A huge disruption happened in international commerce. As of August 29, 2025, the U.S. has officially suspended the de minimis exemption for all inbound commercial shipments, eliminating the $800 duty-free threshold that once supported countless global business models1. This major policy change, which first affected goods from China and Hong Kong on May 2, 2025, is now global. Every single parcel entering the United States, regardless of its value, is now subject to duties, taxes, and formal customs entry.
Brands that relied on low-value, direct-to-consumer, and cross-border shipping have had a bit over a month to adapt to this, but for many, the challenge of a global policy change still puts them in a vulnerable position. If you're looking for a roadmap to navigate the post-321 world, consider this your starting point, and for an in-depth look, here is our ultimate guide.
Assessing the Impact of the End of De Minimis
The end of the de minimis exemption has a distinct impact on the following primary logistics models, which opens up new challenges and a need for quick and smart readjustment.
Cross-Border Shipping
Old Model: Sellers shipped single, low-value parcels with little or no duty.
New Model: All parcels now face duties, which eliminates the cost advantage of cross-border fulfillment. Increased customs scrutiny and compliance, added costs, and slower delivery, causing a steep decline in direct shipment volumes.
Key Risk: Higher landed cost per parcel, less price competitiveness, and longer shipping times.
Transshipping
Old Model: Goods sent indirectly via intermediary countries to bypass restrictions or reduce duties.
New Model: US Customs is focusing enforcement on origin misdeclaration and transshipment. Attempts to shuffle goods through intermediary countries now rarely escape tariffs and only add logistics complexity and regulatory risk.
Key Risk: The practice is now largely ineffective and carries legal and financial penalties, including additional tariffs and fines for customs fraud.
Local Fulfillment
Old Model: The $800 de minimis exemption enabled cost-effective cross-border shipping, which made local fulfillment strategies unnecessary for some sellers.
New Model: The emergent standard is importing inventory in bulk to US warehouses, which leverages economies of scale to reduce per-unit duty costs. However, this shift is creating a rush for local warehouse space and labor, which may increase costs for brands that are transitioning. The primary benefits remain, such as speeding up domestic delivery and lowering the risk of customs disruption.
Key Risk: The capital required for inventory, warehouse space, and compliance infrastructure, coupled with the potential for rising costs due to increased demand for local logistics.
For brands that are already based locally, the policy change provides a powerful, if momentary, advantage. They can leverage their established U.S. fulfillment networks and systems to provide fast, reliable, and cost-predictable domestic shipping while their competitors scramble to set up new operations.
A Deep Dive into Key Industries
The impact of this policy change varies across industries. Here's how the new costs stack up for the apparel, electronics, and home goods sectors.
Note: The figures used are for illustrative purposes and represent a plausible example based on specific product classifications. Actual landed costs will vary depending on the exact item, sales tax in the destination state, and the fees charged by the carrier or customs broker.
Industry | Example Product | Old Landed Cost (De Minimis) | New Landed Cost (Post-De Minimis | Per-Unit Increase | Why the Change is a Problem |
|---|---|---|---|---|---|
Apparel | $50 T-Shirt (Vietnam) | $60.00 | $84.00 | +$24.00 | The apparel industry operates on tight margins. This per-item increase, based on a typical 32% duty rate for man-made fibers, can quickly erode profitability, making the high-volume, cross-border DTC model unsustainable. |
Electronics | $120 Smart Watch (China) | $130.00 | $154.20 | +$24.20 | The electronics industry relies on a global supply chain with a high volume of low-value shipments. This increase, now based on a 10% Section 301 tariff, puts brands at a disadvantage against domestic competitors and adds customs delays. |
Home Goods | $75 Decorative Vase (Russia) | $85.00 | $104.50 | +$19.50 | This category includes everything from small decor to kitchenware. The higher landed cost, based on a 20% Column 2 duty rate, is a major shock to consumers, which can lead to increased cart abandonment and a poor customer experience. |
While the specific costs and duty rates vary, the core message is that same. The de minimis exemption was not a minor perk but a basic component of the business model for countless brands. Its removal means that relying solely on the old way of shipping is no longer a viable long-term strategy.
Understanding the Numbers
To provide full transparency, here’s how we computed the cost impact for each industry:
Product Value and Shipping Fee: The Product Value is a base cost that remains constant in both models. The shipping fee ($10) is a plausible example based on the typical cost of low-value, cross-border e-commerce parcel shipping before the de minimis exemption was lifted.
Old Landed Cost: This was a simple sum of the Product Value and Shipping Fee, as duties and taxes were waived under the old de minimis rules.
New Landed Cost: This total includes the new costs now required for every shipment. The formula is:
Product Value + Shipping Fee + Duties + Taxes + Brokerage and Customs Fees
Duties: This is calculated by multiplying the product's value by the specific duty rate determined by its Harmonized System (HS) code. For these examples, we used the following codes and rates:
Apparel: HS code 6109.90.1060 (T-shirt from Vietnam, if made of man-made fibers) faces a 32% duty rate2.
Electronics: HS code 8517.62.00903 (Smart Watch from China) is subject to an additional 10% Section 301 tariff4.
Home Goods: HS code 6913.90.00 (Decorative Vase from Russia) faces a 20% duty rate5.
Taxes: This is calculated by applying an average US sales tax rate (6%) to the product's value.
Brokerage/Customs Fees: A flat, estimated fee ($5.00) is included to cover the cost of a carrier or broker handling the formal entry paperwork now required for every parcel.
Recommended Mitigation Strategies
To succeed in this new environment, brands must consider the following strategies that transform their fulfillment, compliance, and commercial operations.
1. Shift to Bulk Import and Local Fulfillment
The end of the de minimis exemption makes it clear that the future of competitive international e-commerce is no longer about shipping individual parcels across borders. It's about moving inventory in bulk to the US and fulfilling orders from a domestic warehouse. This strategy leverages economies of scale to reduce per-unit costs, speed up delivery, and minimize customs risk.
Understanding Ocean Freight: LCL vs. FCL
The first step in bulk importing is understanding your shipping options. For most brands, this means choosing between two types of ocean freight:
FCL (Full Container Load): You pay for the entire container, even if you don't fill it. This is the most cost-effective option for large-volume shipments (generally over 15 cubic meters or CBM)6. FCL shipments are also faster and more secure, as your goods are sealed in the container from the point of origin to the destination port, minimizing handling and customs delays.
LCL (Less than Container Load): Your goods share space within a container with other brands' shipments. This is the preferred method for smaller shipments that don't fill a full container. While it's a good way to test new products or manage smaller-volume imports, LCL can be slower due to the time needed to consolidate and deconsolidate goods at each port. It also involves more handling, which can increase the risk of damage or misplacement.
Choosing between the two depends on your volume. For a brand's core product line, FCL is often the clear choice for maximum cost savings. For new product launches or seasonal items, LCL can be a useful, lower-commitment option.
The Advantage of FTZs and Bonded Warehouses
Successfully transitioning to a bulk import model also means being smart about where you store your goods. Two key tools for this are Free Trade Zones (FTZs) and bonded warehouses.
These are secure areas that are legally considered to be "outside" of US customs territory. This allows you to import goods in bulk and defer paying duties and taxes until the products are shipped to a domestic customer. This provides two key benefits:
Cash Flow Savings: You don't pay duties on your entire inventory upfront. You only pay for what you sell. If any products are defective, destroyed, or re-exported, you never have to pay duties on them at all.
Risk Mitigation: By storing inventory in an FTZ or bonded warehouse, you can navigate fluctuating consumer demand without committing capital to duties on products that may not sell.
The Role of 3PL Partners
Managing a bulk import strategy requires a sophisticated logistics network. Most brands, especially small to mid-sized ones, can't afford to build their own warehouses or hire an in-house logistics team. This is where partnering with a 3PL (Third-Party Logistics) provider becomes essential.
A 3PL with a dense network of US warehouses can handle the entire process for you—from receiving the bulk ocean freight to sorting, storing, and shipping individual customer orders. This allows you to leverage their economies of scale, technology, and expertise without the upfront capital investment.
2. Enhance Compliance, Customs, and Logistics Automation
Invest in compliance tech: Automated tariff classification, real-time landed cost calculations, and robust record-keeping ensure smooth customs processing and minimize the risk of penalties.
Strengthen supplier documentation: Ensure all shipments have accurate origin and HS (Harmonized System) code declarations. Regularly audit the supply chain for compliance.
Optimize parcel shipping: Embrace data-driven solutions like Stord Parcel to help reduce shipping costs as it can automatically select the most efficient carrier and service level for each package.
3. Strategic Pricing and Customer Communication
Update pricing models: Build duty and tax costs into product pricing or shipping fees transparently.
Educate consumers: Clearly communicate delivery times, taxes, and duties at checkout to reduce cart abandonment and improve satisfaction.
4. Diversify Global Supply Chains
In the post-de minimis world, reliance on a single supply chain model is a risk. The goal is not to abandon global sourcing but to build more resilient supply chains into the U.S. that can withstand tariffs, political instability, and other disruptions.
Shift from Offshoring to Nearshoring and Friendshoring
Instead of sourcing from distant, high-risk regions solely for the lowest cost, many brands are now adopting a "China plus one" or nearshoring strategy. This means shifting manufacturing to countries that are geographically closer to the US, such as Mexico. This shortens transit times, reduces transportation costs, and improves communication, providing a direct competitive advantage.
The more advanced strategy of friendshoring involves sourcing from politically aligned and stable countries like Vietnam or India, even if they are more distant, to mitigate geopolitical risk.
Establish a Domestic Hub-and-Spoke Network
A major component of a resilient strategy is to establish a strong domestic fulfillment network. For brands that lack the capital or expertise to build their own, partnering with a 3PL that has an established, dense network is the most effective solution. This allows them to set up a hub-and-spoke model with multiple distribution centers across the U.S. without the upfront investment.
This not only puts inventory closer to customers but also diversifies risk. If one port or region is hit by a disruption, orders can be fulfilled from another location, ensuring business continuity.
Leverage Supply Chain Mapping
True diversification requires visibility. Brands must go beyond their direct suppliers to understand where their raw materials and components are coming from. Investing in technology to map your entire supply chain will help you identify single points of failure, avoid transshipment risks, and adjust your sourcing strategy before a disruption occurs.
5. Scenario Analysis and Risk Management
Model cost impacts: Quantify effects on unit economics under various duty/tax scenarios. Use this data to renegotiate supplier or logistics contracts.
Monitor regulatory changes: Policies on de minimis and cross-border e-commerce are politically sensitive. Stay alert for future changes or carveouts that could create new opportunities or risks.
A Concrete Example
Let's revisit the T-shirt example from before. Consider a hypothetical brand selling T-shirts manufactured in Vietnam. They previously shipped a single, $50 T-shirt for just $10, duty-free. Under the new policy, we've shown that the landed cost for that same item is now a staggering $84.00, representing a cost increase of over 40%. This new reality demands a strategic pivot.
Phase 1: Testing the Waters with LCL
The brand starts by consolidating a small batch of 1,000 T-shirts. They choose LCL (Less than Container Load) ocean freight, sharing a container with other companies' goods. While this is slightly slower, it allows them to test the new model without the high cost of a full container. The per-unit cost for freight and duties drops significantly, making the model viable.
Phase 2: Scaling with FCL and Leveraging FTZs
After a successful test, the company scales up. They switch to FCL (Full Container Load), importing a full 20-foot container of 20,000 T-shirts. This is far more cost-effective. They ship the container to a Free Trade Zone (FTZ) in California. Instead of paying duties on all 20,000 units upfront, they defer payment until the products leave the FTZ for customer orders. This preserves their capital and allows them to manage inventory risk. If some T-shirts are defective, they are destroyed in the FTZ, and the brand never pays duties on them.
Phase 3: Partnering for Domestic Fulfillment
Once the goods arrive at the FTZ, the company partners with a 3PL provider. The 3PL handles the entire fulfillment process from their domestic warehouse—from receiving the container to picking, packing, and shipping individual orders.
By leveraging the 3PL's expansive network and discounted carrier rates, the company can now offer 2-day or less domestic shipping to their U.S. customers, which is a huge improvement from their old, slow, cross-border shipping times, for a cost that is now competitive with domestic brands.
Shipping in the Post-De Minimis World
Low-cost, cross-border parcel shipping is now effectively impossible with the end of de minimis exemption. This policy change forces brands to pivot from an order-by-order shipping mindset to a more deliberate model. The brands that master this transformation will not only mitigate rising costs and customs delays but will also gain an advantage in the market. This transition doesn't have to be a daunting task. By leveraging bulk ocean freight, local fulfillment, innovative solutions like FTZs, and the expertise of a trusted logistics partner like Stord, brands can face this new reality with confidence.
