De Minimis Is Ending: What’s Next for US Importers (American Journal of Transportation)

Originally published in the American Journal of Transportation (February 2026).

US importers were caught off guard after a July 30, 2025, executive order signed by the US president fast-tracked the end of de minimis, a decades-old customs rule, to August 29, 2025, impacting millions of low-cost cross-border parcels. The executive order came just a couple of weeks after the signing of the Big Beautiful Bill on July 4, 2025, which, among other things, set an end date for the de minimis rule for July 1, 2027. The impact was noticeable as transpacific air cargo volumes plummeted after the effective date. DHL Express, for example, saw a significant drop in US-bound shipment volume after the de minimis exemption ended. US-bound billed weight for its time-definite international service dropped about 32% year-over-year in Q3 2025, primarily driven by new tariffs and the elimination of duty-free access for low-value parcels. FedEx and UPS reported similar declines. China e-commerce exports to the US plunged 51% in October, 52% in November, and 50% in December, according to China Customs data.

The De Minimis Exemption

The de minimis rule has been around for years and has changed considerably since it was first enacted. In 1938, Congress enacted Section 321 of the Tariff Act of 1930 to authorize the Secretary of the Treasury to waive or reduce certain duties, fees, and other taxes "in order to avoid expense and inconvenience to the US government disproportionate to the amount of revenue that would otherwise be collected" on certain imported goods with a fair retail value in the country of shipment of $1 or less. Over the years, Congress amended Section 321 several times, raising the threshold and ultimately increasing it to $800 in 2015.

The main purpose of Section 321 was to protect the revenue of the United States by, in the words of Assistant Secretary of the Treasury Chapman Rose, ensuring that customs officials were not "spending a dollar to collect 50 cents." However, that changed by 2015 when Section 321 was considered as a trade liberalizing measure. By the 2020s, there were concerns that the de minimis rule was aiding the import of illicit drugs, which led to the end of the rule.

Impact on US Importers

For importers, typically those focused on e-commerce, the end of the de minimis exemption means higher shipping and handling costs and, for some, a complete redo of business models that relied on de minimis. In response to the end of de minimis, Chief Strategy Officer for Evans Transportation Matt Huckeba suggested that there would be an increase in local inventory strategies, SKU rationalization, nearshoring, and the faster adoption of delivered duty paid (DDP), where the seller assumes responsibility for the package and all shipping costs until the goods are delivered to a specified destination. "If sellers aren't able to adopt DDP, 'surprise' duties will trigger higher returns, negative reviews, and other backlash against merchants." DDP could be adopted by more reputable brands or marketplaces, which would shift the merchant pool, said Huckeba.

CEO and founder of cross-border logistics platform FlavorCloud, Rathna Sharad, describes 2025 as a "double-whammy" for importers having to deal with tariffs and the end of de minimis. "Tariffs and the end of de minimis had enormous implications for direct-to-consumer brands and business-to-business importers. Wholesale supply chains were disrupted, which resulted in changes in sourcing locations, trade-lane shifts, and movements of certain commodities to free-trade zones."

One of the most visible strategies by US importers has been to move toward bulk importation and domestic fulfillment. Chinese e-commerce platforms such as Shein and Temu, for example, expanded US-based warehouse capacity, allowing them to import products in bulk and distribute domestically. Brands such as Lululemon are also reviewing their inventory placement strategy. "We fulfill approximately two-thirds of our US e-commerce orders through Canada. Most of those shipments would have been under $800 and would have qualified for the exemption. So, it has a meaningful impact on us [the end of the de minimis rule]. I would share that we are looking actively at our DC network, and part of our mitigation strategy is inventory placement and making sure we're most efficient as we move forward," Lululemon's CFO, Meghan Frank, told analysts during their second quarter 2025 earnings call last August.

Other strategies have included the use of foreign trade zones, bonded facilities, and nearshoring as a duty-deferral method, according to Matthew Hertz, CEO and founder of Third Person, a 3PL matchmaker for e-commerce brands. "Importers are looking for legitimate ways to defer tariffs until goods are shipped to the final customer, rather than trying to bypass them entirely," said Hertz.

Additionally, as noted by Huckeba, SKU rationalization is another consideration for US importers, as they trim slower-moving SKUs and focus on higher-velocity items that justify the cost and compliance burden of bulk importation.

Mitigating Higher Costs

Today importers are faced with higher costs. To mitigate the costs and maintain customer loyalty, they have invested in technology tools to improve transparency in shipping windows, for customs processing, to manage suppliers, to manage cross-border returns handling, and more.

"We see more D2C and B2B importers investing in technology for compliance purposes," said Sharad. "Importers are now having to make sure that declarations are accurate, the correct country of origin is listed, a detailed description of the product, and other requirements to ensure entrance into the US that under de minimis they did not have to worry about," said Sharad.

But despite the higher costs, e-commerce continues to grow. "Shipping costs and landed costs are rising for those who were dependent on the exemption. However, we haven't yet seen a dip in overall US e-commerce spending. The consumer seems resilient, even as importers grapple with whether to absorb these costs or pass them on," said Hertz.

Indeed, according to the Census Bureau of the Department of Commerce, US retail e-commerce sales for the third quarter of 2025, adjusted for seasonal variation but not for price changes, were $310.3 billion, an increase of 1.9% from the second quarter of 2025 and a 5.1% increase from the third quarter of 2024.