What Was De Minimis, Anyway—and Why Was It Important?

Last week, U.S. President Donald Trump signed an executive order that effectively shuts down the de minimis exemption loophole on imports into the United States. Beginning August 29, 2025, this once-obscure provision—long relied upon by importers for low-value shipments—will no longer apply.

And one thing is certain: U.S. Customs brokers are about to face a flood. With over 1 billion new parcels now requiring full Customs processing, delays and bottlenecks are almost inevitable.

What Is De Minimis?

The de minimis exemption, outlined under Section 321 of the Tariff Act of 1930, allowed one duty-free shipment per recipient per day into the U.S., provided the value was $800 or less. Even if a product had a duty under the correct Harmonized Tariff Schedule (HTS) code, that one shipment could previously enter tariff-free—as long as it didn’t exceed the dollar threshold.

This rule became a game-changer for e-commerce and global trade. It allowed importers—especially savvy ones—to bypass tariffs by structuring shipments to fall below the threshold, all without triggering a traditional import entry.

A Bigger Move Than It Seems

The revocation of de minimis isn’t just a technical change; it marks a significant shift in U.S. trade strategy. Gone are the days of narrow, industry-targeted tariffs. In their place: sweeping, structural changes to import policy.

This is very much in line with Trump’s “America First” approach. His trade advisors have long been hawkish on non-tariff barriers and circumvention tactics. Though previously limited to imports from China, this latest move revokes the exemption across the board—cutting off a widely used workaround for mitigating tariffs.

In other words: the gloves are off.

Why It Mattered So Much

Under typical import procedures, duties are based on the declared value multiplied by the tariff rate assigned to the HTS code. However, under Section 321, importers only needed to file a simplified declaration—no duties, no fuss.

And the numbers don’t lie:

• In 2015, there were ~139 million Section 321 shipments.

• By 2023, that number exploded to over 1 billion.(Source: Congress.gov)

Compare that with:

• 36.6 million import entries processed by CBP in 2023(Source: CBP.gov)

• $3.9 trillion in total U.S. imports in 2023(Source: BEA)

• $54.5 billion in total imports under the de minimis exemption(Source: U.S. International Trade Commission)

Clearly, this "loophole" had become a central artery in global trade flows.

COVID-19 and E-Commerce: A Shift in Priorities

Over the past two decades—especially post-COVID—CBP has transitioned from a post-9/11 cargo security focus to consumer protection, fraud prevention, and now, addressing economic harm. Much of this harm stems from foreign entities using U.S. trade rules to undercut domestic businesses.

The primary culprit? China. By far the largest beneficiary of the de minimis rule, Chinese sellers have used it to sell directly to U.S. consumers with minimal oversight, often undercutting U.S. businesses on price.

Transfer Pricing and Exploitation

One of the major loopholes exploited under de minimis involved related-party transactions. When the buyer and seller are related entities, they can use transfer pricing to declare artificially low values, reducing the import burden. Unrelated parties, by contrast, must declare actual transaction prices, making them less competitive and limiting how often they can use the exemption.

As a result, large corporations and international sellers could game the system—leaving U.S. small businesses at a disadvantage.

Even worse, manipulated invoices were often used to reduce declared values just enough to slip under the $800 limit, especially for e-commerce.

The U.S. is one of the few countries that allows foreign companies to import without a physical presence, compounding the issue. Add in no Value Added Tax (VAT) and already-low tariffs, and it's clear how importers—especially e-commerce firms—have been skirting traditional costs.

Why This Matters Now

Trump’s approach is disruptive by design. Previous administrations pursued targeted tariffs that allowed businesses time to adapt. But Trump’s broad-based, fast-acting measures defy predictability—and may be more effective as a result.

This isn’t a World Trade Organization or GATT issue—those are focused on tariff rules. Instead, this is a domestic policy decision to revoke an exemption that’s arguably done more harm than good.

Interestingly, the White House is leveraging the International Emergency Economic Powers Act—not Sections 232 or 301—to take this action. That legal nuance gives even more authority to the administration to treat this as a matter of national and economic security.

What's Next?

Expect circumvention investigations to rise. Customs will now have greater authority—and reason—to scrutinize importers, suppliers, and trade patterns. Compliance professionals will be vital, especially for traders who’ve been relying heavily on supplier-driven logistics or related-party structures.

Final Takeaway

While many headlines frame this as a blow to small business, the opposite may be true. U.S. small firms—previously disadvantaged by inflated prices and limited access to exemptions—could now compete on a more level playing field.

For years, related parties gamed the system. Now, with the exemption gone, honest, transparent trade has a shot at resurgence.

Stay tuned.