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Packages under $800 have been able to avoid tariffs for years. Not anymore.
Last week, the women’s shoe brand Zou Xou offered consumers a “pre-tariff” sale of 10% to 50% off, warning that prices were set to rise. Similarly, the activewear brand Girlfriend Collective said in an Aug. 21 email blast about a sale that “in nine days our prices get a little higher, but we still promise to make sustainable, high-quality clothes you can wear for years.”
The timing of the discounts hit as a loophole allowing cheaper imported packages to avoid steep levies comes to an end.
“I just framed it as an opportunity to save before the deadline,” said Katherine Theobalds, the Buenos Aires-based founder of Zou Xou. She manufactures and ships her artisanal leather shoes from Argentina, which has been hit with 10% tariffs.
The de minimis exemption allowed millions of shipments into the US each day duty-free if they were valued at or below $800.
But President Trump announced in late July that he would eliminate the policy, effective Friday. That decision, which sent direct-to-consumer companies and small businesses scrambling, subjects smaller imported parcels to tariffs moving forward, though gifts of less than $100 between individuals will not be taxed.
Read more: How Trump’s tariffs affect your money
Depending on their country of origin, packages will now face levies of 10% to 50%. Carriers utilizing the international postal network can opt for a flat fee of $80 to $200 per package for the next six months, according to Trump’s announcement, though carriers are largely choosing to use the country-specific reciprocal tariff rates, said Angela Lewis, global head of customs at the logistics company Flexport.
Whether or not to pass that cost along to the consumer or shift strategies is up to companies.
“I do think retailers are going to have the advantage here — a company that does a mix of having stores or even just warehouses in the US where they do fulfillment from, versus a pure e-commerce, direct-to-consumer company,” Lewis said. “You’re going to have some small businesses that aren’t going to be able to handle this. The cost will be too much, given their margins today.”
E-commerce boom
The world has changed dramatically since the de minimis exemption was created in the 1930s to allow the government to waive taxes on packages that were so small it would be more inconvenient to regulate them, Lewis said. The exemption, which was raised from $200 to $800 in 2015, has persisted alongside an explosion in online shopping, and the government is now losing out on a significant amount of revenue.
Additionally, Trump said in his July 30 order that “the risks of evasion, deception, and illicit-drug importation are particularly high for low-value articles that have been eligible for duty-free de minimis treatment.”
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The de minimis exemption was cut off for China and Hong Kong, where the majority of these cheaper packages are shipped from, back in May, impacting fast-fashion companies like Shein and Temu. And it was clear Trump wanted to do away with it entirely at some point, since his tax and spending bill sought to end the exemption for all countries by July 2027.
Still, the shift may catch some consumers off guard when their favorite brands pass on higher costs. In a video promoting Zou Xou’s shoe sale on Instagram, Theobalds noted it would soon be “10% more expensive to get a pair from Buenos Aires.”
Though consumer prices were up 0.2% in July from June, tariff inflation hasn’t fully hit shoppers just yet. But the end of the de minimis exemption could help speed things along. Two economists said in a February paper that the loophole — which applied to 1.36 billion shipments last year — often benefited low-income consumers, noting that if de minimis were to be eliminated, “the tariff schedule would flip from pro-poor to pro-rich.”
Learn more: 5 ways to tariff-proof your finances
Meanwhile, amid all of this confusion, some international postal services have temporarily paused or restricted shipments to the US.
Expect companies to slowly have fewer options and longer shipping times in the future, Lewis said.
“I am really curious about what happens around Christmastime, especially that very last-minute shopping that we’ve all been very accustomed to over the last few years,” she added.
Tariff sales
Larroudé, another footwear brand, advertised a 30% off sale in an email last week, saying the rising tariffs would mean “higher prices across the board.” Their shoes are made in Brazil, which Trump has subjected to a 50% tariff rate.
Though the company has a warehouse in Pennsylvania, it also ships directly to customers from Brazil, the brand’s co-founder, Marina Larroudé, told Yahoo Finance. The end of the de minimis exemption means that “basically everything that we’re going to ship will have tariffs.”
The business will absorb many of the costs, but it will also “have to raise the prices,” Larroudé said. The brand is running its special tariff sale through Aug. 29 and is being “very transparent with the customers.”
She maintained hope that Trump would move the tariff deadline.
“Personally, I think it’s going to be a logistics nightmare to implement de minimis globally by Aug. 29 by the government,” Larroudé said.
Emma Ockerman is a reporter covering the economy and labor for Yahoo Finance. You can reach her at emma.ockerman@yahooinc.com.
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