White House Executive Order U.S. closes de minimis loophole

Following an executive order issued in May, which ended the de minimis exemption—allowing shipments under $800 sent from China and Hong Kong to the U.S. to not be subject to tariffs, the White House this week issued a new executive order suspended the de minimis exemption for various imported goods.

The White House said that this action is being taken to closed what it called a catastrophic loophole used to evade tariffs and funnel deadly synthetic opioids and other unsafe or below-market products that harm American workers and businesses into the U.S. And it added that effective August 29, “imported goods sent through means other than the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption will be subject to all applicable duties.”

What’s more, it explained that between 2015-2024, the volume of de minimis shipments into the U.S. rose from 134 million shipments to more than 1.36 billion shipments, with U.S. Customs and Border Protection processing more than 4 million de minimis shipments into the U.S. on a daily basis. And it added that volume from de minimis shipments that are also from countries that historically have not abused the de minimis exemption has seen significant increases, at 309 million in fiscal year 2025, through June 30, whereas they came in at 115 million in fiscal year 2024—which the White House said resulted in significant lost revenue for the U.S.

This executive order followed a May 2 action by the White House in which it suspended the de minimis treatment for low-value packages from China and Hong Kong that it said represent most de minimis shipments entering the U.S., which was expected—and subsequently has—had a major impact on online retailers like Shein and Temu, which rely on sending goods directly to U.S. shoppers without paying tariffs. 

In an April 8 executive order, the White House stated that the initially-announced tariff of 30% of an item’s value or $25 per item, whichever is more, will now be increased to 90% and $75 or more, effective on or after 12:01 A.M. ET on May 2. And it added that fee per postal item containing goods will be increased from an initially-announced $50 to $150, effective, set to take effect on or after 12:01 A.M. ET on June 1.

Under the Biden administration, the White House in 2024 said it was taking steps towards changing the rules around imports claiming the $800 de minimis exemption.

Noting that the majority of shipments claiming the import exemption originate from several China-founded e-commerce platforms (like Shein and Temu, among others) the White House proposed changes in which the de minimis exemption might not be allowed for products to which Section 201, 301, and 232 duties might otherwise apply.

Chris Rogers, Head of Supply Chain Research for S&P Global Market Intelligence, explained that the de minimis exemption applies to more than 800 million packages per year that would have to be inspected by Customs prior to entering the U.S.

“Bear in mind that the U.S. sees 25 million [import] containers per year, with a removal of the de minimis exemption suddenly increasing that by around a factor of 40,” he said. “I understand why it has been delayed and is probably the right move. Whether it comes back or not, who knows. We are already seeing companies react to it. A Chinese media outlet said that Shein is asking some of its Chinese suppliers to switch to Vietnam for U.S. sites, which could lead to increased tariff activity there.”

Adam Napoli, Director, Fulfillment Optimization, for San Diego-based parcel consultancy Shipware, told LM that shippers and brands are being forced to reassess their entire supply chain strategy due to tariff fluctuations and the end of the de minimis exemption in the U.S., adding that the potential to incur higher costs on smaller shipments requires businesses to explore alternative fulfillment strategies, such as using U.S.-based warehouses or shifting to countries with more favorable trade policies.

“The most successful brands will be those that can adjust quickly and efficiently to these new import rules…considering alternative routes, revisiting contracts, and adapting to market changes will be key to staying competitive,” said Napoli.

And Shipware Founder Rob Martinez said that supporters of this decision argue that it safeguards U.S. industries, prevents exploitation by foreign e-commerce giants, boosts revenue, and enhances regulatory compliance.

“On the other hand, opponents contend that the order may lead to increased prices for American consumers, strain customs and retail logistics systems causing shipping delays, pose risks of trade retaliation impacting U.S. exports, and negatively affect small businesses engaged in direct import or drop-shipping operations,” he explained. 

When President Trump signed the federal budget reconciliation legislation, also known as the One Big Beautiful Bill into law on July 4, it permanently repeals the statutory basis for the de minimis exemption, effective July 1, 2027. But with this week’s Executive Order, the White House said, it is acting more quickly to suspend the de minimis exemption than the OBBA requires, to deal with national emergencies and save American lives and businesses.”