President Donald Trump announced his promised tariffs on Saturday and paused those levied against Mexico and Canada on Monday for 30 days. In addition to threatening to impose double-digit duties on all products imported from Canada, Mexico, and China (whose tariffs took effect on Tuesday), each of the president’s executive orders eliminates duty-free exemptions for low-dollar-value imports, known as de minimis exemptions. Eliminating these exemptions would increase the price of goods from international bargain brands enjoyed by cash-strapped consumers.
De minimis is Latin for “concerning trifles,” per Merriam-Webster. The aptly named exemption applies to shipments “imported by one person on one day having an aggregate fair retail value in the country of shipment of not more than $800,” according to U.S. Customs and Border Protection (CBP). The Congressional Research Service (CRS) reports that the U.S. imported $54.5 billion worth of de minimis products in 2023, 34 percent ($18.4 billion) of which came from China.
Chinese e-commerce firms Temu and Shein had grown to make up 17 percent of the entire American discount market by 2023, according to the CRS. These discount brands contract with Chinese firms to make and ship goods directly to consumers, avoiding expensive tariffs via de minimis, explains Bloomberg. This business model caters to lower-income Americans who are willing to wait weeks instead of days to save more of their hard-earned dollars. Eliminating the de minimis exemption means that the cheap consumer goods sold by these brands will be subjected to the additional 10 percent duty on Chinese products, some fraction of which will inevitably be passed on to American consumers.
The rule announced by CBP to carry out Trump’s executive order imposing duties on China goes even further, requiring formal inspection for all mail shipments from China “without regard to their value.” Christine McDaniel, senior research fellow at the Mercatus Center, tells Reason that this will require CBP to subject roughly 917 million more parcels to formal entry, a process so complex that CBP recommends importers outsource it to third-party brokers (whose services cost around $100). McDaniel says processing so many more parcels “could be prohibitively costly in terms of resources for CBP.”
Compliance is so complicated that the United States Postal Service (USPS) temporarily suspended international package acceptance of inbound parcels from China and Hong Kong, it announced in a Tuesday service alert. Less than 24 hours later, the USPS resumed service saying that it and “Customs and Border Protection are working closely together to implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery.” The “least disruption” is no disruption at all; delayed deliveries and the expense of customs brokers are additional costs that will be passed on to consumers without the de minimis exemption.
The elimination of de minimis exemptions would have applied to Canada and Mexico before Trump wisely paused tariffs on these countries for 30 days. Trump described the United States–Mexico–Canada Agreement (USMCA) as “the fairest, most balanced, and beneficial trade agreement we have ever signed into law” and “the best agreement we’ve ever made” in 2020. The USMCA commits its signatories to “individualized de minimis exemption thresholds, including 800 USD for goods entering the United States, 117 USD for goods entering Mexico, and 150 Canadian Dollars (CAD) for goods entering Canada,” per the CRS.
By threatening to eliminate de minimis exemptions for Canada and Mexico, Trump entertains violating “the best agreement [he’s] ever made.” If repealed, poorer American consumers would bear an even higher cost than in the Chinese case because, curiously, the tariffs Trump levied against our two neighbors and closest trading partners are 15 percentage points higher (25 percent) than those imposed on China (10 percent).
As with Trump’s other protectionist policies, the White House frames the elimination of de minimis as a national security imperative and necessary to reduce overdoses from opioids and fentanyl. The U.S. has been losing the war on drugs by criminalizing supply for decades. Repealing tariff exemptions isn’t going to change this stubborn reality, it will only compound American suffering.
