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Already unhappy American shoppers will now see much higher prices on a lot of formerly low-cost goods, due to the expiration on Friday of a long-time tariff exemption on imported goods that cost less than $800.
The de minimis exemption, as it’s called, expired at one minute after midnight on May 2, and President Donald Trump’s 145% tariff went into immediate effect on all products ordered directly from China-based retailers. Almost one billion low-cost packages, worth more than $66 billion, were imported to the United States in 2023, and 67.4% of those were from China, according to a congressional report.
A study by Yale and UCLA economists found that ending the exemption will “disproportionately hurt lower-income and minority consumers.” Research indicates that nearly half of de minimis shipments were sent to low-income ZIP codes.
It will be hard for these shoppers to miss the impact of the tariffs on prices: Several companies plan to make the added cost of tariffs a line-item when consumers check out, including online fast-fashion retailer Shein.
Amazon (AMZN-2.87%) was reportedly considering such a tariff breakout, but appeared to back down under pressure from the White House. UPS (UPS-2.23%), however, recently rolled out a service where people will be able to see the full cost of their purchase — including tariffs — before checking out.
Shein, Temu, Amazon, and plenty of smaller firms rely on imports and have built their business models around the de minimis exemption. Last month, Shein and Temu started hiking prices to offset tariff costs.
Those higher prices won’t help Trump’s approval ratings, already down to less than 42% due in part to concerns by Americans about the direction of the economy and the impact of tariffs. On Thursday, Trump said at a cabinet meeting that the de minimis exemption was “a big scam,” adding, “we put an end to it.”
Shippers are tasked with collecting the tariff payments on all incoming packages from China and Hong Kong. Packages sent via UPS, FedEx (FDX-1.02%) and other independent carriers will accrue a 145% tariff while customers who get their shipments through the post office will be able to choose whether to pay 120% of the product’s value as a tariff or a flat fee of $100 through June 2, when it jumps up to $200.
The cost will fall on the person who is buying the product unless the business that’s mailing the package chooses to pay the tariff up front.
Congress enacted the de minimis exemption in 1938 for goods of $1 or less to avoid the expense of collecting small amounts of import levies. The limit has been raised several times, most recently to $800 in 2016.
The Trump administration tried to eliminate the de minimis loophole in February, but had to delay the tariffs when packages began to pile up as Customs and Border Protection attempted to design a new screening system.