What Business Owners Need to Know About De Minimis and Its Recent Changes

In the complex world of international trade and ecommerce, the de minimis rule plays a crucial role for businesses that regularly import goods into the United States. With recent policy changes implemented through an executive order by President Donald J. Trump, understanding de minimis has become more important than ever for business owners. This article explores what de minimis means, how it has traditionally benefited businesses, the latest regulatory updates, and how partnering with a third-party logistics (3PL) provider like All Points can help navigate these changes.

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What Is De Minimis?

De minimis refers to a customs rule that allows for the duty-free import of low-value shipments into the United States. The Latin term literally means "about minimal things," and in the context of international trade, it represents a threshold below which imported goods are exempt from applicable duties, taxes, and formal entry procedures.

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The de minimis threshold in the United States was raised to $800 in 2016 when Congress raised the limit from $200 through the Trade Facilitation and Trade Enforcement Act. This increase was significant for American businesses, especially those engaged in ecommerce, allowing them to import individual orders without paying customs duties or filing formal entry documents, as long as the shipment value remained under $800.

The Evolution of the De Minimis Exemption

The de minimis exemption has evolved through several iterations in U.S. trade policy. The concept has roots in the Tariff Act of 1930, though the threshold has changed multiple times over the decades. The de minimis threshold had remained at $200 since 1993, making the jump to $800 in 2015 a significant development for businesses dealing with low-value imports.

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This exemption was designed to allow U.S. Customs and Border Protection (CBP) to expediently process low-value shipments without requiring the resources needed for formal entry procedures. This administrative efficiency has been crucial as global ecommerce has expanded, with CBP processing millions of de minimis shipments daily.

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For business owners, particularly those with fewer resources to dedicate to complex customs procedures, the de minimis exemption has provided a simplified pathway for importing goods and maintaining competitive shipping times while minimizing administrative burdens.

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How Businesses Have Benefited from De Minimis

The $800 de minimis threshold has been a game-changer for many businesses, particularly those engaged in cross-border sales. Here's how companies have traditionally leveraged this exemption:

1. Cost Savings: By importing products as de minimis shipments, businesses have avoided paying applicable duties and additional duties that would otherwise increase their operational costs.
2. Streamlined Operations: The de minimis exemption has allowed for faster customs clearance with reduced paperwork compared to formal entry requirements, leading to quicker delivery times and improved customer satisfaction.
3. Competitive Pricing: Without the added burden of tariff revenue collection, companies have been able to offer more competitive pricing to their customers.
4. Direct Shipping Models: Many ecommerce businesses have structured their operations to take advantage of de minimis by shipping products directly from overseas manufacturers to U.S. consumers in packages valued under the de minimis threshold.
5. Reduced Administrative Burden: The informal entry process has meant less administrative overhead for businesses, particularly those with limited resources for customs compliance.

This exemption has been particularly beneficial for businesses importing from China and other countries with strong manufacturing capabilities and competitive pricing.

Recent Changes to De Minimis from President Donald J. Trump

On April 2, 2025, President Donald Trump signed an executive order that significantly alters how the de minimis exemption applies to imports from China. These changes are part of broader efforts to address concerns related to drug trafficking and enhance import security. Here are the key modifications to the de minimis rule:

1. Elimination of Duty-Free Treatment for Chinese Imports: Starting May 2, 2025, the executive order eliminates duty-free de minimis treatment for low-value imports from China. Goods imported from China and Hong Kong starting May 2 valued at or under $800 will no longer qualify for the de minimis exemption.
2. New Duty Structure for De Minimis Imports:
   
   • Imports sent through channels other than the international postal network will be subject to all applicable duties according to standard entry procedures.
   • Postal items sent through the international postal network that would otherwise qualify for the de minimis exemption will be subject to either a 30% duty on their value or a flat rate of $25 per item, increasing to $50 per item after June 1, 2025. These fees will be collected in lieu of other duties.
3. Enhanced Reporting for De Minimis Shipments: Carriers transporting postal items must report shipment details to U.S. Customs and Border Protection, maintain an international carrier bond to ensure duty payment, and remit duties on a scheduled basis.
4. CBP Discretion for Formal Entry: The order gives customs officials the authority to require formal entry for any postal package instead of applying the specified duties, adding another layer of scrutiny to the de minimis channel.

The Commerce Department has indicated that "adequate systems" are now in place to collect tariff revenue from these previously exempt shipments. According to the administration, during the last fiscal year, CBP apprehended significant amounts of illicit substances at the border, highlighting concerns about the misuse of the de minimis exemption for illicit trade.

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Impact on Business Owners

The elimination of the de minimis exemption for Chinese origin goods will have significant implications for businesses:

1. Increased Costs: Businesses that have relied on duty-free imports from China will face new expenses in the form of applicable duties, potentially increasing product costs by 30% or more.
2. Supply Chain Disruptions: Companies may need to restructure their supply chains, potentially seeking other countries for sourcing or changing their import strategies.
3. Administrative Complexity: The new rules add layers of documentation and compliance requirements, making the informal entry process more complicated for de minimis shipments.
4. Pricing Strategies: Retailers may need to adjust their pricing strategies to accommodate the additional costs, potentially affecting their competitiveness.
5. Delivery Delays: Enhanced scrutiny and processing requirements could lead to longer shipping times, affecting customer satisfaction.

It's important to note that this change specifically targets value imports from China and Hong Kong starting May, while the de minimis exemption remains in place for imports from other countries.

What About Goods Not from China?

While President Donald J. Trump's executive order specifically targets low-value imports from China, it's important for business owners to understand that the de minimis exemption remains intact for goods imported from other countries. The $800 de minimis threshold continues to apply for shipments originating from nations such as Vietnam, India, Mexico, and European countries, allowing duty-free entry without formal entry requirements.

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This creates a strategic opportunity for businesses to diversify their supply chains and potentially reduce overall customs costs by shifting sourcing to these unaffected regions. Many proactive business owners are already exploring these alternatives to maintain the benefits of the de minimis exemption while mitigating the impact of the new restrictions on Chinese imports.

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For businesses operating in multiple international markets, it's crucial to develop a nuanced understanding of how the de minimis exemption varies by origin country. U.S. Customs and Border Protection continues to process millions of de minimis shipments daily from non-Chinese origins under the existing framework, allowing for simplified clearance and reduced administrative burden. 

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However, even with non-Chinese goods, business owners should remain vigilant about properly documenting country of origin, as customs officials have increased scrutiny of all shipments to prevent transshipment schemes designed to evade the new Chinese-specific restrictions. Working with experienced logistics partners can help ensure that legitimate de minimis shipments from alternative sourcing countries move smoothly through customs channels, preserving the time and cost advantages of the exemption for your business.

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How a 3PL Like All Points Can Help

In light of these changes to the de minimis exemption, partnering with an experienced third-party logistics provider like All Points can provide significant advantages for business owners:

1. Customs Expertise: 3PLs specialize in navigating complex customs regulations and can help ensure compliance with the new de minimis rules while minimizing disruptions to your business.
2. Alternative Sourcing Strategies: All Points can help identify and establish relationships with suppliers in other countries not affected by the new restrictions, diversifying your supply chain.
3. Consolidated Shipping: By consolidating multiple orders into larger shipments, 3PLs can help optimize the duty structure and potentially reduce the per-item impact of the new duties on de minimis shipments.
4. Documentation Management: 3PLs handle the increased paperwork required for formal entry procedures associated with the new rules, freeing up your resources for core business activities.
5. Strategic Warehousing: By maintaining inventory in U.S.-based warehouses, All Points can help companies bypass the immediate impact of the new restrictions on direct-to-consumer de minimis imports from China.
6. Customs Bond Management: 3PLs can manage the international carrier bonds required under the new rules, reducing administrative complexity for businesses using the de minimis channel.
7. Real-time Compliance Updates: As trade policy continues to evolve, All Points can keep you informed about changes that might affect your business and help you adapt quickly.

Strategies for Adapting to the New De Minimis Reality

With the help of a 3PL like All Points, businesses can implement several strategies to navigate the changing de minimis landscape:

1. Diversify Sourcing: Consider alternative manufacturing locations such as Vietnam, Thailand, or Mexico to reduce dependence on Chinese imports subject to the new de minimis rules.
2. Domestic Warehousing: Maintain more inventory domestically to avoid the frequent need for small, direct imports that would previously have qualified for the de minimis exemption.
3. Bulk Importing: Consider transitioning from small individual de minimis shipments to larger bulk imports where the duties can be spread across more units, potentially reducing the per-item cost impact.
4. Product Mix Evaluation: Analyze your product portfolio to identify items that may no longer be profitable under the new duty structure for de minimis imports and consider alternatives.
5. Price Adjustments: Strategically adjust pricing on affected products to maintain profitability while remaining competitive in the market.

The Future of De Minimis

It's worth noting that this executive order could potentially be repealed or modified after President Trump leaves office, as trade policy often shifts with administration changes. This adds another layer of complexity for business owners who must remain flexible and informed about potential shifts in the de minimis rule.

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Some trade experts and American businesses have already expressed concerns about the impact of these changes on supply chains and consumer prices. Countervailing duties and other trade measures are constantly evolving as part of broader trade policy discussions, making it crucial for businesses to work with partners who stay current on these developments.

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