The End of the De Minimis Exemption for China and Hong Kong: What U.S. Businesses Need to Know
Starting May 2, 2025, the U.S. government eliminated the $800 de minimis exemption for goods imported from China and Hong Kong. This exemption previously allowed shipments valued under $800 to enter the United States without formal customs entry or the payment of tariffs. With this change, all shipments from these regions, regardless of value, now require full customs clearance and are subject to applicable tariffs, which in some cases can exceed 70% of the landed cost.
This shift has already caused significant disruption. Reports indicate that over 100,000 shipments have been rejected at U.S. ports for failing to comply with the new requirements. For many businesses, especially those in e-commerce, retail, and small-scale import operations, the change means a sudden increase in paperwork, delays, and unexpected costs. Small shipments that were once routine now demand the same level of scrutiny and formalities as larger commercial imports.
The removal of the de minimis exemption is part of a broader effort by U.S. authorities to enforce tariffs more strictly on goods from China and Hong Kong, reflecting ongoing trade tensions and policy shifts. While the policy aims to protect domestic industries and address trade imbalances, it also creates new challenges for companies that rely on low-value shipments from these regions. Importers now face the need to reassess their supply chains, customs processes, and pricing strategies to manage these additional costs and compliance burdens.
For businesses that previously benefited from the exemption, the new rules may require investments in customs brokerage services, enhanced recordkeeping, and more rigorous compliance checks. Many companies will need to upgrade their internal systems to handle the increased volume of customs documentation and ensure accuracy to avoid shipment delays or penalties.
The impact is especially acute for ecommerce businesses that depend on small, frequent shipments from China and Hong Kong. The added tariffs and administrative hurdles could increase costs, forcing some companies to raise prices or absorb losses. In some cases, businesses may need to reconsider their sourcing strategies or consolidate shipments to reduce the number of customs entries.
It’s important to note that these changes do not apply to goods from other countries, so companies sourcing globally might consider diversifying their supply chains to mitigate risks associated with tariffs and customs delays. However, shifting suppliers or manufacturing locations can be costly and time-consuming, and may not be a viable short-term solution for many businesses.
In addition to operational challenges, the new customs requirements increase legal and compliance risks. Misclassification of goods, incorrect tariff codes, or incomplete documentation can lead to fines, shipment seizures, or reputational damage. Businesses must ensure that their customs declarations are accurate and that they stay up to date with evolving regulations.
Staying informed about customs regulations and tariff schedules is critical in this changing environment. Businesses should review their import practices, consult with customs professionals, and consider the financial impact of these changes on their operations. Proactive planning can help mitigate risks and avoid costly disruptions.
If your business is affected by the elimination of the de minimis exemption for China and Hong Kong and you need guidance on navigating the new customs requirements, exploring tariff mitigation strategies, or restructuring your supply chain, tap the button below to get specialized support to help your business manage risks and maintain smooth operations. Understanding the full scope of these changes and preparing accordingly is essential to staying competitive in today’s complex global trade landscape.