The de minimis loophole is closed: low-value imports now carry full duties

The United States has eliminated the de minimis exemption that let imported shipments valued at $800 or less enter the country duty-free with minimal paperwork. The change took effect for China and Hong Kong on May 2, 2025 and for all other countries on August 29, 2025, and a February 2026 White House action continued the suspension for every country, TaxJar explains in its breakdown of the new rules.

How big the loophole was

The exemption was not a niche provision. According to GEODIS, de minimis shipments grew from 134 million in 2015 to more than 1.3 billion a year by 2024, and US Customs and Border Protection was processing roughly 4 million de minimis packages every day. That volume was the plumbing behind a generation of direct-to-consumer import models. With the exemption gone, all commercial imports now require formal or informal customs entries with duties paid regardless of value, and Entry Type 86, the streamlined electronic clearance lane that let low-value e-commerce parcels skip formal entry paperwork entirely, is no longer available. International postal parcels face simplified flat-rate duties of $80 to $200 per package for an initial six-month window before standard processing applies.

Nor is the US acting alone. The European Union agreed in November 2025 to phase out its own 150-euro duty-free threshold, with implementation targeted for July 2026, per TaxJar. The two largest consumer markets in the world are closing the same door within a year of each other, which forecloses the obvious fallback of redirecting the direct-from-factory parcel model at Europe instead. For the cross-border sellers affected, this is not a rate change to be priced around; it is the end of an entry pathway, and the business models built on it have to be rebuilt around domestic inventory or formal import programs.

The new cost and compliance reality

TaxJar notes that formerly exempt shipments are now subject to customs duties, federal excise taxes, and state and local sales and use taxes, and illustrates the squeeze with a 40% tariff that cuts a $15 product's gross margin from 56% to 42%. For goods that competed almost entirely on rock-bottom price, that is the difference between a viable unit and a loss. Returns make it worse: duties paid on an item a US customer sends back are non-refundable, which turns free-returns policies into a genuine financial risk on cross-border orders.

The compliance burden lands on data as much as on cash. Every SKU now needs audit-ready records, including exact HTS classification codes, country of origin, and detailed material descriptions, per TaxJar. For furniture and home goods, where material composition drives the duty rate and where the surviving Section 232 tariffs sit on top (see our coverage of where furniture tariff rates stand), classification accuracy is now a margin lever in its own right.

Who feels it

The direct-to-consumer importers that built their economics on duty-free entry face the most significant operational and financial impact, per GEODIS. Beyond cost, the operational model itself changes. Shoppers used to 1 to 3 day domestic delivery can face 7 to 14 day windows as parcels clear customs, and surprise duty charges at the door erode the very experience that made cheap cross-border buying attractive in the first place. The price advantage shrinks at the same moment the delivery experience gets worse, a combination few business models survive intact.

Why it matters: The exemption was the engine behind Shein, Temu, and similar players that undercut domestically fulfilled sellers on price. Removing it narrows that gap across the board, raises the landed cost of the single-parcel-from-overseas playbook, and rewards inventory that already sits in the US close to the customer. With Europe closing its equivalent loophole on a similar timeline, the structural advantage shifts durably toward sellers with domestic stock, fast fulfillment, and clean customs data.

What it means for our partners: Brands that sell from US stock with clear, predictable landed costs gain ground as the ultra-cheap import advantage erodes and delivery speed becomes a differentiator again.