In a momentous victory for American manufacturing, President Trump has signed an executive order ending the long‑standing de minimis exemption that allowed commercial packages valued below $800 to enter the United States duty-free. The measure takes effect on August 29, 2025, and applies to goods from all countries. Previously, this policy was suspended just for China and Hong Kong in May 2025.
The de minimis rule has fueled a surge in online imports, reaching 1.36 billion shipments in fiscal year 2024, with many shipped directly from overseas producers, most notably ultra-low-cost brands like Shein and Temu.
Domestic manufacturers and labor groups praised the move, saying the loophole had undercut U.S. production while permitting illicit goods, including synthetic opioids and counterfeit products, to slip through less‑stringent inspection channels.
Impact on Manufacturers and American Industry
For U.S. manufacturers, removing this exemption creates a more level playing field. International retailers had used low-duty shipping to undercut domestic prices, eroding market share for manufacturers operating at higher costs. The executive order responds directly to concerns raised by groups like the Alliance for American Manufacturing, which argue that cheap imports distorted competition and harmed worker livelihoods.
At the same time, law enforcement officials have documented that the vast majority of cargo seizures (98 percent of narcotics and 97 percent of intellectual property seizures in FY2024) originated from packages shipped under the de minimis rule, highlighting security vulnerabilities.
Economic Consequences and Consumer Trade‑offs
While manufacturers and enforcement advocates applaud the change, economists caution that it may generate steep costs for consumers and small businesses. Studies by Oxford Economics, Nomura, and the National Bureau of Economic Research estimate that eliminating de minimis could raise prices on affected packages by 40% to 55%, with total consumer costs approaching $11 billion to $13 billion annually. Lower-income households are projected to bear a disproportionate share of the rise in shipping and duty costs, up to 12% in poorer ZIP codes.
Online platforms and logistics companies also reacted, with sharp drops in shares for PDD Holdings (Temu), Amazon, Etsy, FedEx, and UPS, reflecting heightened uncertainty about cross-border parcel flows.
Retailers like Shein and Temu are already adjusting supply chain models, shifting more fulfillment operations within the United States to mitigate disruptions. Analysts suggest the policy will squeeze margins at ultra-low‑price sellers, potentially making fast fashion less competitive.
A Step In The Right Direction
This executive order accelerates the permanent repeal, which was set to take effect in July 2027, under legislation passed earlier in July. It signals a significant step in trade enforcement and industrial policy, protecting American manufacturers and increasing scrutiny of low-cost imports.
