Trump Ends Global Tariff Loophole for Small Businesses in August

After what seems like back-to-back executive orders from Trump regarding the US TikTok ban, the White House announced a new order on Wednesday about tariffs. The de minimis exemption, which lets packages under a $800 value enter the US without paying any fees, will be suspended as of August 29.

What does this mean?

From this date, shipments of any size or value will face tariffs. President Trump had already removed this exemption on low-value Chinese goods in May, but the new executive order takes away the de minimis loophole for all countries.

As part of the announcement, the White House shared a fact sheet about the order:

“Today, President Donald J. Trump signed an Executive Order suspending duty-free de minimis treatment for low-value shipments, closing the catastrophic loophole used to, among other things, evade tariffs and funnel deadly synthetic opioids as well as other unsafe or below-market products that harm American workers and businesses into the United States.”

The order seems to be a reaction to perceived “national emergencies” faced by the US, with the announcement most notably citing drugs and dangerous items. However, while this may be one of the reasons behind the White House’s new tariff rule, small businesses will be impacted hard by the change.

According to the White House fact sheet, the US receives roughly 4 million daily de minimis shipments. While the government thinks the system is being abused, genuine businesses and sellers that operate in the US or have a US audience rely on this tariff exemption for these reasons:

• To keep costs low
• Import products from international warehouses
• Deliver goods to customers

Unfortunately, the tariff change could trigger supply chain shake-ups and inventory storage issues for many businesses.

The exemption also keeps costs low for buyers, so US consumers will face increased prices when shopping with overseas businesses as companies try to cope with the new tariffs. In fact, 41% of shoppers avoided certain products or brands during Amazon Prime Day because of tariffs.

Some shipments will be exempt if they go through international postal networks, but the majority of goods will be subject to a fixed rate of $80 to $200 per item, depending on the country of origin. Other shipments will face an “ad valorem duty” to match the country of origin’s tariff rate.

With less than a month to go, there’s not much time for businesses to adapt to the end of the de minimis exemption. But, there are a few things you can do or consider ahead of the August deadline:

• Move your goods to the US instead of storing products abroad
• Use the international postal network for lower fees
• Sell your overseas inventory quickly
• Increase your product prices

My biggest recommendation is the make your customers aware of the situation, and give them plenty of warning. If you have to up your prices to accommodate new tariff fees, let them know that this is the reason why and that you’re doing what you can to keep your business afloat.

However, remember that this executive order applies for the next six months only. After that, country-specific tariff rates will apply to all packages imported into the US.