What is the 'de minimis exemption' to tariffs and why its end could have a huge impact on your wallet?
What is the 'de minimis exemption' to tariffs and why its end could have a huge impact on your wallet?
Share:
The ‘de minimis’ exemption applies to packages entering the U.S. worth under $800. President Donald Trump will close a loophole that allows online retailers to send small packages to the U.S. without paying a tax as part of his trade tariffs clampdown - a move that could have an impact on the wallet of everyday Americans. Under the “de minimis” exemption, a longstanding rule that applies to packages entering the U.S. worth under $800, retailers overseas are allowed to sell products at lower prices by shipping them straight to consumers, bypassing domestic warehouses.
![[Chinese online retailer Shein has benefited from the loophole known as the ‘de minimis exemption’]](https://static.independent.co.uk/2025/01/08/10/GettyImages-2158469239.jpg)
Trump has characterized the trade tariffs as a “drug war.”. Senders overseas using the loophole have not had to share as much information about the contents of packages with U.S. Customs and Border Protection, Bloomberg reports. Critics argue that because of the lack of discolsure, the exemption has in turn fueled a drug crisis in the U.S. as the packages are not typically inspected rigorously. Eliminating the exception, the report said, could see costs of $11 billion to $13 billion for American consumers. “Doing so would disproportionately hurt low-income and minority households,” the report said.
Lawmakers have been calling for the exemption to be scrapped for years. The Biden administration had its sights on closing the loophole in September and claimed that the number of shipments taking advantage of the exemption over the last decade had soared from 140 million a year to 1 billion a year. The new tariffs on China are set to begin at 12:01 a.m. ET on Tuesday. On Monday, Trump agreed to delay the tariffs imposed on Mexico after reaching an agreement with President Claudia Sheinbaum, who in return has agreed to dispatch 10,000 additional troops to the border between their two countries in order to police illegal drug trafficking. Hours later, he reached a similar deal with Canada.
