How much would eliminating the “de minimis” tariff exception cost the American consumer?

On February 1, the Trump administration moved toward eliminating a provision of the 1930 Tariff Act that, for nearly 100 years, has allowed low-cost consumer goods to enter the country duty-free and with minimal customs paperwork burden. ^¹

Known as the “de minimis” exception to existing tariffs, the provision has played a major role in the rise of direct-to-consumer online goods platforms like Temu and Shein. In 2012, just $50 million worth of goods entered the U.S. under the de minimis exception. By 2024, that number was $64.6 billion, spread over 1.36 billion small shipments. 

Recognizing the increased prevalence of these shipments, we analyzed how ending the de minimis exception might impact American consumers and found that eliminating the exception could cost the average family up to $136 a year, with low-income and minority consumers seeing the biggest impacts on their spending.

Because Census Bureau data often used by researchers to study imports doesn’t include low-value transactions that fall under the de minimis exception, studying the impact of the exception has long been a challenge. Our research relies on a dataset of all shipments into the U.S. handled by three larger carriers. Because we can see the shipment’s destination zip code, we’re able to link purchases to the demographic characteristics of those zip codes. 

Our analysis shows that de minimis exception shipments make up a large share of direct shipments for lower-income households. Looking at packages entering the U.S. worth $5,000 or less, 73% of what the lowest-income zip codes purchased fell under the de minimis exception. For the wealthiest zip codes, the de minimis exception accounted for only 52% of purchases. 

We observed similar spending patterns with respect to shares of shipments purchased by minority households, suggesting that eliminating the de minimis exception will have the biggest impact on non-white and low-income consumers

Similar to research showing how tariffs result in higher prices for consumers, our analysis of carrier data suggests that eliminating the de minimis exception will increase costs for consumers as a whole by at least $10.9 billion, or $34 per person and $136 per family in the U.S. (These estimates are “tariff inclusive” and account for the fact that consumers are likely to import less as prices increase, or may receive rebates from tariff revenue. When not taking this information into account and considering only observed spending patterns before the exemption was eliminated, the costs are considerably higher. See additional numbers here.)

But because our carrier data includes limited shipments from China, we also ran the numbers using data from Customs and Border and Protection (CBP) of all shipments under the de minimis exception that occurred in one week in each year from 2017 to 2022. Using that data (which reveals a greater share of shipments from China), the increase in cost is bigger–roughly $13 billion, or $41 per person and $163 per family.

To put these numbers in perspective, our previous work estimated the tariff-inclusive cost to U.S. consumers of Trump’s 2019 tariffs was $48.2 billion, or $147 per person and $580 per family.

Ending the de minimis exception would profoundly impact a popular shopping channel for many Americans. Though companies like Shein and Temu are often cited as the main examples of the direct-to-consumer model, retailers like the French clothing brand Sezane also rely on the de minimis exception as part of their current business and pricing model.

With the trend toward direct-to-consumer shipping rising globally, other countries are adjusting or eliminating their own tariffs on low-value imports. Policymakers in the UK and Chile are currently debating the future of de minimis exception in their own countries while, in 2024, South Africa eliminated its de minimis exception, Turkey considerably lowered its de minimis exception threshold so it applies to all imports over $33, and Brazil imposed 20% tariffs on imports below $50 purchased online. Moving in the opposite direction, Jamaica raised its de minimis exception in 2024 from $50 to $100 to allow for more duty-free imports.

Looking ahead, these changes in trade policy could be a boon for domestic producers and domestic retailers, though the extent to which that will happen remains unclear. 

To learn more about the de minimis exception and its role in American consumption, read the full paper or download this summary of the research, complete with key charts and figures.

¹ The administration eliminated the provision through an executive order on February 1, then reversed course several days later, suggesting a brief pause before ending the de minimis exemption for good.