The United States has ended its duty-free policy for low-value imports from the Chinese mainland and the Hong Kong Special Administrative Region, a move expected to trigger price hikes and customs delays affecting consumers and businesses alike.
Effective May 2, the U.S. discontinued the de minimis rule, which allowed imports valued at $800 or less from the Chinese mainland and Hong Kong to enter duty-free. This policy shift is set to disrupt supply chains and increase costs for both sellers and shoppers.
Impact on Businesses
E-commerce platforms are feeling the strain as they scramble to adjust to the new tariffs. Many are restructuring supply chains, raising product prices, and accelerating the construction of local U.S. warehouses to mitigate additional costs. Some foreign sellers have halted shipments to the U.S., while smaller businesses have exited the market entirely.
Domestic companies are also adapting. An American footwear brand reportedly relocated its inventory from Canada to U.S. warehouses after discovering that a pair of sneakers made in the Chinese mainland, originally priced at $175, would now incur over $300 in duties if shipped via Canada.
Consumers Feeling the Pinch
For U.S. consumers, especially those accustomed to online shopping, this means higher prices and longer delivery times. The Congressional Research Service noted that eliminating the de minimis exemption could reduce aggregate welfare by up to $13 billion, disproportionately impacting lower-income and minority consumers who rely on affordable goods like clothing, daily necessities, and small electronics.
Experts point out that while the policy aims to appear tough on the Chinese mainland, it effectively imposes a tax hike on American consumers. “It translates to higher prices and slower deliveries,” said Scott Lincicome, a researcher at the Cato Institute. “U.S. consumers are footing the bill for the policy.”
Customs Challenges Ahead
The policy is expected to place significant strain on U.S. customs systems, potentially causing clearance delays. Eliminating the duty-free rule adds considerable costs in checking and taxing low-value packages individually, which could overwhelm customs operations.
The U.S. Customs and Border Protection agency acknowledges the massive task ahead but expressed readiness to enforce duties on small shipments from the Chinese mainland. Industry experts warn that strict enforcement could become chaotic quickly, requiring thousands of daily shipment inspections and potentially leading to nationwide port congestion.
An Oxford Economics estimate suggests that if the U.S. government intends to inspect and tax every small parcel individually, it would require several billion dollars in additional funding to expand systems and hire staff.
Looking Ahead
As the new policy unfolds, both businesses and consumers are bracing for its impact. With the potential for widespread price increases and logistical challenges, the end of duty-free imports from the Chinese mainland and Hong Kong marks a significant shift in U.S. trade policy—one that could have lasting effects on the global economy.
