Author: Maria Pechurina, MA, Director of International Trade @ Peacock Tariff Consulting
Introduction
Last year, over 4 million packages entered the United States under the De Minimis exemption, with a trade value of roughly 1 billion USD. Just a decade ago, that figure stood at 140 million USD, a staggering increase tied mainly to e-commerce and direct-to-consumer shipping in fast fashion, toys, consumer electronics parts, and small household goods.
The anticipation of the August 29th suspension of the de minimis exemption has sent shockwaves through global logistics networks. Many foreign carriers, particularly postal services, have paused shipments to the US and are pleading for a rapid resolution. This change, initially aimed to curb China’s imports into the United States (comprising about 75% of all goods that enter under De Minimis), will now affect all nations and all imports, in an attempt to prevent transshipment flows of Chinese goods through other countries. Foreign nations are not thrilled about this – the immense volume once bound for the US market is now finding its way into Europe, Latin America and SE Asia. In Latin America, we are seeing the same thing occur that pained the United States a decade ago – consumers are ecstatic at the prospect of killer deals, customs are overwhelmed by the inflow of goods and local retailers are losing business. Other nations have de minimis exemptions in place to streamline shipping and relieve customs workers, but the dollar amount is much lower, about $150 in Eurozone 7$ in China.
Small and medium businesses will be hit hardest; they often lack compliance infrastructure, and this shift forces them toward more costly options; moreover, failure to comply results in hefty fines. Every package, no matter how small, now requires HTS codes, country of origin details, and full declaration. US Customs will take longer to process shipments, and mistakes bring penalties of 5,000 to 10,000 USD, making the burden of proper compliance heavier than ever.
A Shift in Shipment Models – Postal vs Non-Postal Shipping
Although traditional postal systems are a feasible workaround, they face significant constraints. The US Postal Service maintains a weight cap of 20kg per package, while de minimis shipments previously had no weight limit. Private carriers such as UPS and FedEx will continue to deliver into the United States from all over the globe, but costs are rising.
Valuation and Fees:
Under the new IEEPA system, importers now face steep flat fees by country of origin:
- If the country’s tariff rate is under 16 percent: 80 USD per parcel
- If the rate is between 16 and 25 percent: 160 USD per parcel
- If above 25 percent: 200 USD per parcel
- For China specifically: 100 USD or 54 percent, whichever is greater
Carriers must commit whether they pay flat fees or country of origin tariff-based rates. While they cannot switch daily, reevaluation can be conducted on a month-to-month basis. This allows some potential flexibility for importers to balance costs against shifting valuations.
Seasonal Jolt
The suspension arrives just before peak season for shipping. While stockpiling helped soften the immediate hit to consumer spending on back-to-school shopping, rising merchandise costs affect shoppers as the NFL season begins shortly. Official apparel and branded team merchandise, sourced from China, Vietnam, and Cambodia now carries tariff rates of 15 to 25 percent; tailgating tech and accessories face higher costs as Chinese-made components bump up cooler, speaker, and truck accessory prices; food packaging and disposable tailgate supplies are also becoming more expensive.
Halloween, Thanksgiving, and Christmas are all periods where the consumer impact will be felt most directly. Retailers are bracing for rising costs, slower supply chains, and possible product shortages as the holiday season approaches, with much of the burden expected to be passed on to consumers. Shoppers should prepare for fewer promotions, steeper prices, and tighter availability of in-demand goods.
Domestic Warehousing
Warehousing capacity is already under strain; when De minimis for China origin goods was first suspended in the spring, brands rushed to stockpile products in US warehouses. Now, brands seeking to fill their inventory ahead of peak season may have a difficult time securing space in prime locations. Suppliers once using the exception to get their goods into the US rush to Foreign Trade Zones (FTZs) to stage goods in bulk, then clear items into the U.S. in controlled increments rather than one duty-free parcel at a time. For context, FTZs allow duty deferral, meaning the tariffs are not due until goods leave the zone for U.S. consumption or get re-exported, in which case they will not be subject to tariffs at all. Although this introduces new costs, such as setup and storage fees, pursuing this route may smooth cash flow compared to paying tariffs upfront. The end of De minimis will greatly accelerate the competition for increasingly scarce warehouse space.
The Legal Wildcard: IEEPA Lawsuit
The Trump Administration is defending its use of the International Emergency Economic Powers Act (IEEPA) as the legal grounding for tariff imposition. The trade deficit, coupled with the fentanyl crisis have been declared the national security justification. The argument is that De minimis parcel inflows contribute to the import of dangerous components and that unfair trade practices have deepened US vulnerabilities and contributed to the loss of industrial capacity.
On July 30, the Secretary of Commerce declared that systems were now adequate to collect duties on these shipments. Following that announcement, more than 25 countries paused shipments to the United States and are waiting for clarity on how these duties will be collected. Critics counter that IEEPA was not designed to impose tariffs and that stretching it into tariff law is an unlawful overreach of executive power. The matter has gone to court, and the outcome could reshape or even reverse the suspension of De Minimis.
Company-level navigation:
While precise HTS classification and thorough recordkeeping have always been required, customs is now expected to step up audits and impose harsher penalties for mistakes. Importers can no longer split shipments into multiple sub-800 USD deliveries to avoid duties and warehousing availability may be strained in key areas as brands rushed to stockpile inventories earlier in the year. Shipping in bulk is often cheaper, especially if importers can use buy prices rather than inflated retail values.
For businesses, it is worth noting that 82% of online shoppers prefer to shop from a brand that can provide an expected delivery date, and almost 40% of customers will abandon their order if the platform is not able to provide an expected delivery date. The importance of planning ahead cannot be overstated at this time. Importers should consider assessing their inventory needs and fulfillment partners’ ability to stagger inbound shipments, aligning stock levels ahead of peak shopping periods, and meeting inbound deadlines to ensure product availability for Black Friday, Cyber Monday and the holidays.
With customs tightening enforcement, automated systems and experienced brokers are no longer optional. At Peacock Tariff Consulting, we help clients stay cost-efficient and ensure accurate HTS codes & documentation, explore alternative fulfillment options, and consolidate orders to reduce entry-frequency.
Workarounds and Industry Adjustments
Although DHL paused their shipping into the United States, their express service continues to ship at higher cost; The company may choose to reposition toward pharmaceuticals and other premium, high cost and volume, time-sensitive shipments to keep their profit margins steady. Low-value exemptions still apply for personal shipments such as books, letters, and small gifts sent person-to-person, valued at up to $100 USD.
Third-party platforms like Zonos are working with US Customs to streamline tariff collection technology.
Consumer impact looms large. More than 80 percent of shoppers want guaranteed delivery dates, and nearly 40 percent will abandon carts if delivery expectations are unclear.
Broader Trade Context
IEEPA tariffs now overlap with other duty regimes, including Section 232 tariffs on steel and aluminum, as well as reciprocal measures from Brazil and India. Global ripple effects are appearing: Mexico, Chile, and parts of the EU are reevaluating their own de minimis thresholds, partly as a buffer from the oversupply from Chinese-origin goods.
Consumer pressure is growing as US households, especially lower income groups, are expected to struggle with price hikes. According to a recent study published by the Yale Budget Lab, the price level from all 2025 tariffs will rise by 1.8% in the short-run, the equivalent of an average US household spending an additional $2,400 USD by the end of 2025, without any changes to their spending habits. As small-package imports are no longer cost-free, the question is how much consumers are willing to pay or wait for their orders.
Conclusion
Suspending the de minimis exemption has already transformed global trade logistics. US manufacturers and compliant logistics providers who can adapt to the rules may win. Small import-heavy sellers, international postal services, and consumers will lose out with higher costs. Workarounds are possible: bulk imports, accurate compliance filings, and leveraging USMCA corridors, one of the few remaining pathways for duty-free treatment, will help. But the real pivot point is the ongoing IEEPA legal battle – if the courts strike down these tariffs, de minimis could return unscathed. Until then, companies are caught in a new environment where compliance, cost management, and supply chain creativity determine business survival.