The Trump administration’s 2025 decision to eliminate the de minimis exemption for Chinese goods has had a significant impact on B2B sourcing. This policy shift is part of a broader trade initiative aimed at curbing unfair trade practices and preventing the flow of illicit goods, particularly fentanyl, into the U.S. The move affects businesses that relied on importing lower-value goods from China under the previous de minimis threshold of $800, which allowed duty-free entry with minimal paperwork.
The de minimis exemption simplifies international shipping by allowing goods below a certain value to enter a country without duties. The U.S. had one of the highest thresholds at $800, while the EU and China set much lower limits. This provision benefited e-commerce businesses, small importers, and global supply chains by reducing costs and streamlining logistics.
Many countries, including China, enforce stricter de minimis rules, often requiring pre-approval or imposing lower value limits. The exemption was particularly advantageous for companies like Shein and Temu, which used it to ship small, direct-to-consumer parcels while avoiding tariffs.
The Trump administration cited national security, unfair trade practices, and fentanyl trafficking as primary reasons for eliminating the exemption. Reports indicated that Chinese entities exploited the de minimis loophole to ship fentanyl and its precursors into the U.S. The administration also accused Chinese e-commerce giants of using the exemption to flood the American market with cheap goods while evading tariffs.
Congressional leaders supported the decision, highlighting a dramatic increase in Chinese imports under the de minimis provision—from 208 million packages in 2018 to over 640 million in 2023. The HR7979 bill originally sought to restrict de minimis use for goods subject to tariffs, but Trump’s executive order accelerated the process, ensuring that Chinese imports no longer bypassed duties.
The policy change presents several challenges for sourcing professionals. Goods previously exempt from tariffs are now subject to duties, raising import expenses and squeezing profit margins. Many e-commerce brands that relied on de minimis to minimize costs now face significant financial strain.
Importers must now file formal customs declarations, leading to increased compliance costs and logistical complexity.
The shift necessitates adjustments to sourcing strategies, potentially causing delays and forcing companies to reassess their supply chains.
Merle Hinrich, a veteran in global trade, acknowledges the de minimis exemption’s original intent to support small businesses and enhance consumer choice. However, he argues that its abuse necessitated reform. He advocates keeping the exemption while tightening regulations to prevent exploitation.
To mitigate the impact, B2B professionals should consider sourcing from alternative countries or leveraging free trade agreements to find cost-effective options, consolidating orders to minimize per-unit tariff costs, requesting better terms to offset increased expenses, and passing some costs to consumers while maintaining competitiveness.
To navigate the new landscape, businesses must review product classifications, analyze tariff impacts, and negotiate supplier contracts. They should also explore nearshoring or trade-friendly production, optimize logistics through bonded warehouses and shipment consolidation, engage customs brokers, and stay informed on trade developments to ensure compliance.
Source: globalsources.com