs, the likely impact, and how merchants should react. The entire audio of that conversation is embedded below. The transcript is edited for clarity and length.

Practical Ecommerce: What’s the status of the Trump tariffs?

Alex Yancher: Let’s break it down by country, starting with China, which seems to be the focus of the Trump administration. Plus, it’s the only new tariff in effect. The president implemented a 10% tariff on all imports from China starting February 4. That’s 10% incremental, on top of the existing 39% tariff from the Biden administration.

For goods from Canada and Mexico, the president announced a 25% tariff but reversed course within a day or two. We’re waiting for more information from the administration, but it doesn’t look like those new tariffs will occur.

President Trump’s salacious post in mid-February about reciprocal tariffs, meaning like-for-like, adds more uncertainty. If one of our industries is subject to a 50% tariff from a country, he suggested reciprocating with an equivalent 50% tariff.

An adjacent development relevant to ecommerce is changes to the U.S. de minimis rules. “De minimis” refers to excluding tariffs for shipments valued below a certain amount, currently at $800. A tariff could be 1,000%, but it’s waived if the item is under $800. Any revision to that rule would be huge for ecommerce sellers.

However, the administration removed the de minimis and then reversed the decision. So it’s still intact. We’re hearing rumblings that Trump will remove it again, at least for China-made goods. A change would be a massive regulatory hurdle to monitor and enforce — likely costing more money to oversee than it generates. So stay tuned.

PEC: Practical Ecommerce has long encouraged free trade and cross-border collaboration. Nonetheless, what’s President Trump’s rationale for tariffs?

Yancher: It seems to fit into three buckets. One is national security and border integrity, including fentanyl-related issues. The second bucket is allegations of unfair, unbalanced trade. We can see that in our trade deficit numbers. We have a trade deficit with virtually every country. Trump doesn’t like that imbalance.

The third bucket is the MAGA, America-first position, putting U.S. workers and companies first — ahead of free trade principles, inflation, and so forth.

Those are the three rationales, more or less.

PEC: Your company, Passport, facilitates trade in 180-plus countries. Are the first two reasons — national security and unfair trade — legit?

Yancher: There’s something to be said about a porous border regarding people and packages. We’ve had bipartisan legislation on oversight of packages coming in, such as drugs and illicit paraphernalia. Most countries are ahead of us in collecting rigorous data and information on incoming goods.

Passport is an internationalization company, as you mentioned. We’re smack in the middle of data flow. The information we must pass to foreign governments is typically much more strict than what the U.S. requires. The U.S. and Australia are the only countries with a high de minimis.

Another aspect of national security is ensuring the supply of critical medical products, such as personal protective equipment during Covid. We don’t want to rely on another country for those items.

In terms of unfair trade, it’s hard to say. U.S. consumers benefit from having access to low-cost goods. U.S. prices are lower for the most part than any other country. That’s partly because we have low tariffs.

PEC: Let’s move on to the impact on ecommerce merchants. What’s your advice?

Yancher: You’re safe if you manufacture in the U.S. unless you import components. You’re likely cheering for the administration to compel countries to lower their tariffs and thus expand your market.

If you manufacture goods in China, there’s presumably a reason you do it since there are already tariffs involved. And now your goods have just become 10% more expensive. So what do you do? Is 10% that meaningful? Are there other suppliers? The answer is case-dependent. Certainly companies are re-evaluating their bill of materials and their supply chains.

Merchants that ship directly from China to consumers in the U.S. are in a tough spot. The de minimis is almost certainly going away, likely very quickly. I advise those sellers to keep going until the bitter end while also devising a plan B.

Otherwise, those direct-from-China sellers may have to pay the duty on the retail sales price. There are ways of structuring the setup to pay the duty on the cost of goods sold, the manufacturer’s cost. But it’s unclear and risky. We’re talking about a lot of money and a big structural expense. Sellers in that position must devise a plan now.

PEC: Tell us about Passport.

Yancher: We help ecommerce merchants go global irrespective of their size. We work with small and large brands. We help them with front-end internationalization — collecting the correct amount of duties and taxes, displaying local currencies, and regulatory and fiscal compliance.

We recently acquired Brand Access, a company that helps enterprises set up local operations in-country. We’ll handle the logistics, warehousing, and importer of record and their seller of record. We’ll equip their front-end consumer experience for a high conversion rate.

We’re at PassportGlobal.com. We’ve launched a new site, TrumpTradeTracker.com, to help the industry stay current on all the trade changes and cut through the noise.

Looming Trade War Is Upending Supply Chains

The combination of Biden administration tariffs, Trump’s proposed increases, and changes in China trade relations will impact U.S. private label and direct-to-consumer brands, driving some to reconsider sourcing strategies in 2025.

Private label and DTC products are merchants’ highest-margin items. While relatively few retailers or DTC brands manufacture in-house, the products tend to remove several “middlemen,” often more than doubling profits.

A pet food retailer, for example, might clear 25 points (0.25%) on a popular premium dog food brand and 55 points on its own private-label version despite both products being manufactured at the same facility using similar recipes. A dog owner will pay about the same price for the private label brand or, perhaps, even a little less.

U.S.-imposed tariffs and changes in China trade relations could remake supply chains.

Private Label Sourcing

Private-label brands on U.S. retailers’ physical and virtual shelves come from factories worldwide, including China and Mexico.

Brand managers identify gaps in the market and then find a manufacturing partner to build, sew, or make products to fill the void. Amazon does this with more than 100 private brands representing thousands of products.

Selecting a manufacturer for these products involves factors such as quality, price, reliability, regulatory compliance, and — recently — trade tariffs or policies.

Trade Situation

Tariffs were top of mind for a group of private-label brand managers discussing their 2025 plans around a large conference table during a meeting in November 2024.

I had been invited to learn more about their businesses, which include 30 private brands with hundreds of products sold through a network of 800 stores and 30 ecommerce sites. My task was to help with potential promotion and go-to-market plans, but each manager noted the shift away from China.

While the broad topic was “tariffs,” the managers zeroed in on three specifics that could impact their private brand relationships in China.

• In May 2024, the Biden Administration announced it would increase Chinese tariffs on some strategic goods. Top tariffs moved from 7.5% to 25% for steel, 25% to 50% for semiconductors (by 2025), and 100% for electric vehicles.

• President-elect Donald Trump has proposed a 10%-to-20% overall tariff on imports, a 60% tariff on many Chinese goods, and tariffs ranging from 25% to 100% on Mexican imports.

• U.S. Representative John Moolenaar (R-MI) introduced the “Restoring Trade Fairness Act” on November 14, 2024, which would revoke China’s permanent normal trade relations status.

These tariff and policy changes could substantially impact the U.S. retail industry.

The National Retail Federation estimated that increased tariffs would cost American shoppers “between $46 billion and $78 billion in spending power each year.”

“Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices,” NRF Vice President of Supply Chain and Customs Policy Jonathan Gold said. “A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”

But Jan Kniffen, the CEO of J. Rogers Kniffen WWE, a retail investment consultancy, disagrees. He told CNBC he was “less concerned about the tariffs than it seems a lot of other people.”

Kniffen noted that when President Trump introduced tariffs in 2018, Chinese manufacturers desperate for access to U.S. markets absorbed them.

“Last time we put on tariffs, nothing really happened. We didn’t see a big rise in inflation. We didn’t see a cratering of retail profits,” Kniffen continued.

According to Kniffen, the Chinese economy is far worse now than it was six years ago, perhaps meaning that Chinese factories would lower prices again to absorb new tariffs.

Sourcing Behavior

Regardless, the private brand managers sitting around the table planned to leave China not just because of tariffs but also due to unpredictable relations, supply chain stability, and better margins.

Depending on the product, those managers suggested manufacturing in other Asian nations, partnerships in Europe and South America, or, better still, working with U.S. suppliers.

The group has even purchased its first U.S. manufacturing operation, controlling its own fate while improving profits.

This strategic pivot may reflect a broader trend toward supply chain diversification and a domestic manufacturing renaissance, potentially reshaping the future of private label and DTC brands in the U.S. market. Moving manufacturing closer to consumers will likely be a top priority in the coming years.

Ecommerce in Brazil: Growth Despite Hurdles

Retail ecommerce in Brazil more than doubled to 185 billion reais ($34.5 billion) in 2023 from $70 billion reais in 2018, while the average order increased in the same period from 435 reais to 470, according to the Brazilian Electronic Commerce Association.

By comparison, U.S. retail ecommerce sales in 2023 were $1.14 trillion, per eMarketer.

In Brazil, perfumery and cosmetics had the most online orders in 2023, followed by home and decor, health and food, and beverages.

Electronics in 2023 represented 31% of total ecommerce revenue, according to ECBD, a Brazil-based analysis firm, followed by fashion at 27%, hobby and leisure at 14%, and furniture and homeware at 11%.

Mercado Livre holds a dominant ecommerce position in Latin America. It was Brazil’s most trafficked retail website in March, with over 216 million visits, followed by Amazon, Shopee, OLX, and Ali Express. All are marketplaces. Amazon.com in the U.S. received 3.15 billion visits in March.

In Q1 2024, about 16% of total retail sales in Brazil came from digital channels — apps, sites, email. That’s comparable to the U.S. for the same period. In China, ecommerce in Q1 was 23% of total retail sales.

International Sellers

A 2024 study commissioned by Alibaba showed that cross-border ecommerce represented a mere 0.5% of total retail sales in Brazil, likely due to the difficulty of doing business there.

Despite consumer demand for phones, brand-name clothing, and baby gear, among other goods, it’s expensive and difficult to get things into the country.

“Doing business in Brazil requires in-depth knowledge of the local environment, including the high direct and indirect costs of doing business,” according to the U.S. International Trade Administration. Regulators have for years attempted to enact reforms but continue to face complex tax schemes, restrictive labor laws, and vexing import barriers.

Those hurdles have collectively restricted access to international goods, prompting many Brazilians to shop abroad.

Last year Brazilian lawmakers created a tax exemption for online purchases of $50 or less from international sellers, but a pushback from domestic merchants may result in its revocation, replaced by a 20% fee. Purchases above $50 are already subject to a 60% tax.

Brazilian logistics are an ecommerce barrier, with inadequate infrastructure in the world’s fifth largest country, most of which is rainforest. There aren’t enough roads, maintenance is poor, and ports have limited capacity. Cargo theft is a problem.

That’s as inflation has expanded, reaching a five-year monthly peak of 12% in April 2022.

Payments

Despite the challenges, the country has excelled in modernizing payments. In 2020 the Brazilian Central Bank introduced Pix, a real-time payments system requiring only an email address, phone number, or local ID — no bank account.

By 2023 Pix represented 41% of all retail transactions — online and in-store — followed by credit cards at 15% and debit cards at 13%. Buy-now pay-later services are also popular.

Brazil is the largest economy in Latin America, representing 57% of ecommerce sales with projected growth of about 14% annually through 2026, according to Payments and Commerce Market Intelligence, a global research firm.

The growth was bolstered by the pandemic, forcing Brazilians who didn’t fully trust the web to go online anyway. But Brazil remains among the most unequal countries, with the bottom 40% of families earning less in 2021 than in 2016, per the World Bank. Fewer jobs, persistent inflation, and a drop in government support could limit ecommerce growth, at least for the medium term.

Charts: Ecommerce in Emerging Markets 2024

The global consumer class will expand by 109 million people in 2024. That’s according to “Beyond Borders 2024,” a report by Ebanx, the Brazil-based payments provider, addressing the digital economy in emerging markets.

The report highlights how digitization is transforming key industries and fostering economic growth, resulting in a more equitable landscape between emerging markets and developed economies.

Per the report, in 2024 India will contribute 34 million (31%) of the new consumers globally, surpassing the combined numbers from Europe, the Americas, and Africa, owing to the rise of ecommerce.

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For international corporations, rising markets present a significant avenue for digital growth. The data shows that while ecommerce is experiencing a 13% annual growth rate in developed nations (Europe and the U.S.), it’s advancing at 20% in rising markets (Southeast Asia, Africa, Latin America).

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A substantial portion of ecommerce in rising economies, particularly Latin America, is driven by international purchases. The data shows that cross-border transactions also play a significant role in the economies of Mexico, Chile, and South Africa.

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Moreover, according to the forecasts, by 2027 rising markets will account for roughly 40% of global B2B digital payments.