De Minimis Tariff Exemption Elimination Hits Small Businesses

Low‑value imports now face tariffs between 10 %–50% following the elimination of the de minimis exemption.

As of Aug. 29, imported packages valued at less than $800 can longer enter the U.S., based on a July 30 executive order.

The executive order eliminated the de minimis exemption—in place for over eight decades—almost two years ahead of the deadline set in the tax and spending bill approved by Congress earlier this year.

Previously exempt shipments will be taxed between 10%-50%, depending on the country of origin.

Over the next six months, carriers using postal networks have the option of choosing a flat duty of $80 to $200 per package.

Connecticut small businesses dependent on affordable imports from Europe and Asia now face steep increases in costs and additional compliance burdens.

Increased Prices

“Basically, everything will now be subject to tariffs—it’s going to be a very real concern for small businesses,” said CBIA president and CEO Chris DiPentima.

“It’s going to increase prices significantly for small and medium-sized businesses and add major administrative burdens.”

The exemption was created in 1938 with a $1 threshold. Congress raised the threshold periodically, the last time in 2015 when it was increased from $200 to $800.

“Basically, everything will now be subject to tariffs.”

CBIA’s Chris DiPentima

The number of exempt shipments surged to 1.36 billion in fiscal 2024, with a declared value of $64.6 billion.

About 73% of those shipments originated from China. The administration ended the de minimis exemption for that country in May.

Canada—Connecticut’s largest trading partner—Mexico, and the United Kingdom represent the next biggest countries of origin, with Hong Kong, India, South Korea, Thailand, and Vietnam all accounting for significant shipments.

Postal services in over a dozen countries last week temporarily suspended shipments of U.S.-bound packages because of confusion surrounding tariff processing and payments.

Manufacturing Impact

Small and medium-sized Connecticut manufacturers often depend heavily on imported components that fall below the de minimis threshold.

Many of those firms now face higher costs and supply chain disruptions, including customs processing delays and additional bottlenecks.

While larger firms may absorb or hedge higher costs through economies of scale, smaller manufacturers are more vulnerable to price shocks and disruptions.

Small and medium-sized Connecticut manufacturers often depend heavily on imported components that fall below the threshold.

Last year, the National Association of Manufacturers opposed a bill that restricted the use of the de minimis exemption.

NAM and other groups said the exemption cut additional costs and administrative burdens when procuring materials and exporting products.

“Restricting the use of de minimis treatment in the U.S. would likely trigger changes in the 88 other countries with de minimis policies, increasing costs for American exporters,” the groups wrote in a letter to the White House.