Explainer: What the End of the ‘De Minimis’ Duty-Free Parcel Rule Means

The administration had ended the $800 ‘de minimis’ exemption, citing security and fairness, in a move set to raise costs for global shippers and consumers.

A delivery person handles a cart full of packages in New York City on Dec. 2, 2014. Reuters/Carlo Allegri/File Photo

The Trump administration has ended duty-free treatment for parcels valued at less than $800, closing the “de minimis” exemption that for decades allowed small packages to enter the United States without tariffs.

The change, effective at 12:01 a.m. on Aug. 29, means that all global parcel imports will now be subject to standard U.S. customs duties regardless of value or origin. Gifts worth less than $100 sent by individuals remain exempt.

Politicians from both parties have supported the change, although the rapid shift marks a massive adjustment for international shippers.

What’s Changed?

President Donald Trump signed an executive order on July 30 ending the exemption, expanding a May policy that had already removed duty-free status for packages from China and Hong Kong.

At midnight, the United States effectively globalized that earlier measure, extending it to all countries.

The exemption had been in place in some form since 1938 and was last raised to $800 in 2015. Officials said it had become a loophole for traffickers and foreign e-commerce companies.

What Was the Reason?

The White House says the exemption grew into a “catastrophic” vulnerability as direct-to-consumer online shopping boomed.

Because low-value shipments often bypassed inspection, officials say the system allowed fentanyl, counterfeit goods, and products made with forced labor to slip into the United States while undercutting domestic manufacturers.

Peter Navarro, Trump’s senior counselor on trade, said on Aug. 28 that the change would “save thousands of American lives,” generate up to $10 billion in annual tariff revenue, and protect against billions lost to counterfeiting and piracy.

Industry groups such as the National Coalition of Textile Organizations welcomed the move as a “historic win,” saying foreign retailers had avoided tariffs and standards that U.S. businesses must follow.

How Will Duties Be Collected?

Customs and Border Protection (CBP) has laid out two ways that foreign postal services can remit the duties during a six-month transition period.

The first is an ad valorem duty—a tariff charged as a percentage of the package’s declared value, based on the effective country tariff rate. The second is a specific duty—a flat per-package fee of $80, $160, or $200, depending on tariff bands for the country of origin. If multiple countries are represented in one parcel, the highest rate applies.

The flat-rate option expires on Feb. 28, 2026, after which, all shipments must use the value-based system.

Postal operators or their agents must file monthly duty worksheets, backed by financial bonds to guarantee payment. CBP may audit shipments and impose penalties or suspend privileges for delinquent payments.

How Are Postal Services Responding?

The Universal Postal Union, the U.N. agency coordinating international mail, said the U.S. change will require “considerable operational changes” worldwide. It noted that operators in 25 countries have already suspended outbound shipments to the United States, citing uncertainties about how the new system will be applied.

“These suspensions will remain in place pending further information on how U.S. authorities will operationalize these measures as well as actual implementation of the required operational changes,” the group stated.

On an Aug. 28 call with reporters, Navarro pushed back on the suspensions, saying foreign posts “need to get their act together” in monitoring mail for smuggling and tariff evasion.

What Does It Mean for Shoppers and Small Businesses?

For U.S. customers, the end of de minimis means more imported products will now carry tariffs. Retail analysts cited by Reuters said this could raise prices on items bought through platforms such as Shein, Temu, Etsy, or eBay, which built business models around duty-free shipping.

Sellers will also face new paperwork requirements. CBP now demands detailed information on the product type and origin for every low-value parcel, adding complexity for small exporters and individual sellers abroad.

Large shipping and retail companies are already feeling the effects. UPS said in a July earnings call that its average daily volume fell by more than one-third after the China-only ban in May, while Temu’s parent company reported a 21 percent drop in quarterly operating profits.

Volumes of de minimis shipments have dropped by about one-third since the China exemption was lifted, according to logistics firm Red Stag Fulfillment, with the potential for further declines as the tariffs bite.

According to administration officials, postal shipments will be assessed using one of two methods: an ad valorem duty equal to the tariff rate on goods from the country of origin, or a temporary specific duty of $80 to $200 per item, depending on that rate. The flat-fee option will last six months, after which all parcels must use the value-based approach.

What Happens Next?

Former White House trade official Kelly Ann Shaw said some disruption is inevitable as customs adapts to handling millions of low-value shipments.

“There will be growing pains as this unfolds, but it is U.S. law,” she said.

Some economists say the shift may have uneven effects. A recent academic study described the de minimis exemption as “a pro-poor trade policy,” finding that eliminating it would reduce aggregate welfare by up to $13 billion and disproportionately hurt low-income and minority consumers.

The Trump administration, however, has said the policy is permanent, with Navarro telling reporters that it’s “not a negotiating tactic” but rather part of a broader effort to reshape global trade through tariffs and bilateral deals.

Austin Alonzo and Reuters contributed to this report.