US ends tariff exemption for small packages - The measure is expected to increase prices for domestic businesses and consumers
Starting Friday, the U.S. has removed the tariff exemption for all package shipments under $800. The decision will increase costs for e-commerce businesses, small businesses, and consumers. The U.S. Customs and Border Protection Agency has begun applying regular customs duties to all imports, regardless of value or country of origin.
For a six-month transition period, a flat fee of $80 to $200 will be applied to packages arriving via foreign postal agencies. The decision expands on a previous waiver that was applied to goods from China and Hong Kong in May, in part to stop the importation of dangerous substances such as fentanyl.
US administration officials have said that this is a permanent measure and there will be no exemptions for other partner countries. White House advisers have said that this initiative will bring in up to $10 billion in additional revenue per year and will help stop dangerous goods from entering the country.
The “de minimis” exemption has been in place since 1938 and was increased from $200 to $800 in 2015, in an effort to encourage small businesses and the development of e-commerce. But use of the exemption has grown significantly in recent years, reaching over 1.3 billion packages a year, nearly 4 million a day.
Eliminating the exemption is likely to increase prices for many goods sold through online platforms, as they will be subject to customs duties. This would put e-commerce companies on the same cost level as large retailers like Walmart, which import traditionally and pay the duties.
The American textile industry has welcomed the decision, calling it a victory against foreign fast-fashion firms that often evaded tariffs and competed unfairly with domestic manufacturers.
At the same time, postal services and international carriers have struggled to adapt to the change, temporarily suspending shipments to the U.S. due to uncertainties around tax collection and required documentation. This change is expected to have a major impact on how supply chains operate and the affordability of imported products for American consumers.
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