US to end de minimis, air cargo set for 'seismic shock'

U.S. President Donald Trump has sounded the bugle on the end of de minimis (imports of less than $800) exclusively from China and Hong Kong w.e.f May 2, 2025.

Such small shipments will face either 30 percent of their value as ad valorem duty or $25 – increasing to $50 per item from June 1, Trump said in his executive order.

The Trump order on regulating imports with a reciprocal tariff 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."

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, says Ryan Petersen, CEO, Flexport.

"This is a game changer, 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. Our understanding is that the system's readiness is what’s kept the government from shutting down de minimis imports from China already. This requires the Automated Commercial Electronic (ACE) system and the Harmonized Tariff Schedule (HTS) to be updated for every country to ensure entries can no longer be cleared using de minimis. This is no small feat. The government has been hard at work on those systems, and so presumably that work will now carry over to accelerate the timeline for turning off de minimis shipping from all countries."

Goods shipped duty-free under the de minimis programme are now nearly 50 percent of all air freight from China, and have kept the price of air freight quite high for the better part of the last few years, Petersen added. "As those volumes likely drop significantly with this change, we would expect the price of air freight on Transpacific lanes to plummet.”

Supply chain professor Jason Miller says "many of the benefits of China + 1 sourcing were just eliminated by the President of the United States. 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."

$5 trillion and counting
The global e-commerce market is likely to touch $5 trillion in 2025, a likely increase of 10 percent from the estimated $4.6 trillion in 2024. China ($1.9 trillion) and U.S. ($1 trillion) accounted for almost 70 percent of the global e-commerce revenue in 2024, according to the latest update from eCommerceDB, a global data provider of e-commerce transactions.

No wonder, every marketer/shipper/seller worth their salt is worried about the changes in international trade that could hurt demand or increase cost of doing business - both of which are bad for customers and business owners.

It is in this background that President Trump has 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.

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

Looking ahead to 2025
E-commerce drove strong air cargo demand in 2024, and the momentum is expected to continue in 2025, according to André Majeres, Head of e-commerce, cargo and mail operations, International Air Transport Association (IATA). "Consumer preferences for fast delivery and cross-border shopping remain key growth drivers. However, challenges like capacity constraints and economic fluctuations could impact the pace of growth. Innovations in logistics and supply chain efficiency will be critical to sustaining this trend. Overall, we anticipate steady demand, but market dynamics will shape the exact trajectory."

Heike Wörner, Head of Business Development, Lufthansa Cargo adds: "The growth of air cargo driven by e-commerce in 2024 was indeed remarkable. However, I believe it will continue in 2025 but not at the exceptional pace we saw in 2024. The overall growth of etailers is slowing down in the U.S. and E.U. as these markets gradually mature, which will likely lead to a more stable and steadier trajectory. Additionally, we are observing increasing uncertainty which is leading to decreasing consumer confidence, particularly in the U.S. and E.U.”

A view backed by Kathy Liu, Vice President, Global Sales & Marketing, Dimerco who says: "In general, the e-commerce demand is not that strong compared to 2024, especially due to the uncertainty from the new Trump administration. Plus, with the China +1 strategy, manufacturers were moving out of China into South East Asia for production. The only area that may have a chance to increase is between Asia and Europe as the Red Sea crisis recently got tighter, and there might be ocean freight switching to air freight due to transit time concerns.

"With the Trump administration on the verge of shutting down de minimis exemptions, the main impact will be on e-commerce and small parcels. For general cargo, there shouldn't be any impact. Therefore, we might see the decline in air freight needs for e-commerce but shift to ocean freight with B2B2C mode for those frequently ordered products."

New air cargo market data for March clearly indicated shippers and forwarders were hedging their bets and buying time before making longer-term commitments to air cargo capacity as they waited to see how the impact of newly-imposed tariffs and international trade tensions unfolded. March showed no drastic signs of panic as demand rose +five percent year-on-year against a strong comparison 12 months ago, according to the latest update from Xeneta.

Global air cargo spot rates in March continued their levelling out trend seen over the past year, increasing at their lowest pace since June 2024 at +six percent year-on-year.

"In my 30 years working in the air freight industry, I cannot remember any other unilateral trade policy decision with the potential to have such a profound impact on the market at a global level," says Niall van de Wouw, Chief Airfreight Officer, Xeneta. "E-commerce has been the main driver behind air cargo demand. If you suddenly and dramatically remove the oxygen from that demand, it will cause a seismic shock to the market."

E-commerce has been a major engine for air cargo demand, with 2024 seeing record-breaking volumes surpassing even the peak levels of 2021, according to Chad Schofield, Co-Founder and Chief Digital Officer, Box C, an e-commerce logistics management platform.

"This surge was fuelled by online shopping by westerners buying from Chinese and Asian sellers. The shift in consumer behaviour toward online shopping in this way shows no signs of reversing, and emerging markets in Latin America and Africa are expected to further boost e-commerce volumes as their digital economies mature.

"Although 2025 might not replicate 2024’s bumper growth exactly, forecasts suggest a slowdown but a still healthy increase in cargo volumes. This moderation reflects a return to more historical growth patterns after the spikes driven by ocean shipping disruptions and e-commerce growth. Capacity constraints due to limited freighter availability will likely persist into 2025, supporting air freight rates even if demand growth softens slightly.

"Conversely, potential regulatory changes, like adjustments to the U.S. de minimis exemption allowing duty-free imports under $800, could push some e-commerce shippers toward ocean freight or regional warehousing."

Eric Pong, Director, Logistics Partnerships, AfterShip offers a different view: "If you look at the U.S., which is the biggest market, the signals are that the CBP needs to make provisions to be able to get the data and collect taxes and duties on all shipments coming in. Since the duties and tariffs are still not meaningfully large enough to change the landscape of sourcing, I suspect that this will have only a minimal impact on air cargo providers who are simply providing the linehaul.

"It’s roughly the same for Europe. Europe already has had the Import One Stop Shop (iOSS) in place for a while, and that did not severely deter e-commerce shipments. I don’t believe that introducing the end of a de minimis will really change volumes too dramatically."

B2C to B2B2C?
The shift from business-to-consumer (B2C) to business-to-business-to-consumer (B2B2C) is definitely growing, and will accelerate with the looming de minimis clampdown, according to Schofield of Box C.

"It’s a hedge against rising costs and regulatory issues. With de minimis exemptions possibly disappearing, the model of shipping millions of small, sub-$800 parcels by air direct to U.S. consumers could be over. Customs clearance bottlenecks will increase the price of that model and shippers are adapting: instead of shipping straight to doorsteps, they’re sending bulk consignments (B2B) to domestic intermediaries like U.S. warehouses or 3PLs who then handle the last-mile B2C leg.

"Air cargo’s 2024 e-commerce surge depended heavily on B2C speed, but ocean freight bookings spiked at the end of 2024, possibly indicating a shift to bulkier, slower B2B moves. Shein has opened U.S. distribution centres and Temu is pursuing American sellers to stock locally, cutting reliance on cross-border B2C shipping.

"B2B2C could dominate e-commerce logistics by late 2025 if de minimis dies for good. Air cargo might lose some B2C volume, while ocean freight and domestic trucking pick up the B2C volume."

Regulatory changes, including customs delays and evolving trade policies, can create bottlenecks for cross-border shipments.
-André Majeres, IATA

Majeres of IATA adds that there has been a shift from B2C to B2B2C as businesses seek more efficient ways to reach consumers. "This model allows brands to leverage logistics partners and platforms for streamlined fulfillment and distribution centers for faster delivery. E-commerce growth, evolving consumer expectations and supply chain optimisation are driving this transition. It also helps businesses scale globally while maintaining control over the customer experience. We expect this trend to continue, especially in sectors like retail, electronics, and healthcare."

The move - B2C to B2B2C - is also more focused on e-commerce, says Liu of Dimerco. "We have seen the demand increasing on distribution centers in the U.S., especially Los Angeles Airport (LAX), Chicago O'Hare International Airport (ORD) and John F. Kennedy International Airport (JFK) - those key hubs. And e-commerce products will move via ocean freight under general cargo mode and put into distribution centers in the U.S.

"Air cargo growth will return to traditional industries instead of e-commerce. And the high demand on air freight will shift from China & Hong Kong into South East Asia countries and India, especially for U.S. destinations."

Pong of AfterShip thinks the classification of B2C vs B2B2C is a misnomer. "Everything at the end of the day is B2C. Middleman, wholesalers, distributors, retailers, service providers are all another B. But you wouldn’t call it B2B2B2B2C.

"The challenge for cross border will be that there are different currencies, clearances and duties, marketing, and localisation. The service providers already do a great job. It’s actually the retailers that are holding back the service providers."

E-commerce challenges
E-commerce will not be replaced in the short-term as the consumer behaviour and the market are already there, according to Liu of Dimerco. "However, if big e-commerce players are still fighting the price war for more deliveries, the logistics cost will be a key factor to look into for cost saving. And now airlines are paying more attention to product content. More security measurements will be applied to e-commerce goods for safety concerns."

The Trump administration’s push to shut down de minimis exemptions would force airlines and shippers to adapt quickly to a new reality, says Schofield of Box C. "Airlines, especially those heavily reliant on e-commerce cargo from China will face a demand shock. The 2024 air cargo boom saw daily de minimis shipments exceed four million, per U.S. customs data. Losing the exemption means these low-value, high-volume packages will now incur tariffs and require formal customs processing, spiking costs and transit times. Air freight’s appeal takes a hit when customs delays and bottlenecks are caused by informal and formal clearances from hours to days.

"Shippers are already scrambling. E-commerce sellers will likely accelerate a shift they’ve started: moving production or staging inventory outside China to dodge tariffs. Shein’s U.S. warehousing push and Temu’s onboarding of U.S.-based sellers show this is underway. For smaller shippers, consolidating multiple sub-$800 shipments into larger, tariffed loads might make sense, though it’ll strain their margins.

"Operationally, airlines might cut freighter schedules or redeploy capacity to non-China routes while belly cargo on passenger flights could see air freight rates soften if e-commerce demand dips. Shippers will lean harder into software for tariff calculations and customs compliance. CBP’s proposed 10-digit tariff code requirement for de minimis is an example of the growing complexity of customs changes."

One of the key challenges for the growth of e-commerce in air cargo operations is the mismatch between the current global freighter supply and the demand driven by market momentum, which is exacerbated by delivery delays and supply chain disruptions.
Heike Wörner, Lufthansa Cargo

E-commerce’s growth in air cargo operations faces a handful of key challenges, adds Schofield. "First, there's sustainability. Air freight’s carbon footprint is under growing scrutiny. E-commerce’s boom has fuelled jet fuel demand but regulators and consumers are pushing back. This could cap growth if costs spike or PR backlash hits.

"Second, customs and compliance are a bottleneck. De minimis aside, the sheer volume of e-commerce shipments, four million daily into the U.S. alone in 2024, strains customs agencies. New rules, like the US CBP’s push for detailed manifest data or China’s stricter export controls, slow clearance times. For air cargo where speed’s the selling point, this kills momentum.

"Third, competition from alternative modes is heating up. Ocean freight’s getting faster and smarter. Rail’s also growing with China-Europe routes. E-commerce sellers looking for cost savings might divert low value goods, leaving air for high value goods. Air cargo’s growth could stall if it loses that middle tier of e-commerce volume."

Capacity constraints and fluctuating freight rates remain key concerns, especially during peak seasons, says Majeres of IATA. "Regulatory changes, including customs delays and evolving trade policies, can create bottlenecks for cross-border shipments. Sustainability pressures are also growing, pushing the industry toward greener solutions while balancing cost and efficiency. Lastly, security risks, including fraud and cargo theft, require ongoing investment in technology and compliance measures. Addressing these challenges will be crucial for sustained growth."

van de Wouw says market anxiety and uncertainty is not good for anyone: producers, consumers, airlines or forwarders. "It’s a crazy environment, left and right. No one is benefitting from this situation because it’s impossible to plan effectively against a moving target. Clearly, everyone will be waiting to see how the removal of the de minimis threshold and all the global tariffs already announced and those still to come will impact trade, as well as how quickly there will be less demand and, consequently, less airfreight. It’s all expectations right now, but we must expect the situation will get worse before it gets better.”

Several challenges are likely to emerge due to the changing political scenario and regulations, says Wörner of Lufthansa Cargo. "Overall, we anticipate continued growth but with new complexities related to adjusting to international trade regulations and geopolitical uncertainties. Potential challenges include stricter customs rules, cross-border taxation schemes or tariffs. To proactively manage these complexities, we engage with authorities and industry groups to ensure compliance.

"Additionally, sustainability and compliance regulations will pose challenges but also present opportunities for us to lead the way with sustainable options for our customers. Despite these challenges, the digital retail trend is irreversible, and we remain committed to investing in new, innovative digital solutions to stay agile and responsive to market demands.

“One of the key challenges for the growth of e-commerce in air cargo operations is the mismatch between the current global freighter supply and the demand driven by market momentum, which is exacerbated by delivery delays and supply chain disruptions. However, the industry should also focus on the long-term challenge of building efficient e-commerce supply chains that can meet the global demand of digital retail. Additionally, it is crucial to address how to achieve this growth in a more sustainable manner to meet the industry's sustainability targets.”