Trump Closed a Tariff Loophole That Was Saving You Thousands — 4 Things You Need To Know
Written by
Vance Cariaga
Edited by
Zuri Anderson
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A rule that allowed for duty-free imports of inexpensive packages recently came to an end, raising concerns that it could lead to higher prices for U.S. consumers.
In late August, President Donald Trump closed the “de minimis exception” loophole that let U.S. consumers buy inexpensive foreign items without having to pay tariffs or fill out complicated customs paperwork, The New York Times reported.
The end of the exemption has already had a major impact on postal deliveries to the United States. The longer-term impact on prices is still unknown, though it’s possible that thousands in savings could be lost.
Here are four things to know about the closed loophole. And if you’re still confused about the tariff situation, ChatGPT breaks down the point of Trump’s tariffs.
What It Involves
The de minimis exemption allowed overseas packages valued at less than $800 to be free from tariffs or other duties. This contributed to a “cross-border e-commerce surge” that helped American shoppers score bargains, Reuters reported.
Last year, 1.36 billion shipments arrived under the “de minimis” rule with a declared value of $64.6 billion, Reuters noted. That was up from about 139 million shipments in 2015, according to the U.S. Department of Customs and Border Protection.
Nearly three-quarters (73%) of de minimis packages entering the U.S. in 2024 came from China. Under the new rules, only foreign packages worth less than $100 will be exempt from duties.
Why It Ended
As The New York Times noted, one reason Trump ended the exemption is because it allowed fentanyl to be smuggled into U.S. There also were concerns that it gave foreign businesses an “unfair advantage” against U.S. companies — a claim that was supported by certain Democrats.
According to Trump advisor Peter Navarro, ending the exemption will “add up to $10 billion a year in tariff revenues to our Treasury, create thousands of jobs and defend against billions of dollars more lost in counterfeiting, piracy and intellectual property theft.”
The Immediate Impact
The new de minimis rule was implemented on Aug. 29. On that day, U.S.-bound shipments from certain countries fell 81% from a week earlier, according to the Universal Postal Union (UPU), a United Nations agency that focuses on postal services.
In a statement, the UPU said that 88 postal operators have suspended “some or all postal services to the U.S. until a solution is implemented, highlighting the widespread impact [on] low-value goods.”
Meanwhile, foreign businesses that rely on postal networks to deliver goods to the U.S. have much more limited options than they did before.
“It is a stark shift from the way that business has been done for quite a while,” Ryan Tanner, senior director of compliance at supply chain company Flexport, told The New York Times.
The Consumer Impact
The big question moving forward is how the new rule will affect consumer prices — particularly with holiday shopping season looming.
Some retailers might pass on costs to consumers while others might evaluate price increases based on their SKUs, according to Irina Vaysfeld, principal in KPMG’s trade and customs practice.
“There is a lot of work that’s gone into thinking about how the consumer will be impacted,” Vaysfield told Retail Brew. “But we, of course, do expect an impact this year.”
Some retailers have already projected millions of dollars in lost profits due to the end of the exemption. That could spell bad news for budget-conscious consumers.
“Consumers’ budgets were already very tight, and we saw consumers scaling back their preferences,” John Harmon, senior retail and technology analyst at Coresight Research, told Retail Brew. “So the consumer is really stretched.”
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