The story so far:
Postal and courier services worldwide are bracing for logistics disruptions, as the U.S. eliminates duty-free imports of low-value goods, effective August 29. Set at a maximum purchase threshold of $800 per person per day, shipments of merchandise ranging from textiles to toys, cosmetics, and electronic accessories have until now been covered under the de minimis exemption — Latin for “too small to be trifled with”. These imports will now face tariffs based on the country of origin. The duty exemption was reversed in May for imports from China, which accounts for over 50% of de minimis imports, according to the U.S. Customs and Border Protection agency. This dealt a severe blow to the country’s leading e-commerce platforms, like Temu, and textile retailers such as Shein. The latest move is part of the barrage of measures the Donald Trump administration has embarked upon to narrow the U.S. trade deficit with the biggest economies, prevent intellectual property theft, and block the influx of counterfeit products. Opponents claim that the abolition of the duty exemption would reduce aggregate welfare by between $11-$13 billion and disproportionately hurt the poorer, citing a National Bureau of Economic Research (NBER) study.
What is the de minimis regulation, and how did it work?
The de minimis regulation, rooted in Section 321 of the 1930 Tariff Act, allowed American tourists to send home souvenirs without incurring taxes. In the 1990s, the rationale of the provision was recast as a trade facilitation and liberalisation tool designed to reduce transaction costs for businesses and consumers. When Congress quadrupled the value of exempted goods from $200 to $800 in 2016, the number of items that were eligible for coverage was also expanded.
An important consideration behind the move was to balance administrative costs with potential revenue earnings in the wake of the exponential rise in imports into the country in recent years. Fresh tariffs during President Trump’s first term may have paradoxically contributed to the proliferation of trade via the postal route. About four million deliveries were estimated to be processed daily under the de minimis exemption scheme. The volume of imports had increased from 134 million in 2015 to 1.36 billion in 2024, according to the White House.
How does this fit into previous international agreements?
The removal of the duty-free exemption recalls a 2019 bargain that Mr. Trump extracted from the 192-nation-strong Universal Postal Union (UPU) 2019 in a bid to block other nations from free-riding on the American economy.
The UPU conceded to the U.S. demand to hike postal rates applicable for exporters from developing nations, which Washington maintained were substantially lower than the costs incurred by domestic customers. The administration further reasoned that the anomaly had incentivised the flood of Chinese goods into the U.S., putting domestic importers at a disadvantage.
Are there international parallels?
The European Union has proposed a handling fee of €2 for products directly imported by individuals, and a €0.5 fee received by warehouses. The aim is to crack down on dangerous and illegal goods flooding the single market and distorting competition in the 27-country bloc. Crucially, the reform shifts responsibility for direct purchases made by individuals onto Chinese e-commerce platforms, which must furnish additional data to customs officials for closer scrutiny. In a related move, imports into the EU last year of 4.6 billion low-value parcels — a four-fold increase over 2022, 90% of which were from China — have brought to the fore the termination of the €150 duty-free threshold, offering greater protection to consumers and businesses.
What does this indicate about global trade?
Together, the U.S. and EU actions on low-value imports are a most telling statement that the basic pillars of the post-war world order, exemplified among others by the World Trade Organization, are being systematically undermined by its founding architects.
Evidence that the multilateral framework is near collapse can be gathered from the inability of sovereign and independent nations to formulate a concerted response to Mr. Trump during recent negotiations over bilateral trade agreements with Washington. Most notable of these is the EU’s trade pact with the U.S.
The writer is Director, Strategic Initiatives, AgnoShin Technologies
Published – August 29, 2025 08:30 am IST
