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Today, 2 May, the US Customs and Border Protection (CBP) will implement a significant policy shift, ending the de minimis exemption for low-value imports under $800 from China and Hong Kong. This change means that all packages originating from these regions — regardless of value — will now be subject to formal customs entry procedures and duties. The implications for the fashion industry, particularly fast fashion and e-commerce, are both immediate and far-reaching as the once-invisible cost of compliance becomes very visible.
Shipments that previously glided through customs with minimal documentation and no tariffs will now be subject to delays, inspections and detailed recordkeeping. For time-sensitive inventory cycles, that lag could mean the difference between a successful drop and missed revenue. For companies importing at scale, even modest duties can quickly erode already tight margins.
Consumers are also likely to feel the impact — perhaps most acutely. Those accustomed to seamless, low-cost international shopping may now find themselves asked to pay unexpected customs duties upon delivery. These surprise fees, often poorly communicated, can lead to confusion, frustration, or outright refusal of the package.
The end of the de minimis trade exemption is lauded as a triumph against fast fashion. But which brands will really pay the price?
In the months leading up to the end of the de minimis exemption for China and Hong Kong shipments, the fashion and retail sectors have already felt significant ripple effects from changes in the trade environment, from retaliatory tariffs to a brief de minimis pause. Companies like fast fashion giant Shein have raised prices and adjusted customer messaging in response to new customs duties and processing costs, signalling that the era of ultra-low-cost, rapid cross-border deliveries is coming to a close. This shift reflects a fundamental recalibration of supply chain economics.
What’s more, additional signals indicate how companies reliant on low-cost China supply chains are readying themselves for trade changes. According to daily Google Shopping ad impression share data from Tinuiti, Temu abruptly dropped from approximately 17 per cent share to zero on 12 April, with Shein following on 16 April after hovering near 20 per cent earlier in the month. The sudden disappearance marks a dramatic reversal for two of the most aggressive spenders in paid search, with Shein peaking at a 29 per cent share in the fourth quarter of 2023.
Steep US tariffs are the likely culprit, along with preparations to manage costs in a post-de minimis world. Both companies raised prices around the same time, and their retreat from performance marketing signals a possible recalibration of customer acquisition strategies in the face of rising costs. Tinuiti also noted a sharp decline in their visibility within Facebook’s ad library, suggesting a broader pause on paid media across platforms.
Brands are grappling with how to raise prices without alienating customers. Earlier this week, Amazon scrapped reported plans to display US tariff costs on product listings after a direct call from President Donald Trump to company founder Jeff Bezos, underscoring the mounting political pressure facing retailers navigating trade transparency after the administration called the move a “hostile and political act”. The move indicates how charged the conversation around tariffs has become — and how even the biggest players may be forced to retreat.
In light of a US-China trade war, fashion executives are facing an immediate reality: price increases. How should they communicate it to consumers?
Meanwhile, Port of Los Angeles — a critical gateway for imports from China — is bracing for a sharp decline in cargo volumes. Executive director Gene Seroka estimates that Trump’s trade war policies will drive a 35 per cent year-on-year drop in shipments next week, with virtually all shipments out of China for major retailers and manufacturers ceasing. In Seattle, part of America’s third-busiest cargo handling hub, reports indicate that sailings are up year-on-year while container volume is down, reflecting the impact of trade changes on the global flow of goods. This dramatic slowdowns adds another layer of complexity to an already strained logistics network.
In a similar vein, this week, DHL Express announced the resumption of global business-to-consumer shipments valued over $800 to the United States. This follows a temporary suspension that was implemented on 21 April due to new customs regulations, which lowered the threshold for formal entry processing from $2,500 to $800. The suspension was a direct response to increased customs clearance requirements under the Trump administration s revised tariff framework. While business-to-business shipments and packages under $800 remained unaffected, DHL did caution that some consumer packages might still face transit delays.
However, unlike February’s fleetingly chaotic de minimis pause, this time federal agencies have had more time to prepare. CBP, along with other relevant offices, has been granted reprieves on timelines, allowing them to refine internal systems and coordination protocols to better handle the influx of data, documentation, and physical inspections that will come with this policy shift. The ultimate goal is to enforce the new directive without crippling small-parcel flows or overwhelming port infrastructure. Here’s what brands and retailers need to know about a world without the de minimis exemption.
A new era of customs compliance
For years, the de minimis rule enabled shipments valued at less than $800 to bypass formal customs procedures and enter the US duty-free. This allowed a flood of low-cost imports, supporting the rapid growth of platforms like Temu and Shein, which relied heavily on direct-to-consumer cross-border logistics. According to CBP data, more than four million of these low-value parcels arrive daily in the US, amounting to roughly 1.36 billion packages in fiscal year 2024.
Now, every shipment from China and Hong Kong will require formal customs clearance. This includes submission of detailed entry documentation by a licensed customs broker, classification of each item under the Harmonized Tariff Schedule, and the collection of duties based on the item’s tariff code. Even postal items delivered by USPS will no longer be exempt. These will incur either a 120 per cent ad valorem duty — meaning the duty is calculated as a percentage of the total value of the package — or a flat fee of $100 per package, which will rise to $200 in June. For brands and retailers that depend on low-margin, high-volume shipments, this represents not just a logistical hurdle but a fundamental challenge to their business model.
When the US paused de minimis clearance for packages from China in February — the fallout was immediate. Logistics networks were thrown into disarray, warehouses backed up, and consumers were met with unexpected delivery delays. That brief halt was reversed within days as the chaos underscored how reliant the system had become on low-friction trade.
While the CBP maintains that the policy is aimed at bolstering trade compliance and stemming the tide of counterfeit and illicit goods, the ripple effects across the global supply chain are already being felt. The surge in formal customs entries is set to overwhelm an already stretched CBP, with Oxford Economics estimating that it would take 22,000 new officers to keep up — a hiring goal that doesn’t seem realistic. Without major investments in staffing and technology, backlogs like those seen at JFK earlier this year are almost certain to become the norm, says Christopher S. Tang, a professor at UCLA Anderson School of Management.
Carriers and brokers feel the pinch
Shipping carriers such as FedEx and UPS will be forced to overhaul their processes, if they haven’t already. To comply with the new rules, they’ll need to calculate duties, communicate these charges to end customers, collect payments through secure platforms, and remit the funds to CBP. Each of these touchpoints introduces new cost burdens, which are likely to be passed on to the consumer in the form of higher shipping fees or product markups.
There is also uncertainty over the role of importer of record. To limit their own liability, carriers may begin requiring either the customer or the seller to assume this responsibility, which involves appointing a customs broker and accepting legal responsibility for compliance. This shift could deter casual cross-border purchases and add complexity for first-time international shoppers.
Customs brokers, meanwhile, are grappling with a dramatic uptick in demand. These are licensed experts who navigate cross-border trade, ensuring goods move smoothly through customs by managing compliance, paperwork, and duties — minimising delays and costly errors. Many are ill-equipped to scale operations at the pace the new rules require. Emil Stefanutti, CEO of compliance tech company Gaia Dynamics, warns that brokers relying on manual workflows or legacy systems will be quickly overwhelmed. “Warehouses, especially those tied to e-commerce fulfilment, are optimised for speed but not for regulatory complexity,” he says. IT systems were rarely designed to process, verify, and transmit customs data at the granular parcel level, especially for the millions of shipments that flow through daily.
Still, some see opportunity in the disruption. Amy Magnus, director at customs brokerage A.N. Deringer, Inc., says that many brokers already offer a range of services and will adapt. She anticipates a shift in shipping strategy rather than a collapse — fewer low-value parcels from China, more consolidated shipments treated as full loads and cleared through existing formal processes, which could slow down the speed at which shoppers receive online orders.
A fast fashion wake-up call
For fashion brands — and especially for fast fashion — the end of de minimis may serve as a long-overdue reckoning. While the policy change strengthens the US stance against counterfeits, it also challenges the very business models that have thrived on speed and price.
Some exporters may attempt to bypass the restrictions through transshipping — an illegal practice more commonly associated with ocean freight, where goods are routed through third countries to obscure their true origin and avoid tariffs. In the context of small parcels, this might involve shipping products from China to a transit country such as Malaysia or Vietnam, clearing them under that country s de minimis threshold, and then forwarding them to the US, explains Tang.
“Addressing such circumvention without broader international coordination will be challenging for CBP,” Tang says. Enhanced data analytics could help identify suspicious patterns, such as a sudden uptick in low-value shipments from countries with previously minimal parcel volume. Moreover, heightened scrutiny of shipments routed through known transit hubs — especially those benefiting from their own de minimis exemptions — will likely become standard practice. For fashion brands, this means increased diligence is required not only in direct sourcing but also in understanding and auditing the full supply chain, including transit points that could be exploited for tariff circumvention.
Tang also points to risk-based targeting as a key strategy — focusing enforcement on shippers and supply chains identified as high-risk for evasion — along with strengthened documentation requirements, even for low-value goods. Cross-agency collaboration with bodies like ICE (Immigration and Customs Enforcement) could further bolster investigations into potential fraud.
For brands, this means more than just watching shipping timelines — it means investing in traceability, auditing logistics partners and being prepared to answer questions not only about where goods are going, but where they’ve truly come from.
The requirement to classify each item under the Harmonized Tariff Schedule — and to prove it isn’t made using forced labour, as required by the Uyghur Forced Labor Prevention Act — adds another layer of scrutiny. Brands will need to track materials and labour across the full value chain, and those lacking traceability systems may find themselves vulnerable to delays, seizures, or reputational damage.
Technology becomes the differentiator
Experts say that the coming months will separate digital-first importers from those still running on spreadsheets and manual workflows. Amy Morgan, vice president of trade at supply chain software firm Altana, believes the industry is underestimating the operational fallout. “Many brokers rely on legacy technology and manual classification methods that simply aren’t scalable,” she says, adding that small and mid-sized firms were never equipped to handle this level of operational intensity.
To survive, retailers and brokers alike will need to invest in automation and advanced analytics — tools that can scan invoices, assign tariff codes, and detect potential compliance issues before they happen. AI-based classification and smart customs declaration platforms will no longer be a nice-to-have; they’ll be a prerequisite for competing in the new trade environment.
Retailers like Temu and Shein are already reworking their pricing structures to reflect the new duties, adding surcharges at checkout and adjusting product pricing. Morgan describes this moment as a critical juncture in the evolution of cross-border commerce. “Companies must find ways to transparently communicate with customers, maintain trust, and retain customers who now realise that de minimis exemptions shaped their shopping habits,” she says.
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