On April 2, 2025, President Trump issued an executive order eliminating the de minimis exemption for low-value imports from China, which previously allowed U.S. consumers to buy goods worth up to $800 directly from online marketplaces based outside of the United States without paying duties. Since the order took effect on May 2, some U.S. shoppers have been surprised by notices from shipping carriers requesting duties that in some cases surpassed the value of the items that were ordered.1
A tariff is a tax on imported goods that the Trump administration has imposed to help protect domestic industries from foreign competition, raise revenue, and use as a bargaining chip in trade negotiations. The term “duty” refers more broadly to multiple types of fees that must be paid by importers when goods are shipped across borders. Depending on the type of product and where it originated, this amount might include tariffs, customs brokerage fees, excise taxes, and/or other miscellaneous charges.
U.S. lawmakers raised the de minimis exemption from $200 to $800 in 2015. As a result, many Americans have become accustomed to shopping for low-value goods such as clothing and housewares without considering where their purchases are shipped from or the prospect of duties. Many other countries, including members of the European Union and Canada, have lower thresholds, so the consumers who live there may already expect to pay duties when goods are ordered from e-commerce sites outside of their home country.2
Critics of the de minimis exemption believe that it disadvantages U.S. manufacturers and retailers and creates a loophole for dangerous and illegal products such as fentanyl and counterfeit luxury goods to enter the United States with less scrutiny.3
Tax rates in flux
Effective May 14, goods valued at $800 or less that are shipped through the U.S. Postal Service to the United States from China or Hong Kong are subject to a tariff rate of 54% of their value or an optional flat rate of $100 per package. Chinese goods shipped by commercial carriers are assessed the default 30% tariff rate, even for low-value packages.4
Back in early May, the tariff on low-value Chinese goods sent through international mail was a punishing 120%, and the default tariff rate that applied to commercial carriers was even higher (145%), until a round of positive trade negotiations resulted in the de-escalation of tensions between the two nations.
While President Trump’s executive order only applies to goods from China, it appears to be just a first step toward ending duty-free de minimis privileges entirely. In fact, a provision in the Big Beautiful Bill passed by Congress and signed by the president on July 4 eliminates de minimis entries from all countries beginning July 1, 2027.5 As a result, shopping internationally could get even trickier, especially if Trump’s threatened reciprocal tariffs, which vary by specific trade partner, are still in the picture.
On May 28, the U.S. Court of International Trade ruled that President Trump had exceeded his authority under the International Emergency Economic Powers Act (IEEPA) when he imposed broad tariffs on goods from nearly every country, including China. This decision likely extended to the status of the de minimis exemption, but the case was appealed to a higher court that granted a temporary stay, so for the time being the president’s IEEPA tariffs and related trade policies remain in effect.6 Regardless of the outcome for tariffs, the fate of the de minimis exemption itself probably won’t be decided in the courts now that Congress has passed a law that settles the issue.
Shopping online? Take a closer look before you click
When you shop on a U.S.-based e-commerce site, whether it’s a small business or a behemoth like Amazon, the duties on imported Chinese goods have already been paid and are likely to be reflected in the item’s price. Some portion of the tariffs paid by the retailers is typically passed along to consumers, so the potential for higher prices across the board — especially for big-ticket purchases such as cars, electronics, and appliances — might be one of your top concerns.
It’s also worth considering that you could unknowingly trigger exorbitant duties for relatively inexpensive online purchases if you respond to a targeted ad or come across a product offered by an unfamiliar online marketplace. One complicating factor is that the duties apply to goods that originate in China, even if they are sold online and shipped to the United States by a company based in a different country (like Canada or the United Kingdom). Before placing an order, check the website or ask customer service where the product ships from. If the order won’t be fulfilled in the United States, go a step further to determine where the product was made (the country of origin).
When U.S. duties apply to an item in your online shopping cart, the best you can hope for is transparency from the seller, so you can make an informed decision before completing the sale. You might see a reference to delivered duty paid (DDP) shipping, which typically means the duties will be included in your charges during the checkout process and paid by the shipper. Delivered duty unpaid (DDU) or tax unpaid shipping means you should expect to receive a bill from the carrier.
If you are caught off guard by duties for an online order, you could choose to pay the duty or refuse the package. Keep in mind that depending on the company’s return policies, you might be charged for return shipping or may not receive any refund at all. Unexpected duties may become less frequent in time as international sellers and carriers refine their policies and procedures in response to shifting trade rules. But unfortunately for consumers, the higher costs that tend to follow the imposition of steep tariffs might be here to stay.
If you need help, contact the experts at Henssler Financial:
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- Email: experts@henssler.com
- Phone: 770-429-9166
1. The New York Times, June 12, 2025
2. New York Magazine, April 24, 2025
3. The New York Times, May 1, 2025
4. Time Magazine, May 14, 2025
5. The Wall Street Journal, July 2, 2025
6. The Wall Street Journal, June 11, 2025
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