As of May 2, the United States has officially ended the de minimis exemption for packages arriving from China and Hong Kong. This change eliminates duty-free entry for shipments valued under $800, subjecting them instead to significantly higher tariffs and stricter customs procedures.

Under the new policy, affected packages will either face a 120% tariff or a flat $100 fee, which is set to double to $200 in June.

The exemption had allowed an estimated 4 million packages per day to enter the U.S. in 2023, a steep increase from 2.8 million daily packages the previous year. Fast-fashion e-commerce giants like Shein and Temu heavily relied on this loophole to deliver low-cost products to U.S. consumers.

According to logistics data provider Xeneta, e-commerce accounts for roughly 50% of air cargo volume on the China–U.S. route, which itself makes up about 6% of global airfreight activity. The new restrictions are already creating turbulence in the market, with signs of weakened demand, freighter flight cancellations, and shifting capacity.

“A sharp drop in demand is likely to challenge carriers’ capacity planning,” said Niall van de Wouw, Xeneta’s head of airfreight. “The redeployment of capacity across other trade lanes could lead to broader disruptions in global airfreight.”

Van de Wouw noted that while it’s too early to fully assess the impact, initial signs point to a challenging environment for both airlines and retailers. “This isn’t just one industry feeling the effects—it’s an entire segment of global trade,” he added.

Forwarders are also warning of a spike in administrative complexity. Scan Global Logistics stated that, as of May 2, all shipments must go through standard customs clearance, calling it an “administrative nightmare.” With U.S. tariffs on many Chinese imports already at 145%, the end of the de minimis exemption is expected to reshape e-commerce pricing strategies and consumer habits. Shein and Temu have already announced price hikes.

While these changes are significant, it’s difficult to isolate their impact from other recent developments, such as the 145% tariff already imposed on most Chinese imports. However, the market is already reacting. Data from WorldACD shows a 15% year-on-year drop in air cargo volumes from China and Hong Kong to the U.S. for the week ending April 17.

Spot rates have also declined. Since the end of April, prices for shipments from Hong Kong to the U.S. have dropped by nearly $1 per kilogram, now hovering around $4.40/kg.

Freight forwarder Dimerco reported a sharp 50% year-on-year decline in e-commerce volumes since mid-April. The company noted that several freighter charters have already been cancelled, with more likely in the weeks ahead. Chinese airlines are also considering further service suspensions, which could tighten capacity even further.

There is concern that excess capacity removed from the China–U.S. corridor may flood other markets, potentially depressing rates where demand is lower. Dimerco Express Vice President Kathy Liu confirmed that some freighter capacity is already being redirected to Latin American destinations like Nuevo Laredo, where demand remains strong.

In contrast, outbound demand from Southeast Asia and Taiwan has remained stable, supported in part by a temporary 90-day U.S. tariff exemption for those regions.

The U.S. initially attempted to end the de minimis exemption in February but was forced to reverse the decision after customs systems were overwhelmed.

In 2023, nearly 1 billion packages entered the U.S. under the exemption, with about 800 million arriving via international mail, express couriers (like UPS, DHL, and FedEx), or as cargo on commercial flights.

U.S. authorities argue that the exemption has been exploited not only for duty avoidance but also by criminals smuggling illicit drugs and contraband into the country.

Source: aircargonews.com