President Donald Trump has put a temporary hold on implementing tariffs for low-value packages arriving from China, giving federal agencies more time to develop a system to process millions of untaxed shipments that flood into the U.S. daily. The executive order, signed on Wednesday, does not set a deadline for lifting the pause. However, it makes clear that the suspension will remain in place until the Department of Commerce establishes an efficient process for managing and collecting tariff revenue.
A Shift in U.S. Tariff Policies
This decision comes amid bipartisan support in Washington for eliminating tariff exemptions on low-cost Chinese imports. It also follows Trump’s recent move to increase tariffs on various Chinese goods by 10%. If fully enforced, the policy change would require packages that previously bypassed duties to comply with standard tariff regulations, including the existing 25% tariff on many imports, along with the newly imposed 10% levy. This shift highlights the evolving approach of Trump’s second administration, which has shown some flexibility in tariff policies for Mexico and Canada, particularly in exchange for cooperation on border control matters.
Strain on the U.S. Postal Service
Enforcing tariffs on small shipments is expected to add significant pressure on the U.S. Postal Service (USPS). Initially, USPS considered halting package acceptance from China and Hong Kong but later reversed course. Now, the agency is working with U.S. Customs and Border Protection (CBP) to determine how to implement the new tariff collection system. Experts warn that without adequate preparation, this change could disrupt operations for both government agencies and businesses that depend on cross-border e-commerce.
The De Minimis Loophole—A Policy Under Pressure
The de minimis exception, originally introduced in 1938, was meant to simplify customs processing for packages valued at $5 or less—equivalent to about $106 today. Over the years, the threshold was increased to $200 in 1994 and then to $800 in 2016. However, with China’s booming e-commerce exports, this exemption has come under scrutiny. In 2018, Chinese low-value shipments to the U.S. amounted to $5.3 billion; by 2023, that figure had skyrocketed to $66 billion. For the first time this year, U.S. customs processed over 1 billion of these small-package imports.
The Business Impact—Price Hikes and Delays?
Analysts predict that stricter enforcement of tariffs on small packages could lead to higher prices and slower shipping times as CBP struggles to inspect and process the influx of shipments. Currently, many of these packages enter the U.S. without customs scrutiny, but new regulations could fundamentally alter that system. In response, some businesses, including Chinese e-commerce giant Temu, are already adjusting their logistics strategies. Companies are ramping up warehousing in the U.S. and transitioning to container shipping to mitigate potential disruptions.
If fully enforced, the rollback of the de minimis exception could reshape global trade flows, forcing international sellers to rethink their supply chain strategies and compliance measures. Whether this policy shift will ultimately benefit domestic manufacturers or create new hurdles for small businesses remains to be seen.
