Surprises May Be in Store for Online Shoppers in the Tariff Era

On April 2, 2025, President Trump signed an executive order ending the de minimis exemption for low-value imports from China. This exemption had previously allowed U.S. consumers to purchase goods worth up to $800 from overseas online marketplaces without paying import duties. Since the policy took effect on May 2, many American shoppers have been caught off guard by notices from shipping carriers demanding duty payments that, in some cases, exceeded the value of the purchased items.¹

A tariff is a tax applied to imported goods, imposed by the Trump administration to support domestic industries, generate revenue, and serve as leverage in trade negotiations. The term “duty” is broader and can include various charges required when goods cross international borders. Depending on the product and its country of origin, these costs may consist of tariffs, customs brokerage fees, excise taxes, and other related charges.

In 2015, U.S. lawmakers increased the de minimis exemption threshold from $200 to $800. As a result, many Americans became accustomed to buying low-cost items such as apparel and household goods without paying attention to shipping origins or potential duties. In contrast, consumers in many other countries — including Canada and members of the European Union — face lower exemption limits and are more accustomed to paying duties on cross-border e-commerce purchases.²

Opponents of the de minimis exemption argue that it places U.S. manufacturers and retailers at a disadvantage and creates a pathway for illegal or unsafe products, including fentanyl and counterfeit luxury goods, to enter the country with reduced oversight.³

Tax Rates in Flux

As of May 14, goods valued at $800 or less and shipped from China or Hong Kong to the United States through the U.S. Postal Service are subject to a tariff equal to 54% of the item’s value, or an optional flat fee of $100 per package. Low-value Chinese goods shipped via commercial carriers are assessed a default tariff rate of 30%.⁴

Earlier in May, the tariff rate on low-value Chinese goods sent through international mail was as high as 120%, while commercial carrier shipments faced tariffs of up to 145%. These rates were reduced following constructive trade negotiations that eased tensions between the two countries.

Although President Trump’s executive order applies only to imports from China, it appears to signal a broader effort to eliminate de minimis duty-free privileges altogether. A provision in the Big Beautiful Bill, passed by Congress and signed into law on July 4, ends de minimis exemptions for imports from all countries beginning July 1, 2027.⁵ As a result, international online shopping may become even more complicated, particularly if the administration’s proposed reciprocal tariffs — which differ by trading partner — remain in place.

On May 28, the U.S. Court of International Trade ruled that President Trump exceeded his authority under the International Emergency Economic Powers Act (IEEPA) when imposing sweeping tariffs on goods from nearly every country, including China. While the ruling likely affected the de minimis exemption, it was appealed, and a higher court issued a temporary stay. For now, the president’s tariffs and related trade measures remain in effect.⁶ Regardless of how the courts rule, the future of the de minimis exemption has largely been settled by congressional action.

Shopping Online? Look Closely Before You Click

When purchasing from U.S.-based e-commerce platforms — whether a small retailer or a major marketplace like Amazon — duties on imported Chinese goods have already been paid and are typically reflected in the listed price. Retailers often pass at least part of these added costs on to consumers, raising concerns about higher prices overall, particularly for big-ticket items such as electronics, vehicles, and appliances.

Consumers should also be cautious when buying inexpensive items from unfamiliar online marketplaces or targeted advertisements. In some cases, significant duties may apply even to low-cost purchases. Importantly, duties are based on the product’s country of origin, not the seller’s location. Goods manufactured in China may be subject to tariffs even if they are sold by companies based in countries such as Canada or the United Kingdom. Before placing an order, shoppers should verify where the product ships from and, if necessary, confirm where it was made.

Ideally, sellers will clearly disclose whether duties apply so consumers can make informed decisions. Terms such as delivered duty paid (DDP) generally indicate that duties are included at checkout and paid by the seller. In contrast, delivered duty unpaid (DDU) or tax unpaid shipping means the buyer should expect a separate bill from the carrier upon delivery.

If unexpected duties arise, consumers may either pay the charges or refuse the shipment. However, depending on the seller’s return policy, this could result in return shipping fees or a loss of refund altogether. While surprise duty charges may decline as sellers and carriers adapt to evolving trade rules, higher consumer costs resulting from steep tariffs are likely to persist. On April 2, 2025, President Trump signed an executive order that ended the de minimis exemption for low-value imports from China. This rule had allowed U.S. consumers to buy goods worth up to $800 without paying import duties. The policy took effect on May 2. Since then, many shoppers have received unexpected notices from shipping carriers. In some cases, the requested duties exceeded the value of the items ordered.¹

A tariff is a tax on imported goods. The Trump administration uses tariffs to protect domestic industries, raise government revenue, and strengthen its position in trade negotiations. The term “duty” has a broader meaning. It includes several fees that importers must pay when goods cross borders. These charges may include tariffs, customs brokerage fees, excise taxes, and other related costs.

In 2015, U.S. lawmakers increased the de minimis exemption from $200 to $800. Because of this change, many Americans grew used to buying low-cost items without thinking about shipping origins or duties. These items often include clothing and household goods. In contrast, countries such as Canada and members of the European Union maintain lower thresholds. Consumers there often expect to pay duties on international online purchases.²

Critics argue that the de minimis exemption harms U.S. manufacturers and retailers. They also say it allows illegal and dangerous products to enter the country with less inspection. These products may include fentanyl and counterfeit luxury goods.³

Tax Rates in Flux

As of May 14, goods worth $800 or less shipped through the U.S. Postal Service from China or Hong Kong face a tariff of 54% of their value. Importers may also choose a flat fee of $100 per package. Commercial carriers apply a default tariff rate of 30% to low-value Chinese goods.⁴

Earlier in May, tariff rates were much higher. International mail shipments faced tariffs of up to 120%. Commercial carrier shipments reached as high as 145%. Trade negotiations later reduced these rates and eased tensions between the two countries.

Although the executive order applies only to Chinese goods, it signals a broader policy shift. Congress reinforced this direction through the Big Beautiful Bill. The law ends de minimis exemptions for all countries starting July 1, 2027.⁵ International online shopping may become more complex, especially if reciprocal tariffs remain in effect.

On May 28, the U.S. Court of International Trade ruled that President Trump exceeded his authority under the IEEPA. The ruling addressed broad tariffs on goods from many countries, including China. The administration appealed the decision, and a higher court issued a temporary stay. As a result, current tariffs remain in force.⁶ Congress has already settled the future of the de minimis exemption through legislation.

Shopping Online? Look Closely Before You Click

When shoppers buy from U.S.-based e-commerce platforms, import duties have already been paid. Retailers usually include these costs in the listed price. Many businesses pass part of the tariff burden to consumers. This shift may raise prices, especially for electronics, appliances, and vehicles.

Shoppers should remain cautious when purchasing from unfamiliar online marketplaces. Targeted ads may promote low-cost items that carry high duties. Duties apply based on where the product was made, not where the seller operates. A company based in Canada or the U.K. may still ship goods made in China. Before placing an order, buyers should confirm the shipping location and country of origin.

Clear pricing transparency helps consumers make informed decisions. Delivered duty paid (DDP) shipping usually includes duties at checkout. Delivered duty unpaid (DDU) or tax unpaid shipping means the carrier will bill the buyer later.

If unexpected duties appear, buyers may pay the charges or refuse the delivery. Some sellers may charge return shipping fees or deny refunds. Over time, surprise duties may become less common. However, higher consumer costs linked to steep tariffs are likely to remain.

Sources

1. The New York Times, June 12, 2025
2. New York Magazine, April 24, 2025
3. The New York Times, May 1, 2025
4. Time Magazine, May 14, 2025
5. The Wall Street Journal, July 2, 2025
6. The Wall Street Journal, June 11, 2025