The de minimis exemption—a tariff loophole that for years made millions of direct-to-consumer imports duty free—is gone, and its end marks a structural shift for American shoppers and logistics providers.
“It’s a different shock to the system at a different level than what we’ve seen with the tariffs on large industrial goods,” Rob Haworth, senior investment strategy director at U.S. Bank, told Fortune. “It does start up another near-term challenge for consumers and for businesses and spending overall.”
“Categories like footwear and apparel will see some of the highest impacts, estimated at 15%-25% increased end consumer pricing, given the manufacturing origin often being China,” Sean Henry, CEO of Stord, an e-commerce and fulfillment company, told Fortune.
“Nearly 40% of online shoppers abandon their carts when faced with these extra tariff and duty surcharges at checkout,” Stord CEO Henry said.
Lee Klaskow, a senior analyst of transportation and logistics at Bloomberg Intelligence, told Fortune he expects spending on these largely “discretionary” purchases to decrease.
“That Shein shirt that you really want that’s $5—maybe you’ll think twice about getting it because it’s going to be more expensive,” Klaskow said.
Prior to the pandemic, consumers had a “huge appetite for cheap things,” but Klaskow expects consumer behavior to flip in response to the change.
U.S. Bank’s Haworth said he’s more focused on how the government will implement the change, as it will require new systems, investment, and infrastructure to collect on small purchases.
“Originally why you had a de minimis exemption is so that you weren’t spending a lot of time on small transactions that didn’t net anything,” Haworth said. “So that’s kind of an interesting or challenging cost that is going to come into the business system.”
