The US officially ended its de minimis exemption that allowed packages under $800 to come into the country duty-free on 2 May but what will this mean in practice for fashion brands, retailers and the wider supply chain?

During a recent webinar, customs expert and Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP partner David Murphy explains that as of 2 May 2025 goods identified as having a China or Hong Kong origin can no longer clear on the manifest or by the de minimis exception for type 86 entries.

An entry type 86 is a US Customs and Border Protection (CBP) customs clearance procedure for low-value shipments, specifically for shipments valued at $800 or less.

He adds that all goods are manifested with a description and country of origin so the decision on de minimis is going to be based upon that and it’s then how the goods get segregated out. 

Murphy points out during the tariff and de minimis update webinar, which was hosted by global digital freight forwarder Zencargo, that both courier shipments and non-postal shipments all have to be entered so whether it’s a formal or informal entry does not matter.

He notes there was a recent clarification that an entry process has to be done and it has to have a responsible party. 

But, he says the crucial part is that you also have to classify your pay duties, which is the “big deal” as this means there is no exemption for postal shipments under $800. 

Carrier is now responsible for collection of duties 

He continues: “Because of the capabilities of the US Postal Service, postal shipments from China Post or Hong Kong Post get put on a carrier and brought to the US. The carrier now is responsible for collecting either 120% of the value of the item, or a specific fee of 100, going up to 200 on 1 June.”

From what Murphy is hearing, a lot of the carriers are opting for the latter because it’s easier to do the collection process.

But, he says: “I haven’t really worked through with anybody on how they’re going to do that.”

Murphy sees the biggest problem as the bond, because these carriers have an international carriers fund, but they haven’t been responsible for the collection of duties and that’s going to increase, so that’s a potential issue.

He does point out that they are already reporting the number of postal items as that’s their manifest, so he says that is less of an issue unless there’s been some sort of consolidation overseas that they’re not seeing, but they’re still going to have that problem moving forward. 

“Like I said, the choice between the ad valorem or the specific value, what I’m hearing is a lot of defaulting for that, so it is becoming a very difficult issue.

“As we said earlier, formal versus informal entry. It doesn’t really matter in the sense that there is now an entry process. A lot of the information has to be filed and duties paid.” 

Murphy notes that a formal entry requires a bond, a specific import of record and someone who is going to be financially responsible. 

He states: “So unless somebody wants to stick their neck out, I could see there’s some problems with filing formal entries.” 

Again, he says: “The same sort of International Emergency Economic Powers Act (IEEPA) exclusions apply, personal communications, informational materials, donations, personal baggage, those sorts of things, those apply across the board. But be careful, as I’m sure those are going to be heavily policed, they’re going to stop and look to see if any of those are claimed.”

The IEEPA is a US law that allows the president to regulate international commerce and economic activities in response to unusual and extraordinary threats to US national security, many of which originate outside the country. 

De minimis for countries other than China and Hong Kong still exists 

Murphy is quick to point out that de minimis for other countries still exists. 

But, he states: “Now that doesn’t mean shipped from the country, it means the products shipped are country of origin of that country. So, simply shipping Chinese goods through Canada doesn’t allow you to do it. It has to be truly Canadian goods coming out of Canada.”

When quizzed on how a carrier should treat a parcel of mixed-origin goods, Murphy says it depends on how it’s manifested.

“If it is manifested with two countries of origin, that package is going to get put aside for the entry process. That would be the proper way to do it. If they’re not properly declaring it, the carrier really is based upon the information that is provided to them.

“But, customs is going to be looking at these things, and if they start seeing significant cheating on these issues, we can see them cracking down on allowing any of those situations.” 

In regard to the entry and whether the carrier will be and should be reporting the retail value of a parcel shipment or Free on Board (FOB) value, Murphy highlights the carrier is not making the entry.

He explains: “The carrier will basically hand that off to whoever is responsible, and that is likely to be a customs broker appointed by either the foreign consolidated shipper or somebody on this side to clear these goods. The value is going to be the declared value so it should match.”

He highlights the idea that the de minimis exemption is the fair retail value in the country of origin, so that’s what it should be, and that’s where the entry will be made.

Again, he says: “Customs is going to police this if they believe that people are trying to get in goods at a lower value that aren’t properly there.” 

When asked what to do if there are multiple products with different Harmonised System (HS) classifications, Murphy shares that there is a provision in the customs law for co-mingled goods.

“If there’s not a way for customs to determine the individual value and quantity of those goods, they will apply the highest duty rate to the entire product or shipment to that package, if it’s properly manifested.

“That’s again getting back to the issue of having a proper manifest of the information. It should break it out, and that’s what the rates should be.” 

Key recommendation to fashion brands, retailers selling ecommerce cross border to the US 

His key recommendation to fashion brands and retailers selling e-commerce cross-border is to make invoices as detailed as possible.

He suggests breaking it down as much as possible by country of origin and HS classification.

It is both the most compliant way to do it, but also the most advantageous way to make sure that everything is being assessed correctly. 

He does point out that for the time being, the real issue here is China, rather than the rest of the world as if a total shipment is under $800 it’s less of an enforcement issue elsewhere. 

But, he says you should definitely break out the information as “at some point, customs can always pull a de minimis shipment to require an entry from any country, and if you don’t have that detail, you’re going to get hit with the highest possible duty rate.” 

Timeline for closing de minimis on other countries other than China? 

Murphy says there hasn’t been a discussion around a timeline for other countries.

He states: “I think one of the problems is customs is going to struggle with just the China shipments and trying to handle those.” 

He suggests it will be based on whether there is the capability to make a proper entry for these goods at some point and if they are ready for the onslaught of this.

Experts warned last month (April) that the price of goods from fast fashion retailers such as Shein and Temu will increase due to the end of the de minimis exemption.