The End of De Minimis: How Tariff Changes Hit Shein, Temu and Small Brands

For almost a decade, a parcel worth $800 or less entered the United States without duty. Use of the exemption grew from 134 million shipments in 2015 to more than 1.36 billion in 2024, and Customs and Border Protection was processing over four million de minimis parcels a day. That exemption, known as Section 321 after the provision of the Tariff Act of 1930 that created it, is now suspended for every country. Congress will repeal it by statute on 1 July 2027.

How the Exemption Ended

Section 321, codified at 19 U.S.C. 1321, let CBP admit low-value shipments duty free, and the 2016 Trade Facilitation and Trade Enforcement Act raised the threshold from $200 to $800. The suspension came in two waves. It reached shipments from China and Hong Kong on 2 May 2025, and Executive Order 14324 extended it to every country on 29 August 2025.

The Supreme Court’s February 2026 ruling against the IEEPA tariffs did not restore the exemption. Executive Order 14388 continued the suspension on 20 February 2026, and CBP then published two interim final rules on 24 June 2026 that suspend the exemption indefinitely, the first for all modes of transport other than the international postal network. A trade association tracker records the second rule, which covers postal shipments, and a new entry type that CBP announced alongside them.

Why the Courts Let It Stand

Importers argued that the Supreme Court’s reasoning on tariffs should apply to the suspension. On 13 August 2026, the Court of International Trade disagreed in Axle of Dearborn v. Department of Commerce. It held that IEEPA authorises the president to rescind the exemption, which it treated as a statutory privilege the president may void, and it distinguished that step from the tariffs the Supreme Court invalidated, according to KPMG’s summary of the ruling. The plaintiff can appeal to the Federal Circuit, and Congress has already fixed the endpoint by statute. The suspension had generated more than $1 billion in duty payments by the end of 2025, according to Customs.

What It Did to Shein and Temu

Shein and Temu built their business models on the exemption. FLJ’s analysis of Shein and the UFLPA Entity List shows that the two platforms accounted for between 48 and 52 percent of the 1.36 billion low-value parcels entering the country each year.

The losses showed up in prices first. When CNN checked in April 2025, a swimsuit set on Shein rose from $4.39 to $8.39 in a single day, according to Quartz. In the first three months of 2026, getting orders to customers took nearly 48 cents of every dollar Shein brought in, up from about 43 cents a year earlier. Temu raised prices and reined in its aggressive online advertising, and both platforms opened more US warehouses to serve customers from local stock.

Volumes dropped sharply. CBP estimates cited by Quartz put arrivals of low-value packages in 2025 at more than 940 million, about a quarter fewer than in 2024. The Universal Postal Union found that the number of parcels worth less than $800 fell 54 percent within four months of the global suspension. The annual drop is smaller because the exemption stayed in force for part of 2025.

What It Means for Small Brands

Small brands sit on the other side of the same rule. NBC reported that the end of de minimis would hit hardest on online marketplaces where millions of small businesses, such as Etsy and Shopify merchants, had used the exemption to defray the cost of sending orders from other countries to US customers. A designer who ships orders from an overseas studio, imports fabric swatches or posts samples to a US buyer now faces the same customs process as a large importer.

Every parcel now goes through a customs entry and pays the duty that applies to its product and country of origin. Shein and Temu could answer by building US warehouses and shipping in bulk. A small brand rarely has the volume to justify a warehouse, so it carries the cost on each order or raises its prices. A mail-order business owner in Minot, North Dakota, told Marketplace that she now checks where her products ship from, because the change has pushed her business to raise prices.

The practical response for a small brand is to price the duty into every product and to ask a customs broker how to classify each item. Brands that ship regularly should consider consolidating orders into one freight shipment to a US fulfilment partner. Logistics providers report that many companies are moving from parcels to freight, which lets them clear customs once for a whole batch instead of parcel by parcel.

What Comes Next

The suspension now rests on executive orders and CBP’s own rules, and a statute removes the exemption on 1 July 2027. An appeal in Detroit Axle can change the route to that date and has no effect on the destination. Importers of any size should plan for a market in which a low-value parcel pays duty like any other import, and Shein and Temu already do.