The Trump administration has ended the de minimis provision for commercial shipments.
On July 30, the president suspended de minimis globally in an effort to stim the unregulated flow of packages into the U.S. The provision, which allowed goods valued under $800 to enter the country duty free, is set to end on August 29, 2025.
U.S. Customs & Border Protection reported that between 2015 and 2024, the volume of de minimis shipments entering the U.S. increased from 134 million to over 1.36 billion or 4 million shipments a day. The New York Times estimated that translated into up to 60 freight flights daily.
Up to 50 percent of that influx was apparel. By the end, Temu and Shein represented 30 percent of those fashion items.
By 2021, China and Hong Kong already represented 60 percent of all de minimis packages, prompting the U.S. government to exclude China from de minimis in May.
By accelerating that time frame, Trump compounded the impact of the ongoing trade war on textile and apparel companies doing business in the U.S.
The end of de minimis had been a part of Donald Trump’s Big Beautiful Bill, which passed July. Under that piece of legislation, the provision was scheduled to end in 2027. Instead, the president issued an executive order that classified the surge of goods across the border as an emergency, stating de minimis had been abused and was responsible for an influx of “illicit fentanyl and other synthetic opioids, precursors, and paraphernalia into the United States.”
These goods will now either face the ad valorem duty equal the effective tariff rate for the country of origin or a fixed duty, ranging from $80 per item to $200 per item. The latter provision expires in six months.
Logistics hit
Last week’s announcement had an immediate impact on logistics companies.
Share prices for UPS decreased by 4 percent while FedEx saw a 4.6 percent decline on Wednesday. It was the latest blow to delivery companies operating in the U.S. The first came in April with the first announcement of retaliatory tariffs, which sent shipping haywire, with some companies racing to bring goods in before the new rates went into effect and others halting the production of new products in a gambit to wait and see how things would turn out. Then in May, came the China exclusion from de minimis.
Both FedEx and UPS count the China-U.S. route as their most profitable. For UPS, that route accounted for 11 percent of the company’s business, while for FedEx that number is about 2.5 percent.
In the company’s earnings call, FedEx said as volume out of China “deteriorated sharply” in early May, it cut capacity between China and the Americas by more than 35 percent. UPS reported a 34.8 percent drop in volume in May and June between the U.S. and China.
“Trade follows policy, and generally, tariffs are not good for trade,” said Carol B. Tome, CEO and director of UPS, during the company’s Q2 earnings call last month, noting the company’s business between China and other countries is up. “But it’s important to remember that with policy changes, trade doesn’t stop, it moves.”
Apparel impact
For apparel firms, how the end of de minimis is being received depends largely on where their garments are produced.
The U.S. textile and apparel industry has long lobbied for the close of the so-called loophole, which made it all but impossible for goods made in America to compete. In a statement on Wednesday, the National Council of Textile Organizations (NCTO) CEO Kim Glas praised the move as an end to a flood of “cheap, subsidized, and often illegal, toxic and unethical imports.”
For brands and retailers producing outside of the U.S., however, the end of de minimis is a “game changer.”
“The timing couldn’t be worse for D2C peak—unless you’re ready,” Cody Moreland, senior director of fulfillment for Flexport, said in a LinkedIn post.
Moreland enumerated the negatives: higher tariffs, slower customs clearance and slower timelines, all of which will first hit consumers during the holidays.
Many businesses that had been capitalizing on de minimis, fulfilled orders from warehouses in Canada and Mexico. With the end of the provision, some companies are moving those operations into the U.S., citing that it’s cheaper to pay the duties on the wholesale price.
Shein and Temu were among the retailers that began stockpiling goods in U.S. warehouses months ago. Additionally, Temu announced in a statement that it “has been actively recruiting U.S. sellers to join the platform.”
As these ultra-fast fashion giants try to figure out their next steps, consumers reacted to rising prices. In April, The Wall Street Journal reported on eight sellers on Shein and Temu that increased prices and subsequently saw orders from the U.S. fall by up to 50% in March compared with January.
Reuters tracked prices on Shein for more than 100 inexpensive garments from April 24, one day before price increases went into effect, to July 22. Following an initial spike when the tariff on China goods was 145%, prices cascaded downward through the end of May before rising again. Ultimately, men’s briefs increased from $4.15 to $5.81 and girl’s sleeveless tops from $2.55 to $3.87. Overall, the publication found higher-end women’s apparel prices increased 23 percent on average during the period.
Product insights company Shelftrend estimates a 60 to 80 percent margin impact. The company said to expect wholesale prices on inexpensive basics were in the range of $2 to $4 now reaching $3 to $6.
Aaron Rubin, CEO of logistics firm ShipHero said on X. that in the short term consumers could be winners. “Expect a bunch of sales as brands try to liquidate their overseas inventory in the next 30 days.”
