Shoppers met with canceled orders, delays as de minimis exemption ends

Consumers, shippers and small businesses at home and abroad are in flux as an exemption that allowed low-cost goods to enter the United States duty-free came to an end.

For nearly a century, the de minimis rule allowed merchandise worth $800 or less to bypass import tax. But it expired at 12:01 a.m. Friday, meaning such shipments are now subject to an additional 10 to 50 percent levy that coincides with the tariff rate of the country of origin, or a flat rate of $80 to $200, depending on which option the merchant chooses.

Subscribe to The Post Most newsletter for the most important and interesting stories from The Washington Post.

The change has caused widespread uncertainty over how the levies will be collected. President Donald Trump’s July 30 executive order states that transportation carriers have to collect the tax from merchants before arriving in the U.S. using a third-party service preapproved by U.S. Customs and Border Protection. As of midday Friday, only a dozen service providers had been certified to collect and pay such duties.

More than two-dozen countries – including several European nations, Japan and Taiwan ― have suspended some shipments to the U.S. until they sort out a system to collect the duties. That’s prompted some overseas businesses to cancel or hold deliveries until mail carriers conform to the new guidelines. Sabo, an Australian fashion brand, is advising customers that orders will be delayed another five to 10 business days, and that prices will include duties, tariffs and taxes to ensure there are “no surprise fees.”

Online marketplaces like Shopify and Etsy, which primarily house small businesses and independent vendors, have issued guidance for shoppers and sellers on how to adapt to the changes.

In the meantime, consumers shouldn’t expect to get overnight, two-day, or even five-business-day shipping, said Maria Pechurina, the director of international trade at Peacock Tariff Consulting.

Paul Robertson, the owner of niche book and art dealing company Unoriginal Sin, in the northern England region of Cumbria, said he’s unable to ship a $1,000 poster to an American client. “All the online options to get a courier or the Royal Mail are just stopping at the point where you put it in your basket … it just times out,” he said.

Though frustrated by the delay, the customer agreed to wait until service resumes. But Robertson lost another sale: He had to issue a $100 refund to an American museum for a pop-art catalogue from the 1960s.

Joan Strickler, an avid knitter from Edina, Minnesota, said she hasn’t been able to order wool yarn from her favorite sellers in Britain. That means she’ll miss out on a new collection of yarn colors out Monday.

“I feel like it’s all chaos for no reason,” she said. “It also affects small businesses here because a lot of yarn stores buy wool from outside the U.S.”

The U.S. dropped de minimis – Latin for too small or insignificant to be considered – on goods out of mainland China and Hong Kong in May, a move that largely targeted large e-commerce sites such as Shein and Temu. Both platforms thrived as a result of de minimis, allowing them to avoid paying billions of dollars in duties. But many small U.S. businesses also source materials from China.

Of the some 1.4 billion packages that entered the United States last year under the exemption, China represented about 75 percent, said John Lash, a vice president of product strategy at supply chain platform e2open. The Trump administration contends that closing the loophole on all imports will keep illicit drugs, such as fentanyl, from being mailed into the U.S. undetected.

In a media call Thursday, White House trade adviser Peter Navarro said ending the de minimis loophole will “add $10 billion a year in tariff revenues to our treasury, create thousands of jobs and defend against billions of dollars more lost to counterfeiting, piracy and intellectual property theft.”

But industry experts said American consumers will ultimately foot the bill, as businesses, as well as independent sellers on platforms like Etsy and eBay, increase prices to make up for the tax. Some buyers might see it as an additional shipping fee at checkout, said Alison Layfield, the vice president of product development for ePost Global, a domestic and international shipping solutions provider.

“There is definitely going to have to be some type of cost increase – I don’t think the merchants are prepared to just eat that additional cost,” she said.

Some consumers feel the same way. Kelly Flowers of Lilburn, Georgia, said she’s concerned she won’t be able to afford some of the products she enjoys, such as K-pop fan art and specialized paper from Japan. She says she was recently charged about $46 in duties and fees on an order of enamel pins from Canada, on top of what she paid for the pins themselves.

“I can afford the items but I can’t afford all the duties and fees,” she said.

Small and midsize companies also have less flexibility to maneuver, Lash said.

“Unlike large businesses, smaller organizations often lack the resources to manage more complex customs filing processes and are more apt to abandon the market altogether,” Lash wrote in an email. “As many of these goods are boutique items, this action could reduce consumer choice and further erode sentiment by losing access to a cherished product.”

Zoe Desborough, owner of Canadian yarn dyer Woolerton Estate Yarns, said the closing of the de minimis loophole will cost the U.S. shops that carry her yarn an additional 33 percent. For U.S. consumers, the result could be less availability of niche products like hers, she said, adding that many Canadian companies have stopped taking online orders from U.S. consumers in the short term.

“Some shops might make the decision, for the time being, to not stock up on goods coming from outside the United States because of all these extra fees,” Desborough said. “No one is going to want to pay 20 or 30 percent more.”

Even larger businesses will have to alter their delivery strategy now that they can’t leverage the loophole, said Maggie Barnett, chief executive of LVK, a third-party logistics company with warehouses in the United States and Canada. For years, brands shipped their items in bulk from manufacturers in China or Southeast Asia to warehouses in Canada or Mexico to then “ship them over [to the U.S.] one by one when the orders come in,” she said.

In its latest earnings call earlier this month, Tapestry Chief Financial and Chief Operating Officer Scott Roe noted the company expects “profit headwinds” from tariffs, including the de minimis exemption as “a meaningful factor.” The brand, which owns Coach, Kate Spade and Stuart Weitzman, leveraged de minimis for its e-commerce business.

“It was the law of the time, and now the law has changed,” he said.

Related Content

Fame can sack an NFL superstar. Good luck catching Jayden Daniels.

Left behind: How one Russian family survived the Kursk occupation

‘Nowhere to go’: What happened after Trump ordered homeless encampments cleared