Consumers to Feel Tariff Pain as Small Parcel Exemption Ends
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Consumers are all but assured to encounter sticker shock starting Aug. 29, when the U.S. ends a longtime exception that allowed parcels worth less than $800 to avoid tariffs.
The so-called de minimis exemption for years allowed parcels carrying low-value goods to enter the U.S. duty-free. The number of packages claiming the exemption has surged over the last decade, totaling nearly 1.4 billion in the government’s 2024 fiscal year, or roughly 3.7 million a day. That in turn has helped fuel the growth of e-commerce businesses such as Amazon.com Inc. and Shein in recent years.
President Donald Trump’s decision to scrap the policy means that surprise bills will increasingly accompany deliveries that have become a staple of modern life for many consumers.
“It’ll only be exacerbated after Aug. 29 when the rest of world loses access to de minimis,” said Derek Lossing, founder of logistics consulting firm Cirrus Global Advisors.
Starting Aug. 29, parcels entering the country will be assessed duties based on the country-of-origin tariff rate that Trump imposed using his emergency powers. Alternatively, packages shipped via international post could be assessed with a temporary flat fee of $80 to $200 per item, but only for the next six months.
The looming expiration has already sown chaos with logistics companies, sellers and postal services attempting to sort through a complicated and costly process with what they say are limited instructions from US authorities.
Postal services around the globe have halted shipments to the U.S. until additional clarity emerges, further confounding the global shipping apparatus.
For companies that rely on those networks — oftentimes small businesses looking to save money — the choice they face is to either shut off orders to U.S. customers or opt for pricier express carriers such as UPS and FedEx Corp. that are still shipping.
Imminent changes to US customs regulations pose significant operational challenges for the global postal network. UPU is working with member countries & US authorities to ensure continuity of postal flows & support the development of sustainable solutions. — Universal Postal Union (@UPU_UN)
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and FedEx ranks No. 2. UPS Supply Chain Solutions is No. 5 on the TT Top 100 list of the largest logistics companies. The company also ranks No. 3 on the TT Top 50 list of the largest global freight carriers.
Amazon.com Inc. ranks No. 1 on the TT Top 100 logistics list, No. 12 on the TT Top 100 list of the largest private carriers and No. 1 on the global freight list.
“If you sort of limit one channel, then that volume is going to go somewhere else,” said John Pickel, vice president of international supply chain policy at the National Foreign Trade Council, an organization that advocates for open trade.
In the meantime, retailers with robust e-commerce operations should be prepared to handle the tariff change on their end, Lossing said.
“It would be a disaster if you’re trying to get a consumer to deal with it,” he said.
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Josh Gachera, a college senior in Alabama, recently ordered $1,029 Italian-made boots from a seller in Canada. He received a $190 bill from FedEx about a month after his boots arrived.
“I thought it was a scam at first,” he said.
With the rules seemingly ever changing and confusion abounding, Gachera has yet to pay the surprise bill. He figures he’ll just see how everything plays out.
After all, he already has his boots.
Days after ordering high-end computer parts, Chris Pawlukiewicz got an unpleasant surprise: a bill for $934 in tariffs he owed to U.S. Customs and Border Protection.
“I was immediately like, ‘hell no,’ ” said the avid gamer from Louisiana.
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He consulted Reddit and made a few calls to customer service to parse the details in his invoice — delivered by UPS. on the U.S. government’s behalf — and found that the parts he ordered from Germany had been over-tariffed. But he still owed a 25% tariff on an item from China and a 50% duty applied to an aluminum derivative.
The final tab was about $340 before brokers’ fees, roughly 75% of what he paid for the parts themselves. What’s more, he’d had no choice but to order his gear from overseas because U.S. retailers were out of stock.
“I’m still super confused about why I paid what I paid,” Pawlukiewicz said.
