8th February 2025 – (Washington) U.S. President Donald Trump has temporarily suspended the repeal of duty-free treatment for low-cost packages from China and Hong Kong, allowing the Commerce Department time to implement a workable order. This decision comes amidst significant disruptions affecting customs inspectors, postal services, and online retailers, following a rapid policy shift.

The cancellation of the de minimis exemption, which facilitates the entry of over 1 billion small-value e-commerce packages into the U.S. each year, now requires these shipments to undergo a more complex entry process involving additional information and duties, leading to increased costs and delays.

The recent fluctuations in the acceptance of these packages by the United States Postal Service (USPS) have caused substantial backlogs in customs clearance, particularly at New York City’s John F. Kennedy International Airport. Derek Lossing, CEO of Cirrus Global Advisors, remarked on the chaos this has caused for global e-commerce operations.

The abrupt policy change was enacted with just over 48 hours’ notice, prompting USPS to temporarily halt the acceptance of packages from both China and Hong Kong. Major online retailers such as Shein and Temu, who rely on this exemption to keep prices competitive, are now facing uncertainty.

The executive order, signed on Wednesday and published on Friday, does not specify when the pause will end, but indicates it will remain until the Department of Commerce can establish adequate systems to process and collect tariffs on these shipments.

The term de minimis refers to the U.S. waiver of standard customs procedures and tariffs on items valued under $800 shipped from abroad. With companies like Temu and Shein shipping around 9,000 metric tons of cargo daily, the sudden changes have overwhelmed customs, leading to meetings with logistics professionals to address the backlog.

Officials have cited the need to combat the flow of fentanyl and precursor chemicals into the U.S. as a rationale for the policy changes. However, critics have raised concerns over the potential for increased prices and delivery delays as customs officials struggle to manage the influx of packages.

The de minimis exemption, originally established to facilitate small shipments, has seen its threshold rise significantly over the years, now becoming a focal point of contention in U.S.-China trade relations. As the volume of low-value packages from China surged to $66 billion in 2023, the impact of these regulatory changes on both consumers and e-commerce businesses in Hong Kong and the U.S. remains to be seen.