U.S. Ends Duty-Free Exemption on Small Parcels from China, Prompting Retailers to Exit Market

United States officially terminated the "de minimis" tariff exemption for small parcels originating from China and Hong Kong. This exemption had previously allowed e-commerce packages valued under $800 to enter the U.S. without incurring duties. The policy change subjects these goods to tariffs of up to 145%, leading several international retailers to reconsider their presence in the U.S. market.

US President Donald Trump

British beauty retailer Space NK announced a pause in U.S. e-commerce orders to prevent unexpected costs for customers. Similarly, Vancouver-based lingerie brand Understance has ceased U.S. shipments, citing the prohibitive nature of the new tariffs. Cindy Allen, CEO of Trade Force Multiplier, noted that many small to medium-sized businesses are choosing to exit the U.S. market entirely due to the sudden and substantial tariff increases.

For companies continuing operations in the U.S., price adjustments are underway. Fashion retailer Oh Polly has increased U.S. prices by 20% to offset the added costs. Major Chinese e-commerce platforms like Shein and Temu are adapting by promoting U.S.-stocked items and emphasizing stable pricing, though both have reduced their U.S. digital advertising efforts.

The policy change also imposes additional administrative burdens, requiring detailed product origin data and compliance with new customs procedures. Critics argue that the removal of the de minimis exemption could raise consumer costs and particularly impact small and medium-sized businesses that rely on inexpensive imports. While the move aims to bolster domestic manufacturing, it introduces significant challenges for international retailers and consumers alike.