Small-ticket items shipped to the United States from China will no longer be exempt from tariffs starting on Friday, when a decision by President Trump to shutter a shipping loophole he calls a “scam” takes effect.
The move is expected to send ripples through the economy as American consumers, who have gotten used to buying cheap shoes, Hawaiian shirts, holiday decorations and other products made in China, suddenly find those products much pricier. The fallout is also expected to extend to independent online vendors who have based their businesses on the ability to cheaply import Chinese-made goods.
Mr. Trump is set to scrap a shipping workaround that has allowed products made in China and valued at under $800 to come into the United States without being subject to duties and taxes. The Trump administration has said it was focused on eliminating the de minimis loophole because of its apparent ties to the fentanyl trade, a concern previously raised by the Biden administration and several advocacy groups.
Traditional retailers that typically send big bulk shipments to their warehouses have also expressed frustration with the workaround, which has allowed popular Chinese e-commerce sites like Temu and Shein to cheaply send packages directly to customers. Retailers like Walmart and Amazon had explored shifting more toward shipping directly from China to consumers.
But the end of the exemption is expected to cause pain for a wide swath of online sellers across the globe, including independent e-commerce companies that rely on the channel, too.
Mr. Trump’s order repeals the duty-free provision for all goods made in mainland China and Hong Kong, which would apply to products sent both directly and indirectly to the United States. Vendors in the United States and Canada who sell Chinese-made goods online to U.S. buyers say they’re bearing the brunt of Mr. Trump’s decision to end the exemption.
For small online sellers, the de minimis changes are spurring confusion about costs for supplies sourced from China.
Kelly Kendall, who runs a craft supplies business in the Chicago area, imports about 80 percent of her supplies, including fabrics and embroidery products, directly from China. She uses those materials to make kits that she sells on Etsy and through her own website. She said she was worried that changes to the de minimis trade provision would make her costs surge.
Ms. Kendall orders most of her supplies in quantities below the $800 threshold, so she has avoided taxes on those imports, and she has built up some inventory. But within the next couple of months, she’ll have to start replenishing her supplies and pay tariffs on them.
Any additional shipping costs would force her to raise prices for her crafting kits, which currently range from $30 to $100.
“I don’t think people understand the larger impact for really small businesses, where this is my main source of income,” Ms. Kendall said. “This is a big deal.”
Alternatives to China for sourcing her materials are nearly nonexistent, she added.
Ms. Kendall started looking for U.S. manufacturers in March, after it became clear that Mr. Trump planned to eliminate the de minimis provision. She found two small factories in the New York City area that are capable of making the specific textile fabric she needs for embroidery, but they turned her down because her order volume would be too small, she said.
“A lot of factories, if I try to go directly to them, won’t deal with me because I don’t have a large amount of business for them,” Ms. Kendall said.
The import charges are set to differ depending on how the goods are shipped. If they come on an express carrier like DHL or FedEx, the goods will be subject to tariffs as high as 145 percent. Shipments through the Postal Service will face a tariff equivalent to 120 percent of the value of the goods, or a fee of $100 per package. The fee will increase to $200 in June.
De minimis changes could affect businesses outside the United States, too, since Mr. Trump’s order imposes duties on low-value products that originate from China even if they are shipped indirectly to the United States. The fallout was immediate for Canadian sellers in February, when Mr. Trump announced the change. He ultimately paused the decision within a few days, in order to give the Commerce Department time to set up systems to collect tariff revenue.
But what happened during those few days has fueled concern about shipping chaos this time around.
Justin Crowder, the owner of Cafuné Boutique, an e-commerce business in Montreal that sells coffee products, was thrilled when, in February, a YouTube content creator promoted an espresso maker on his site. It boosted orders of the Chinese-made product from U.S. buyers, and Mr. Crowder quickly shipped roughly 120 orders.
But just two days later, Mr. Trump’s ban on the de minimis rule for Chinese goods turned those U.S. sales into a liability. Emails from frustrated American customers started flooding Mr. Crowder’s inbox, all of them complaining about being charged unexpected taxes.
The sudden changes to the trade loophole appeared to inundate customs agents, leading to errors and import fees that ranged from $38 to $159 for the same espresso maker, Mr. Crowder said.
“My heart sank when I realized that a number of our customers would be impacted by this,” he said. “We’ve just been in a hamster wheel chasing down as much information as possible.”
Mr. Crowder decided to pay the tariffs rather than force his American customers to shoulder the unforeseen costs. But he said he was concerned that the constant whiplash from Mr. Trump on trade policies, including on the de minimis rule, would leave small businesses like his in the dark.
“We don’t have dedicated resources to make sure we’re on top of every policy change,” he said.
Shipping firms have scrambled in recent weeks to adjust to the shifting U.S. trade rules. In a series of blog posts, Chit Chats, a Canadian shipping company, alerted its customers to new requirements that all packages include information about where the product was made. Shipments to the United States were delayed because of the abrupt changes in February, Chit Chats said.
Stallion Express, another Canadian company that ships packages to the United States for businesses of various sizes, had thousands of its parcels returned to Canada by U.S. customs agents in February. That was partly because of new country of origin documentation requirements, said Kensen Wah, the company’s chief revenue officer. The rule changes caused inconsistencies at the U.S. border, Mr. Wah said, with some Stallion Express trucks turned away even after Mr. Trump temporarily reinstated the de minimis provision.
“I’m advising all our clients not to use this as a time to be complacent. This is a time to be nimble and to pivot the business,” Mr. Wah said. “I don’t think it’s safe for businesses to rely on the de minimis now.”
Larger Canadian companies may eventually shift their infrastructure to the United States, Mr. Wah added. But smaller online sellers will probably have fewer options to adapt.
For Émile Arsalane, who lives in the province of Quebec, a permanent reversal of the de minimis provision for Chinese goods would pose an existential threat to his e-commerce business. He sells electronics on eBay and used clothing on Poshmark. The vast majority of his items go to U.S. customers — almost all of them made in China.
When Mr. Trump initially scrapped the trade loophole, Mr. Arsalane’s first concern was about hefty import taxes on his products, including antiques, that do not have certificates of origin attached to them. It’s impossible to know where these items were made, he said.
Last Friday, he paused sales of Chinese-made goods, and goods that lack a clear country of origin, to U.S. customers, in anticipation of the de minimis expiration. That means 70 percent of his sales have been cut off while he tries to find a way to build his Canadian customer base instead.
“Tariffs on China are affecting Canadian sellers more than tariffs on Canada,” Mr. Arsalane said. “It’s the heart of the issue for small sellers.”
