De Minimis Rule: What E-commerce Sellers Need to Know

When it comes to e-commerce with global operations, trade and customs should be top of mind. 

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Think of complying with international laws and local regulations, such as paying tariffs for imported goods. Consider taking advantage of de minimis provision for lesser costs and higher profits when shipping products to another country.

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Take the recent elimination of the de minimis loophole enacted by the U.S. President Donald Trump for imported products from China and Hong Kong. Chinese businesses would have to follow customs duties and pay related taxes and flat-out fees, unlike before. As an e-commerce seller, how will this impact you?

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This page doesn't only cover e-commerce trends but also delves into recent updates about the industry. Read on to learn what you should know about the de minimis rule, how the U.S. policies can impact your business, and how to maximise this provision.

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1. What Is the De Minimis Rule?

De Minimis sets a minimum value for an import fee imposed by a particular country. If the value of your goods being shipped is below the threshold amount set by this country, you won't incur any tax (or duty fee). But if it hits or exceeds the threshold value, you have to pay a certain amount. 

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The table below shows the thresholds for different countries and how they surpassed the EU threshold:

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Case in point: Members of the European Union have the same de minimis thresholds of 150 EUR. If your shipments to these countries are worth less than the threshold value, your products will enter the country duty and tax-free. However, if they reach or exceed this value, they'll be due for both a duty fee and value-added tax (VAT).

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Another example: The United States used to have a de minimis trade of $800 for all imported goods. If you were shipping products from the UK to the U.S. with a value of less than $800, you'd have your shipments enter the country duty-free. Otherwise, you'd have to pay for the customs duty fees and/or taxes.

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However, that's no longer the case in the country, as it is now under the Trump administration. Find out what the most recent updates are in the U.S. below for informed e-commerce decisions.

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2. Recent De Minimis Loophole Updates in the U.S.

U.S. President Donald Trump signed an executive order on May 2, ending the de minimis loophole for shipments from China and Hong Kong. This means that low-value products or packages from these countries are subject to all applicable customs duties and taxes (a 120% tax or $100 flat fee on packages, rising to $200 in June as of the time in writing).

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The de minimis provision became part of the Tariff Act of 1930 under Section 321, which was introduced in 1931. It initially aims to reduce the administrative burden of inspecting low-value products entering the country since these packages are "de minimis," meaning "of little importance."

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However, the 1938 provision has led to massive imports of low-value goods or items from China. A Congressional Research Service report shows that the value of low-value packages from this country has increased from $5.3 billion to $66 billion between 2018 and 2023. Between 2018 and 2021, about 67% of U.S. duty-free imports worth $228 billion came from China and Hong Kong.

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The use of the de minimis exemption has risen exponentially in recent years. Think of the surge of products from Chinese bargain sites, such as Temu and Shein. Approximately 1.36 billion shipments utilising this exemption entered the country last year, with 60% of these packages originating from China.

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As such, the White House has accused Chinese sellers of taking advantage of the de minimis loophole through "deceptive shipping practices." Meanwhile, companies and organisations in the industry have also complained about the unjust competition with Chinese businesses. Hence, that led to a critical decision under the Trump administration.

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The de minimis elimination is in line with Tariff provisions, which struck down the following:

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• 10% universal baseline tariff
• 20% duties on Chinese goods (due to the failure to cease fentanyl trafficking)
• 10% "reciprocal" duty targeting all Chinese goods

Kathryn MacDonell, CEO at Trilby Misso Lawyers, has seen the would-be-impact of the U.S. de minimis elimination on the e-commerce industry on a global scale.

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MacDonell says, "The end of the de minimis loophole sends a ripple effect through global e-commerce. Sellers worldwide now face tougher margins and tighter compliance—especially those relying on low-cost imports from China."

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So, what do these provisions imply for global e-commerce operations? Learn more about the effect of the de minimis rule on online sellers in the next section.

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3. The Impact of the U.S. De Minimis Rule on E-commerce Sellers

There is no denying the effects of the U.S. market on global operations, which is particularly evident in the e-commerce industry. The country's de minimis exemption is one of the highest in the world; however, the recent tariff reform could impact worldwide operations.

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If you're a Europe-based online business catering to the U.S. market, it's crucial to understand the de minimis elimination in the country. That way, you can make informed decisions to streamline your operations.

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As an e-commerce seller, here's what you need to know:

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3.1 For e-commerce platforms:

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• Changing fulfilment networks: E-commerce platforms need to rethink their fulfilment strategies, especially if they rely on China-based warehouses. To avoid high duties, many companies are exploring the establishment of distribution hubs in other countries or within the U.S. itself.

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• Shifting product sourcing: With tariffs raising costs on Chinese goods, some platforms are diversifying their suppliers. Expect a shift toward sourcing products from regions with more favourable trade terms.

Laurence Bonicalzi Bridier, CEO at ArtMajeur by YourArt, suggests optimising your supply chain and order fulfilment strategies.

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Bridier says, "Now's the time to rethink your logistics. Diversifying your supply chain and fulfilment hubs isn't just smart. It's essential to stay competitive in today's shifting trade environment. As an e-commerce business serving the U.S. market, this is exactly what you need to prioritise amid the de minimis removal."

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3.2 For international online sellers:

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• Possible new tariffs: Foreign sellers shipping to the U.S. could face extra costs due to the removal of the de minimis exemption. This means tighter margins or potential price hikes to stay profitable.

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• Potential customs delays: Without the fast-track benefits of the de minimis rule, low-value shipments may face longer processing times at the border. This can lead to delivery delays and customer dissatisfaction if not properly managed.

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Peter Čuček, Owner of Tuuli, recommends staying abreast of international laws and local regulations in your country of operation.

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Čuček explains, "Keeping up with changing trade laws and local regulations is key for any international seller. It helps you avoid surprises, manage costs, and ensure smooth delivery for your customers. Navigating the removal of de minimis in the U.S. is a perfect example of staying informed."

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3.3 For U.S.-based  online sellers: 

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• Levelled playing field: With the loophole closed, overseas sellers no longer get a duty-free pass, giving U.S. sellers an equal footing. Competing on price and delivery got a bit more balanced.

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• Increased cross-border cost. Shipping internationally might become more expensive, especially if you're importing goods to resell. To stay competitive, focus on lowering your shipping costs wherever possible. 

Jeffrey Zhou, CEO and Founder of Fig Loans, emphasises the positive impact of de minimis removal in the U.S.

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Zhou suggests, "U.S.-based sellers should focus on cutting shipping costs and streamlining fulfilment to stay competitive. Embracing efficient logistics and exploring local suppliers can help offset rising cross-border expenses."

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Find out the key steps for handling the de minimis rule in the next section.

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4. How To Navigate the De Minimis Rule as an E-commerce Seller

The de minimis provision is favourable to both parties: The market country and the e-commerce business. The country doesn't have to deal with inspecting goods and collecting fees for low-value packages. Meanwhile, your e-commerce business won't be subject to high tariffs and fees.

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However, Ian Gardner, Director of Sales and Business Development at Sigma Tax Pro, recommends studying the laws and regulations around trade and customs. He suggests making the most of the de minimis rule in a way that benefits your e-commerce business.

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Gardner nudges, "Take the time to understand how trade laws apply to your business—especially around duties and thresholds. Knowing where the de minimis rule works in your favour can help you avoid unnecessary costs and streamline cross-border sales."

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As an e-commerce seller, here's how to handle the de minimis provision:

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• Know your target market's threshold value. Of course, the first thing to consider is the de minimis threshold value per country. Are you shipping products to Europe, North America, or Asia for your e-commerce business? Below are the top five e-commerce markets, showing their duty and tax de minimis:

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• Sort and value your products appropriately. Organising your goods or items is a streamlined way of marking their value and capitalising on the de minimis rule. For example, if you're shipping custom t-shirts to the UK, determine the package value per category, such as colour, size, gender, and style, and see how you can save up on tariffs and duty fees. 

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• Pick the right shipping service providers. There's a line drawn between shipping in the UK and globally. The latter can be costly as you'd have to pay for tariffs and other related costs. Therefore, it's best to work with the right shipping partners who can help you save money in the long term without compromising product quality.

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• Use local fulfilment centres when applicable. It's a good idea to partner with not only local warehouses but fulfilment centres. As far as local regulations, such as tariffs and customs duties, they are familiar with the details. So they can help you stay on top of your order processing and shipping operations.

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• Outsource customer support for de minimis understanding. As businesses grow fast, handling consumer questions and tech issues can get overwhelming. That’s where white label support comes in—it lets you offer great customer service without building an in-house support team. This frees them up to focus on core operations and keep up with changing rules.

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• Leverage software automation for compliance. It's best to leverage digital tools integrated with automation and artificial intelligence. Not only do they reduce manual e-commerce tasks, but they also help you predict your sales. They can even assist you in making decisions on de minimis.

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• Track, measure, and optimise product shipments. To stay on top of your e-commerce logistics, constantly monitor the goods or items shipped to customers in different countries. Taking advantage of de minimis exemption is one way to optimise your operations, allowing you to save costs and boost profits.

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• Consult with trade or customs professionals. Knowing the de minimis threshold per country is one thing; handling recent updates, such as the one in the U.S., is another. So, what better way to handle the provision and its implications than to work with experts?

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• Keep your valued customers always informed. It's essential to keep your customers informed, such as with the recent de minimis removal in the U.S. For example, listen to e-commerce podcasts to educate yourself and share the information with your customers. That way, they won't be surprised by the increase in prices.

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• Stay up-to-date with policy changes or reforms. The impact of the U.S. tariff reform under the Trump administration has ripple effects on global e-commerce operations. That's why you must stay abreast with these changes so you can make informed decisions as an e-commerce seller.

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In trade and customs, the de minimis rule is an excellent provision to capitalise on. Not only does it help e-commerce businesses selling low-value products, but it also reduces the administrative burden of inspecting goods and collecting fees.

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As an online seller with global operations, however, it's crucial to stay up-to-date with the recent laws and regulations. 

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Take the elimination of the de minimis provision under the Trump administration in the U.S. Consider the valuable information shared above, and more importantly, follow our critical steps for navigating such a provision. By doing so, you'll not only decrease your costs but also increase your e-commerce profits!

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