Tariff Talk

With the first issuance of tariffs this year, the topic of de minimis took center stage, highlighting the significant volume of low-value shipments entering the country without paying duties or undergoing the same scrutiny as formal entries (those exceeding U.S. $800). Efforts to apply the China IEEPA tariff to de minimis shipments disrupted supply chains and infrastructure, primarily impacting the U.S. Postal Service, courier-sized shipment providers, and e-commerce suppliers that ship directly to consumers.

Last night’s reciprocal orders brought further developments. The order announced that “duty-free de minimis treatment… shall no longer be available for products of China (and Hong Kong) origin, including those sent through the postal network, effective May 2, 2025.” For cargo shipments, duties will be applied according to the Harmonized Tariff Schedule (HTS) number and other tariff programs, eliminating preferential de minimis treatment for products from China, Hong Kong, and Macau.

According to the order, the Secretary of Commerce has confirmed that a system is now in place to process de minimis addresses. Freight forwarders and brokers will interface with this system through ACE under a new entry type. Postal carriers must now report the total number of postal items containing goods and their duty calculation method per transit, with the methodology subject to monthly adjustments. Starting May 2, all shipments will be subject to either a 30 percent ad valorem duty or a $25 fee per postal item, increasing to $50 per item on June 1. Additionally, U.S. Customs reserves the right to reject a shipment, require a formal entry, and apply standard tariffs as necessary.

Outside of China, de minimis treatment remains in effect. However, the Secretary of Commerce has been tasked with establishing a collection system to prevent circumvention of these reciprocal measures. The expansion of reciprocal tariffs to all low-value shipments will effectively eliminate fully duty-free treatment under de minimis, though exemptions remain for low-value gifts and personal effects.

Consumers and trade groups are closely monitoring these changes to assess their impact on direct-to-consumer e-commerce and whether they will create a more level playing field for traditional online retailers.