What the end of U.S. tariff exemption for small orders means for Long Islanders

Long Islanders can expect higher prices and longer delivery times after a duty-free exemption on low-cost imports expires Friday, experts warned, although some said the end of the tax loophole could aid domestic manufacturers.

The exemption, known as “de minimis,” has allowed shipments valued under $800 to enter the United States tariff-free since 2016, but will end under an executive order signed last month by President Donald Trump. More than 90% of imports currently fall under the de minimis policy, according to U.S. Customs and Border Protection. Several countries have said they would temporarily suspend shipments to the United States.

The biggest problem with eliminating the policy “is that it will hurt the consumer and the small business,” said John Capela, an assistant professor of business at St. Joseph’s University who specializes in international trade. “As a consumer, you’re going to get hurt significantly, and it’s going to hurt the little budding entrepreneur.”

But ending the exemption has its benefits as well, said Anoop Rai, a professor of finance at the Frank G. Zarb School of Business at Hofstra University.

“It will help domestic production and it will restrict cheap imports,” he said. “I think consumers will ultimately settle.”

The White House has cited a “national emergency” caused by the flow of fentanyl and other drugs over the borders as the reason for suspending the de minimis policy.

What is de minimis?

Starting Friday, products shipped to the United States will come with country-specific tariffs ranging from 10% to 50%. Letters and personal gifts valued under $100 will still be allowed to enter duty-free.

Over the next six months, rather than setting rates by country, carriers handling orders through the global mail network may also choose to charge a flat $80-$200 fee per package.

Due to processing confusion over the end of the exemption, the national postal services of more than a dozen countries have said they would temporarily suspend shipment of some or most U.S.-bound packages.

As of Tuesday, countries that have said they would pause shipments include Japan, Switzerland, Australia, Austria, Belgium, Finland, France, Germany, India, Italy, Norway, Spain, Sweden, Denmark, Thailand, the United Kingdom and New Zealand.

Rai pointed out that other countries, including the United Kingdom, Japan and the European Union, plan to review their own de minimis policies as well.

Higher costs for Long Islanders

The end of the de minimis rule will leave U.S. shoppers with fewer options for cheap consumer goods, said Thomas Cook, managing director of Blue Tiger International, an East Moriches supply chain and trade consultancy.

“The consumers are really the ones that are going to be impacted, mostly by not having access to inexpensive items,” said Cook, who assists businesses navigate trade and supply chain issues.

The de minimis exemption was ended in May for imports from China, where the overwhelming majority of packages shipped to the United States came from. But removing the exemption for the rest of the world will continue to have a negative impact on some businesses, Cook said. 

Packages that fell under the rule were subject to limited processing or vetting, and it's unclear how the United States plans to process the additional packages, he said.

Before the implementation of trade barriers on China earlier this year Customs and Border Protection processed more than 4 million de minimis shipments to the United States each day, according to White House figures.

“Countries around the world that have high volumes of mail coming to the U.S. have closed down their mail services to the U.S. because they realize it’s not going to be moved easily and the rules are so ambiguous, they are uncomfortable with it,” Cook said. 

Level playing field 

The de minimis exemption, however, has created “a disadvantage for U.S. warehousing and U.S. operators” with foreign competitors, said Melissa Irmen, director of advocacy at the National Association of Foreign Trade-Zones, which represents stakeholders engaged in international trade.

From a long-term perspective, there’s already been some warehousing shifts back to the United States, she said, which could also help create more jobs.

One potential upside of the end of de minimis, Cook said, is that local businesses won't have to compete at such a disadvantage with foreign shippers of consumer goods, like Chinese e-commerce giant Temu or fast fashion retailer Shein.

But one local retailer said the exemption won't be beneficial to her clothing business, even if it increases prices for competitors like Temu or Shein.

Joanna Mazzella, co-owner of Mint, a Mattituck-based women’s clothing chain with four boutique locations on Long Island said local retailers shouldn’t have to compete with the unfair pricing from companies like Shein and Temu, but she doubts that price increases will be enough to change consumer habits.

“Will it affect their bottom line? Maybe a little bit. Will it be enough for customers to not shop at a place like that? I don’t think so,” Mazzella said. 

Mazzella, who also designs her own line of clothing, said the broader tariff situation has impacted her future business plans.

She said she is currently designing her 2026 collection but isn’t sure which overseas manufacturer to partner with as she’s worried about paying prohibitively high tariff rates. Mazzella manufactures and imports clothing from India, she said.

“No one’s having an easy time with this,” she said. “It’s the stress of not knowing.” 

Impact on shipping

Besides helping small businesses, the de minimis policy eliminated a lot of the "red tape" that goes along with processing imported goods, Capela said, such as review by Customs and Border Protection.

But resulting delivery delays will likely be short-term, Irmen said. “Companies are really smart. If customers start complaining about longer lead times to get their materials," they'll find distribution warehouses closer to where consumers live to cut down on transportation times.

A spokeswoman for UPS said in an emailed statement that the company “has systems and processes in place to facilitate payment” on duties placed on imports, with the goal to help customers “minimize any disruption to business.” 

The company also offers a service, UPS Global Checkout, that allows online shoppers to check the total cost of duties, fees and taxes before making international purchases, said spokeswoman Natasha Amadi.

A FedEx spokeswoman similarly said in an emailed statement that the company plans to support customers and help “them navigate through the changes going into effect for U.S.-bound shipments” starting Friday.

“We encourage individuals and businesses with commercial shipments coming into the U.S. — even experienced shippers — to consult fedex.com/tariffs for tools and the latest guidance on regulatory requirements,” said spokeswoman Savannah Haeger.

The U.S. Postal Service declined to provide comment beyond the executive order from the White House.

With AP