What is the loophole in De Minimus?
Ending the De Minimis loophole means that items under $800 shipped from China will no longer be able to enter US tax-free.
The prices of imported low-cost goods could rise soon as they expire this week, a trade loophole that allows many retailers to avoid hiking customs for President Donald Trump.
The exception that applies to items shipped to the US and worth less than $800 will end on Friday, August 29th, following the president’s executive order in late July, effectively bringing all countries’ “minimum trade agreements” to a sunset. In 2024, the minimum shipment was valued at over $1.36 billion, according to US Customs and Border Protection.
This means that consumers may be seeing higher costs and supply disruptions as the Trump administration effectively terminates its tax-free program across the board.
In preparation for the change, Reuters reports that postal groups from several European counties have announced that they will suspend standard parcel shipments to the US Austrian postal service.
“This tightening poses a major challenge for all postal companies around the world when sending goods to the US,” the Austrian Post Office said.
Here’s what you need to know about the exceptions to DE Minimis and how its ending affects consumers:
What are the exceptions to de minimis?
The De Minimis exemption refers to section 321 of the Customs Act of 1930. This allows the Treasury Secretary to waive any obligation or fees that are inconvenient to collect taxes rather than the income is worth it. In fact, this policy allowed businesses to ship low value packages without US tariffs. The Trump administration said customs and border patrols will process the minimum shipments of more than 4 million people every day before an executive order ending the exemption.
The exception has been the fore and backwards over the past few months between the Trump administration and China, resulting in an early speed bump. Originally scheduled to close in February, it was postponed after packages began to stack up without time to plan and execute policy changes.
The August 29 deadline will be closed months after the loophole was closed due to imports on May 2nd, especially from China and Hong Kong. More than half of all packages, including the De Minimis exemption, come from China, and more than 30% of all daily packages shipped under De Minimis are from Temu and Shein, Reuters reported in February.
Two popular online retailers sell a wide range of products, including clothing and linen, toys, household items and electronics. Over the past few years, both retailers have been popular in the US. This is thanks to the minimal exemption that helps businesses keep prices low.
Data collected by consulting firm Bain & Company on a per-Reuters show that since Trump announced significant trade tariffs, both Temu and Shein have experienced a sharp decline in sales growth and customer growth rates. Simeon Gutman, an equity analyst at Morgan Stanley, also saw a significant decline in involvement with Temu in May Note, said Simeon Gutman of Molgan Stanley Equity Analyst.
How will the end of De Minimis affect consumers?
With the end of the exception, only a few days apart due to imports from all other countries, the same impact that Shane and Tem wrestled with could soon clash with other low-value goods retailers.
Ernie Tedesci, director of economics at Yale Budget Lab, said the end of the deminisi could affect imported health and beauty items, apparel, household items, and a variety of bespoke or boutique items.
“For consumers who shop at many big name brand stores like Target, Walmart, and Costco, this has nothing to do with them,” Tedeski said. “These stores are already experiencing increased tariffs and should be incorporated into those prices at this time.”
However, according to Tedeski, shoppers can get confused about availability or stock before they notice price increases. He put the administration on hold on orders after more than a million packages were stacked at John F. Kennedy International Airport in New York, pointing to a package stake as Trump was first trying to end the exemption.
“It’s not clear to me that the administration has yet to resolve the issue,” Tedeski said. “That all means that the first effect consumers are seeing may not be price increases. At least at first, there are no products previously included from De Minimis at all.”
Kathryn Palmer is a national trending news reporter for USA Today. You can contact her kapalmer@usatoday.com And with x @Kathrynplmr.
