US to do away with de minimis exemption; Trump announces new tariffs

U.S. President Donald Trump announced sweeping changes to tariff structures across-the-board, redrawing the global trade map.

"Except as otherwise provided in this order, all articles imported into the customs territory of the United States shall be, consistent with law, subject to an additional ad valorem rate of duty of 10 percent," Trump said in his executive order.

"Such rates of duty shall apply with respect to goods entered for consumption or withdrawn from warehouse for consumption on or after 12:01 a.m. eastern daylight time on April 5, 2025, except that goods loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 a.m. eastern daylight time on April 5, 2025, and entered for consumption or withdrawn from warehouse for consumption after 12:01 a.m. eastern daylight time on April 5, 2025, shall not be subject to such additional duty."

Trump also ordered country-specific ad valorem duty ranging from 46 percent on Vietnam, 26 percent on India and 20 percent on European Union.

De minimis to be cancelled
On de minimis (shipments with a value of less than $800), the order states that duty-free imports will be in place until notification by the Secretary of Commerce to the President that adequate systems are in place to "fully and expeditiously process and collect duty revenue applicable pursuant to this subsection for articles otherwise eligible for de minimis treatment."

On last count, around four million parcels were entering the U.S. via the de minimis route, Lars Jensen, container shipping expert writes in his LinkedIn column.

"The de minimis exemption in the U.S. where shipments with a value less than $800 were duty-free is now set to expire on May 2. Instead, such small shipments will face either 30 percent of their value or $25 – increasing to $50 per item from June 1. Each transportation provider can choose whether the percent or USD method applies, but must use the same method for all their shipments. They can change methods once per month."

Imported goods sent through means other than the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption will be subject to all applicable duties, which shall be paid in accordance with applicable entry and payment procedures, according to the update from Cirrus Global Advisors.

"All relevant postal items containing goods that are sent through the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption are subject to a duty rate of either 30 percent of their value or $25 per item (increasing to $50 per item after June 1, 2025). This is in lieu of any other duties, including those imposed by prior Orders."

Supply chain professor Jason Miller says "many of the benefits of China + 1 sourcing were just eliminated by POTUS. I feel bad for Americans who, living paycheck to paycheck, are now going to struggle even more to afford products like clothing and shoes. Back to school season 2025 is going to be brutal for the average U.S. household."

Ryan Petersen, Chief Executive Officer, Flexport said in his LinkedIn post: "While the end of de minimis has been long foreshadowed for goods imported from China, ending it for all countries is a shock that was not widely anticipated buried in the executive order.

"This is a gamechanger, because for many brands, this was their backup plan. Many brands we’ve spoken to had a "China + 1" strategy, but in this case, no one is exempt."