In a surprise move, on 30 July, the Trump administration announced that it would end the de minimis tariff exemption on imports from all countries, beginning on 29 August 2025. Since 2016, the exemption has allowed for duty-free imports into the US on all shipments valued at USD800 or less. These small shipments that once bypassed US customs will now undergo inspection and face their country of origin’s tariff rates, which may fall between 10% and 50%.
While the Trump administration had already closed the exemption for shipments originating from China and Hong Kong on 2 May, it had not been scheduled to expire for any other countries until July 2027. The unexpected early end of the exemption for imports from all countries complicates the outlook for many types of businesses – especially e-commerce marketplace operators that source the lion’s share of the products they sell in the US from third party merchants based overseas.
The de minimis exemption has powered the e-commerce boom
Over the last decade, cross-border retail e-commerce into the US has soared. Between 2014 and 2024, the retail value of cross-border sales into the country grew by 858%, reaching USD113 billion dollars, behind only China.
By 2024, the majority of third party merchants operating on Amazon’s US marketplace were located overseas, with as many as 50% based in China. Additionally, two of the fastest growing online marketplaces in the US in 2024, Temu and Shein, made the provision of ultra-low prices central to their value propositions. For both, being able to take advantage of the de minimis exemption to import small shipments into the US has been the linchpin of their entire business models, which is now (intentionally) under threat.
Up until 2025, the partnership between online marketplace platforms and third party sellers fostered by the de minimis tariff exemption had been highly lucrative, as US consumers gravitated towards the low prices on goods that this relationship had made possible. As a result, by 2024, third party marketplace sales accounted for fully 30% of total retail e-commerce sales in the US by gross merchandise value (GMV) – up from only 16% in 2014.
The Trump administration’s decision to end the de minimis tariff exemption for all countries will radically alter the development of marketplace e-commerce in the US. The previous revocation of the exemption on imports from China on 2 May had already proven massively disruptive to marketplace operators, as many of them relied on China as their primary source market for the goods sold on their platforms. Some of the leading marketplaces had already started scrambling to shift distribution and manufacturing capacity out of China to other emerging markets in a bid to continue to take advantage of the de minimis exemption. For example, in May, Shein – the online retailer that has done so much to disrupt the global fast fashion landscape – secured well over 100,000 sq m of warehouse space in Vietnam in order to use the facility as a new distribution point to ship goods into the US until at least 2027. The Trump administration’s announcement that the de minimis exemption will now apply to all countries means that Shein’s pivot away from China towards Vietnam – as well as its broader strategy to reshore its distribution capabilities – will not be nearly as effective as the company’s executives might have hoped.
Further complicating matters, by the end of August, the national postal services of over a dozen countries had announced temporary halts on shipping parcels to the US, citing uncertainty around new processing and payment rules. As of the time of writing, Australia, Austria, Belgium, Denmark, Finland, France, Germany, India, Italy, Japan, New Zealand, Norway, Spain, Sweden, Switzerland, Thailand and the UK had all suspended shipments. As a result, many third party sellers that previously used national postal services to ship their orders to US consumers are being forced to work with private parcel delivery services instead – a development that could significantly increase sellers’ delivery costs, which will inevitably be passed on to consumers.
US consumers will be forced to pay more
Between the added tariffs and the increased shipping costs, US consumers will find that they are paying significantly more for many of the goods they purchase online. This is likely to be particularly true for apparel purchases, as many players in the fast fashion space have followed Shein’s lead by moving to ship small orders directly to US customers.
Even if marketplaces move to transition to a US-based fulfilment model by bulk shipping orders to warehouses within the US, as “online dollar store” Temu is now attempting, this does not alter the fact that products that that were previously allowed to skirt customs will now be subject to tariffs. This new reality could help shore up Amazon’s position; unlike Temu – which sources virtually all products on its platform from third party merchants – Amazon already sells a vast selection of goods from its own fully-owned product inventory warehoused in the US. More likely, though, the end of de minimis could benefit Walmart, the US-based hypermarket giant that has assiduously expanded its omnichannel operations to become the sixth largest online retailer in the world by value sales – thanks, in large part, to its strength in grocery e-commerce.
Whatever the future may hold, however, one thing is certain. US consumers will now be paying more for any products bought on online marketplaces from third party sellers based overseas. This is bad news for the short-term growth trajectory of US marketplace e-commerce.
Read our report How Trump’s Economic Policies Affect Industries and Consumer Markets for more analysis on the impact of tariffs on global markets.