Tariff exemption’s end for small orders means higher costs, postal disruptions

The end of an exemption from U.S. tariffs for small imported packages has prompted postal disruptions and additional costs for people shopping online for items from around the world.

For years, a loophole known as the “de minimis” exemption has spared imports into the United States below the value of $800 from import duties.

In what amounts to a sea change for those that ship or receive international goods into the U.S., the Trump administration is ending that exemption. The new policy already started for imports from China and Hong Kong in May. As of Friday, packages from the rest of the world are subject to the additional costs, too.

There are exceptions for documents and gifts valued up to $100.

But the introduction of tariffs for many small-value shipments from other countries is adding more costs, logistical challenges and postal disruptions. De minimis shipments make up 92% of all cargo entering the U.S., according to U.S. Customs and Border Protection.

The Trump administration said the de minimis loophole was being used to funnel fentanyl into the U.S. and cheap products that harm American businesses.

UPS, the Sandy Springs-based delivery and supply chain giant, has responded by adding fees to cover just the labor needed to facilitate the processing of all these new tariffs. Standard Canadian imports worth $0 to $200 will face a new $10 “entry preparation charge”; those worth $200.01 to $800 will face a $20 fee.

Effective Sept. 8, all international imports will face a processing fee of $2.50.

The change is an immense undertaking for shippers and will likely have a wide-ranging impact on global retail. In a statement, however, a UPS spokesperson highlighted that the company is “well-positioned to help our customers navigate shifts in global trade.”

The end of the de minimis exemption particularly affects small e-commerce retailers that sell through Amazon, Etsy, eBay, Shopify and similar platforms, according to Ben Johnston, chief operating officer of Kapitus, a small-business lender and marketplace.

Those retailers that operate from overseas previously used the de minimis exemption to sell clothing, electronics, beauty products, home goods, toys and other consumer goods in the U.S., according to Johnston.

Earlier this year, UPS launched an artificial intelligence-powered service that guarantees customers’ international shipping duties up front.

UPS said it is already “one of the world’s largest customs brokers, and our brokerage services are designed to ensure shipments comply with regulations, pay necessary duties and taxes, and avoid delays.”

UPS competitor FedEx in a statement Friday said it “continues to accept and transport U.S.-bound shipments from all countries we serve.”

“Our priority is supporting our customers and helping them navigate through the regulatory changes that went into effect for U.S.-bound shipments on Aug. 29,” FedEx said.

Meanwhile, postal service operators in more than 30 countries, including ones across Europe as well as Mexico, South Korea and Japan, have limited or suspended shipping of most U.S.-bound parcels valued at $800 or less, The Associated Press reported.

NBC reported that U.S. shoppers ordering small goods from abroad were seeing orders canceled ahead of the Friday rule change. Shipping an item internationally via private carriers can cost significantly more than shipping through a post office, NBC reported.