You’ve probably done it. Most of us have. You’re scrolling through Temu or Shein, you see a sweater for twelve bucks or a gadget for six, and you hit "buy." It shows up at your door a week later. No extra fees. No customs forms. No headache.
That magic trick is possible because of Section 321 of the Tariff Act of 1930. Specifically, the de minimis exemption trump administration and subsequent Biden policies have wrestled with for years. Right now, if your package is worth less than $800, it basically flies under the radar of U.S. Customs and Border Protection (CBP).
It’s a massive loophole. Honestly, it’s less of a loophole and more of a gaping canyon at this point.
Back in 2016, the threshold was only $200. Then it jumped to $800. Suddenly, the volume of small packages exploded. We went from a few hundred million packages a year to over a billion. It's wild. But the tide is turning. Whether you’re a shopper, a small business owner, or just someone wondering why your local mall is a ghost town, the "Trump-era" focus on trade enforcement is coming back with a vengeance, and it’s targeting those cheap packages specifically.
The $800 Problem: How the De Minimis Exemption Trump Discussed Became a Flashpoint
When Donald Trump took office, his "America First" trade policy focused heavily on massive tariffs—specifically Section 301 tariffs on Chinese goods. You remember the headlines. 25% on steel, 10% on aluminum, billions in levies on electronics.
But here’s the thing: tariffs only work if you actually collect them.
Chinese retailers like Shein and Temu figured out a workaround almost immediately. Instead of shipping a massive container of 10,000 shirts to a warehouse in California (where they’d get hit with a 25% tariff), they ship 10,000 individual packages directly to 10,000 different customers. Because each package is under $800, it qualifies for the de minimis exemption. The result? Zero tariffs. Zero duties. Zero inspection in many cases.
Trump’s trade representatives, including Robert Lighthizer, eventually realized this was a massive "back door" for Chinese goods to enter the U.S. duty-free. It essentially made the tariffs on big companies useless while giving an unfair advantage to foreign e-commerce giants.
Why the government is suddenly panicked
It’s not just about the money. Sure, the Treasury is losing billions in uncollected tax revenue, but CBP is also overwhelmed.
Think about the math.
✨ Don't miss: The Big Buydown Bet: Why Homebuyers Are Gambling on Temporary Rates
CBP officers used to inspect shipping containers. Now, they have to deal with four million individual small packages arriving every single day. It is physically impossible to check them all. This has turned the de minimis lane into a "superhighway" for illicit goods. We’re talking about counterfeit Nikes, sure, but also precursor chemicals for fentanyl and unapproved medical devices.
The Biden administration recently moved to tighten these rules, echoing many of the concerns first raised during the Trump years. In September 2024, the White House announced a "Notice of Proposed Rulemaking" to basically ban goods covered by China-specific tariffs from using the de minimis exemption.
If it’s on a tariff list, it shouldn't get the free pass. Period.
The Economic Reality for Small Businesses
If you run a boutique in Ohio, you’re getting crushed.
You buy inventory in bulk. You pay the shipping. You pay the 25% tariff. You pay for the warehouse space. Then, you try to sell a dress for $60 to cover your costs and make a tiny profit. Meanwhile, a shopper can buy a "similar" dress on a direct-to-consumer app for $18 because that company skipped the tariff, skipped the warehouse, and used the de minimis exemption trump and Biden are both looking to gut.
It’s an uneven playing field.
- Retailers: Losing foot traffic to ultra-fast fashion.
- Manufacturers: U.S. textile mills are closing because they can't compete with duty-free imports.
- Logistics: Companies like FedEx and UPS are stuck in the middle, handling the volume but facing increased scrutiny.
Kim Glas, the president of the National Council of Textile Organizations (NCTO), has been screaming about this for years. She’s pointed out that the U.S. textile industry is facing an "existential crisis" because of this specific trade rule. When the de minimis threshold was lower, there was a natural friction that protected domestic businesses. Now, that friction is gone.
The "Fentanyl" Factor
This is where the politics get really heated. Lawmakers like Senator Sherrod Brown and even hardline Republicans have found rare common ground here. They argue that the de minimis loophole is literally killing people. Because these packages aren't subjected to the same "Entry Summary" requirements as larger shipments, they provide the perfect cover for small quantities of synthetic drugs.
You can't inspect a billion envelopes. You just can't.
🔗 Read more: Business Model Canvas Explained: Why Your Strategic Plan is Probably Too Long
What Happens if the Loophole Closes?
Let’s be real. If the government removes the de minimis exemption for these goods, your "cheap" shopping habits are going to change. Fast.
If Shein has to start paying duties on every single item, those prices aren't staying at $5. You’ll likely see a massive price hike. Or, more likely, you’ll see these companies try to set up "Foreign Trade Zones" (FTZs) inside the U.S. to mitigate the costs, but even that is being targeted by new regulations.
There’s also the "reciprocity" argument. Trump often mentioned that other countries have much lower thresholds. In many European countries, the de minimis limit is closer to $20. In China, it’s even lower for incoming goods. The U.S. limit of $800 is an outlier. It’s the most generous in the world, and many argue we’re just being "suckers" for allowing it to stay that high.
The Logistics Nightmare
If the exemption is revoked or heavily restricted, the shipping industry will face a massive bottleneck. Every package will require more data. More "Harmonized Tariff Schedule" (HTS) codes. More paperwork.
If you think shipping is slow now, wait until every $15 phone case requires a formal customs entry.
Misconceptions: What Most People Get Wrong
People think "de minimis" is a new thing. It’s not. It’s been around since 1930. The problem is the scale.
In 1930, people weren't ordering individual pairs of socks from a factory in Shenzhen. They were bringing back souvenirs from a cruise. The law was designed to save the government money—it cost more to process a $5 tax than the $5 was worth. But in the age of algorithms and global logistics, that logic falls apart.
Another misconception? That this is only a "China" problem.
While China is the biggest user of the exemption, it’s a global issue. Goods from all over the world flow through this lane. However, the de minimis exemption trump and the current administration are focusing on is specifically linked to the Section 301 tariffs, which are overwhelmingly aimed at Chinese manufacturing.
💡 You might also like: Why Toys R Us is Actually Making a Massive Comeback Right Now
Navigating the Future of Your Imports
So, what should you actually do if you’re a business or a frequent buyer?
First, don't assume the $800 limit is a "right." It's a privilege that is currently being revoked through executive action and potential legislation like the "De Minimis Reciprocity Act."
If you are a small business owner importing goods, you need to start looking at your supply chain now. Are you relying on the de minimis exemption to keep your margins healthy? If so, your business model is on thin ice.
- Classify your goods early: Get your HTS codes in order. Don't wait for a shipment to get seized at the border to find out your "plastic toy" is actually classified under a high-tariff category.
- Audit your vendors: If your suppliers are shipping direct-to-consumer to your customers, they are the ones using the exemption. If the law changes, your customers might suddenly get hit with a "COD" (Cash on Delivery) bill for customs duties they didn't expect. That’s a great way to kill your brand reputation.
- Watch the "Entry Type 86" changes: This is a specific type of informal entry that allows for electronic filing of de minimis shipments. CBP has already started suspending brokers who have high rates of non-compliance in this category.
The "Trump" Effect on 2025 and 2026
With the current political climate, trade protectionism is one of the few things both parties agree on. Trump has signaled that if he returns to power, he would likely go even further—potentially proposing a universal baseline tariff on all imports.
This would effectively kill the de minimis exemption as we know it.
Even without a change in the presidency, the Biden administration has already laid the groundwork for a massive crackdown. They’ve increased the data requirements for small packages, meaning shippers have to provide the 10-digit HTS code and the identity of the person claiming the exemption.
The era of "anonymous" cheap shipping is ending.
Actionable Steps for the "New" Trade Landscape
The free ride is over. Whether it happens this month or next year, the "loophole" is closing. Here is how to prepare:
- For Consumers: Expect prices on platforms like Temu, Shein, and AliExpress to rise by 20% to 50% over the next 18 months. If you have a major purchase in mind that relies on this exemption, buy it sooner rather than later. Also, be prepared for longer shipping times as CBP ramps up inspections.
- For E-commerce Sellers: If your entire margin depends on avoiding the 25% China tariffs via de minimis, you need to diversify. Look into sourcing from countries like Vietnam, Mexico, or India, which aren't currently targeted by Section 301 tariffs.
- Compliance is King: If you are importing for a business, stop using "informal" entries for anything that could be even slightly controversial. Use a licensed customs broker. It’s more expensive upfront, but it’s cheaper than having your entire inventory incinerated by CBP because it lacked the proper data.
- Stay Informed on "Section 321": This is the legal term for de minimis. Keep an eye on any "Federal Register" notices regarding Section 321. When the government wants to change a trade rule, they have to post it there first.
Honestly, the de minimis exemption trump started targeting is a relic of a pre-internet world. It wasn't built for a world where a billion packages a year cross the border in cardboard boxes. The shift toward stricter enforcement isn't just a political stunt; it's a fundamental restructuring of how we buy things from across the ocean.
Adjust your expectations, and your budget, accordingly.