The United States has officially ended the “de minimis” tariff exemption for e-commerce parcels under $800 originating from China and Hong Kong, leading to widespread disruption across online retail channels. Retailers now face tariffs of up to 145%, following a trade policy shift introduced by the U.S. administration. As a result, several companies have temporarily halted U.S. shipping, while others scramble to mitigate the cost burden through price hikes or supply chain shifts.
British beauty retailer Space NK has paused all online orders to the U.S., citing concerns over unexpected costs that could be passed on to customers. Similarly, Understance, a Canadian lingerie brand, announced that it would cease shipping to the U.S. for the time being, calling the steep tariff increase “untenable” for both businesses and consumers.
These developments mark a major shift for small to medium-sized enterprises, many of which rely heavily on Chinese manufacturing. According to trade experts, a growing number of these companies are withdrawing from the U.S. market due to the dramatic rise in import costs and the added burden of compliance with more stringent customs documentation requirements.
Retailers that continue selling to U.S. consumers are adjusting their strategies. British fashion brand Oh Polly has already increased prices in the U.S. by 20% and may consider further increases. Singapore-based fast-fashion giant Shein acknowledged some pricing changes in a recent social media post, though it emphasized that most items remain affordable. Meanwhile, Temu is promoting goods from local U.S. warehouses to avoid the new tariffs and maintain competitive pricing.
Despite these adaptations, the end of the de minimis policy may still lead to inventory shortages, especially as pre-imported items are sold out. Both Shein and Temu have reportedly scaled back their U.S. digital advertising in anticipation of sales declines.
Originally introduced to encourage international commerce, the de minimis policy came under scrutiny for its role in facilitating the import of counterfeit goods and chemicals used in illicit drugs. In 2024, such shipments represented the overwhelming majority of IP-related seizures by U.S. customs.
As smaller e-commerce sellers exit the market, the policy shift could give an edge to retailers that rely less on Chinese manufacturing or operate brick-and-mortar stores, such as British fashion brand Primark, which anticipates potential gains from the disruption in cross-border online retail.
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