In a dramatic pivot in its trade policy, the United States will reduce the “de minimis” duty on low-value parcels from China to 54 percent of declared value—down from the 120 percent tariff imposed earlier this year—effective 12:01 a.m. EDT on May 14, 2025. A flat fee of US \$100 per package will remain in place, while a previously planned increase to a \$200 levy has been shelved. The move, issued via a White House executive order, marks a targeted rollback of punitive measures on e-commerce shipments, underscoring a broader 90-day freeze in tariff escalations agreed upon by Washington and Beijing over the weekend.
The de minimis rule, first codified in 1938, allows packages valued up to US \$800 to enter the United States without the full spectrum of customs duties and formalities. Congress raised the exemption threshold from \$200 to \$800 in 2016, triggering an unprecedented surge in low-value imports. By early 2025, more than nine out of ten packages crossing U.S. borders claimed the de minimis exemption, with direct-to-consumer platforms in China—including Shein and Temu—accounting for roughly 60 percent of that volume.
In February, citing concerns over unfair competition and the concealment of illicit substances—including fentanyl and chemical precursors—President Donald Trump abruptly revoked the de minimis exemption for China. Under that policy, parcels under the \$800 threshold faced either a 120 percent ad valorem charge or a flat fee rising to \$200. Though set to start June 1, the higher flat fee had yet to take effect. The administration argued that duty-free shipments had undermined U.S. manufacturers and overwhelmed customs enforcement with tens of millions of parcels annually.
Monday’s executive order reverses course on the ad valorem component—scaling it back to 54 percent—while preserving the \$100 minimum fee. Trump’s directive also cancels the pending \$200 increase. “This calibrated adjustment will help restore balance to our trade relationship with China, while ensuring we continue to address the underlying concerns about illicit trafficking,” said a senior administration official.
The tariff cut is part of a broader détente reached in Geneva, where negotiators from both sides agreed to suspend further tariff hikes for 90 days and to unwind many of the duties imposed since April. Under the truce, baseline U.S. tariffs on a wide array of Chinese imports will fall sharply—bringing relief to U.S. manufacturers facing rising input costs—while China will reciprocate with cuts on U.S. agricultural and industrial goods. The targeted reduction on de minimis shipments is the most finely tuned measure in the deal, reflecting the White House’s desire to address e-commerce issues separately from broader industrial tariffs.
Financial markets reacted positively to the news. U.S. equity futures rose in pre-market trading, with import-sensitive retail and logistics stocks leading the gains. Global indexes climbed as well, with European and Asian benchmarks up more than 1 percent. “The tariff rollback has reduced one of the key headwinds for consumer-facing businesses,” noted a strategist at a major investment bank. “It also eases inflationary pressures at the border, which could feed into lower goods-price inflation in the coming months.”
Analysts estimate that parcels valued under \$50—encompassing fashion accessories, small electronics, and home-goods trinkets—could see consumer-level price adjustments of 10 to 20 percent, depending on how much duty burden is passed through. E-tailers like Temu and Shein may absorb a portion of the cost to maintain competitive pricing, though smaller importers could face steeper margins. Early modeling suggests a typical \$20 purchase would incur an additional \$10.80 in ad valorem duty plus the \$100 flat fee—though that fee applies per parcel, not per item.
Logistics providers are preparing for operational shifts. Packages once fast-tracked through automated customs channels will now require more rigorous inspections and duty-collection processes. The U.S. Postal Service (USPS) warns that existing staffing levels could struggle under the increased workload, potentially leading to processing delays, especially during peak-season surges. Private carriers, which already collect full duties on non-postal shipments, anticipate higher parcel volumes as shippers explore alternative routes to mitigate tariff impacts.
Revenue projections from the Treasury Department are robust. Applying the \$100 minimum fee to an estimated 50 million Chinese parcels annually would generate \$5 billion, while the 54 percent ad valorem component could add several billion more, dependent on declared values. These revenues are eyed for infrastructure investment and border-security funding priorities under negotiation on Capitol Hill.
Reactions from Capitol Hill have been mixed. Lawmakers in both parties praised the targeted reduction as a pragmatic step that balances trade enforcement with consumer relief. “This move preserves our ability to combat illicit imports while recognizing that a 120 percent tariff was unsustainable,” said one senior senator on the Finance Committee. However, critics cautioned that 54 percent remains punitive. Some representatives argued for reinstating a partial exemption for shipments under \$200, to reduce administrative burdens on small businesses that rely on cross-border sourcing for components and specialty items.
Retail and small-business groups welcomed the news but pressed for clearer guidelines. The National Retail Federation called the cut “a meaningful concession” but urged the administration to detail protocols for duty collection and parcel inspections to avoid confusion. The U.S. Chamber of Commerce argued that predictability in trade policy is critical for economic planning and called for a longer-term framework beyond the 90-day pause.
Consumer advocates, meanwhile, warned that any duty on low-value goods risks narrowing shopping choices and could push buyers toward domestic retailers—or back to brick-and-mortar stores—potentially dampening e-commerce growth. “Even with the reduced rate, a 54 percent duty plus a flat fee is steep for small purchases,” said a spokesperson for a national consumer rights organization. “This may well increase costs for the average American household.”
On the Chinese side, exporters expressed relief that the draconian 120 percent rate has been tempered, though some cautioned that uncertainty remains until the broader 90-day agreement is formalized in writing. E-commerce platforms with U.S. operations are recalibrating their logistics strategies, exploring consolidation options to amortize the flat fee across multiple items in a single parcel.
As the 90-day truce unfolds, officials from both countries are expected to engage in detailed discussions on non-tariff barriers, intellectual property enforcement, and market access issues. The de minimis adjustment is likely to be a focal point in talks on digital trade and e-commerce regulations, with the potential to inform a new, long-term bilateral framework that could reshape online retail flows.
With the new 54 percent rate now in place, market participants will closely monitor parcel volumes, customs revenue trends, and downstream price effects. Should shipment backlogs or consumer complaints spike, the administration has signaled its willingness to revisit the policy. For now, though, the cut represents the latest signal that both Washington and Beijing are testing a path toward more stable, if cautious, economic cooperation.
(Source:www.usnews.com)
The de minimis rule, first codified in 1938, allows packages valued up to US \$800 to enter the United States without the full spectrum of customs duties and formalities. Congress raised the exemption threshold from \$200 to \$800 in 2016, triggering an unprecedented surge in low-value imports. By early 2025, more than nine out of ten packages crossing U.S. borders claimed the de minimis exemption, with direct-to-consumer platforms in China—including Shein and Temu—accounting for roughly 60 percent of that volume.
In February, citing concerns over unfair competition and the concealment of illicit substances—including fentanyl and chemical precursors—President Donald Trump abruptly revoked the de minimis exemption for China. Under that policy, parcels under the \$800 threshold faced either a 120 percent ad valorem charge or a flat fee rising to \$200. Though set to start June 1, the higher flat fee had yet to take effect. The administration argued that duty-free shipments had undermined U.S. manufacturers and overwhelmed customs enforcement with tens of millions of parcels annually.
Monday’s executive order reverses course on the ad valorem component—scaling it back to 54 percent—while preserving the \$100 minimum fee. Trump’s directive also cancels the pending \$200 increase. “This calibrated adjustment will help restore balance to our trade relationship with China, while ensuring we continue to address the underlying concerns about illicit trafficking,” said a senior administration official.
The tariff cut is part of a broader détente reached in Geneva, where negotiators from both sides agreed to suspend further tariff hikes for 90 days and to unwind many of the duties imposed since April. Under the truce, baseline U.S. tariffs on a wide array of Chinese imports will fall sharply—bringing relief to U.S. manufacturers facing rising input costs—while China will reciprocate with cuts on U.S. agricultural and industrial goods. The targeted reduction on de minimis shipments is the most finely tuned measure in the deal, reflecting the White House’s desire to address e-commerce issues separately from broader industrial tariffs.
Financial markets reacted positively to the news. U.S. equity futures rose in pre-market trading, with import-sensitive retail and logistics stocks leading the gains. Global indexes climbed as well, with European and Asian benchmarks up more than 1 percent. “The tariff rollback has reduced one of the key headwinds for consumer-facing businesses,” noted a strategist at a major investment bank. “It also eases inflationary pressures at the border, which could feed into lower goods-price inflation in the coming months.”
Analysts estimate that parcels valued under \$50—encompassing fashion accessories, small electronics, and home-goods trinkets—could see consumer-level price adjustments of 10 to 20 percent, depending on how much duty burden is passed through. E-tailers like Temu and Shein may absorb a portion of the cost to maintain competitive pricing, though smaller importers could face steeper margins. Early modeling suggests a typical \$20 purchase would incur an additional \$10.80 in ad valorem duty plus the \$100 flat fee—though that fee applies per parcel, not per item.
Logistics providers are preparing for operational shifts. Packages once fast-tracked through automated customs channels will now require more rigorous inspections and duty-collection processes. The U.S. Postal Service (USPS) warns that existing staffing levels could struggle under the increased workload, potentially leading to processing delays, especially during peak-season surges. Private carriers, which already collect full duties on non-postal shipments, anticipate higher parcel volumes as shippers explore alternative routes to mitigate tariff impacts.
Revenue projections from the Treasury Department are robust. Applying the \$100 minimum fee to an estimated 50 million Chinese parcels annually would generate \$5 billion, while the 54 percent ad valorem component could add several billion more, dependent on declared values. These revenues are eyed for infrastructure investment and border-security funding priorities under negotiation on Capitol Hill.
Reactions from Capitol Hill have been mixed. Lawmakers in both parties praised the targeted reduction as a pragmatic step that balances trade enforcement with consumer relief. “This move preserves our ability to combat illicit imports while recognizing that a 120 percent tariff was unsustainable,” said one senior senator on the Finance Committee. However, critics cautioned that 54 percent remains punitive. Some representatives argued for reinstating a partial exemption for shipments under \$200, to reduce administrative burdens on small businesses that rely on cross-border sourcing for components and specialty items.
Retail and small-business groups welcomed the news but pressed for clearer guidelines. The National Retail Federation called the cut “a meaningful concession” but urged the administration to detail protocols for duty collection and parcel inspections to avoid confusion. The U.S. Chamber of Commerce argued that predictability in trade policy is critical for economic planning and called for a longer-term framework beyond the 90-day pause.
Consumer advocates, meanwhile, warned that any duty on low-value goods risks narrowing shopping choices and could push buyers toward domestic retailers—or back to brick-and-mortar stores—potentially dampening e-commerce growth. “Even with the reduced rate, a 54 percent duty plus a flat fee is steep for small purchases,” said a spokesperson for a national consumer rights organization. “This may well increase costs for the average American household.”
On the Chinese side, exporters expressed relief that the draconian 120 percent rate has been tempered, though some cautioned that uncertainty remains until the broader 90-day agreement is formalized in writing. E-commerce platforms with U.S. operations are recalibrating their logistics strategies, exploring consolidation options to amortize the flat fee across multiple items in a single parcel.
As the 90-day truce unfolds, officials from both countries are expected to engage in detailed discussions on non-tariff barriers, intellectual property enforcement, and market access issues. The de minimis adjustment is likely to be a focal point in talks on digital trade and e-commerce regulations, with the potential to inform a new, long-term bilateral framework that could reshape online retail flows.
With the new 54 percent rate now in place, market participants will closely monitor parcel volumes, customs revenue trends, and downstream price effects. Should shipment backlogs or consumer complaints spike, the administration has signaled its willingness to revisit the policy. For now, though, the cut represents the latest signal that both Washington and Beijing are testing a path toward more stable, if cautious, economic cooperation.
(Source:www.usnews.com)
