The Impact of De Minimis Exemption Changes on 3PLs and E-Commerce Sellers Introduction

The Impact of De Minimis Exemption Changes on 3PLs and E-Commerce Sellers

About De Minimis Exemption

The de minimis exemption allows U.S. imports valued under $800 to enter duty-free without extensive customs procedures. This rule, in place since 2016, has fueled a boom in cross-border e-commerce by enabling millions of small parcels to enter the U.S. without incurring tariffs. Platforms like Shein, Temu, and AliExpress have built their business models around this exemption, offering ultra-low-cost goods shipped directly from China to U.S. consumers.

However, the U.S. government is now tightening restrictions on de minimis shipments, particularly from China, Canada, and Mexico. The Biden administration has temporarily kept the exemption for Canada and Mexico but plans to phase it out once a better tariff collection system is in place.

Meanwhile, bipartisan efforts in Congress, such as the Import Security and Fairness Act, seek to restrict or eliminate the exemption for non-market economies like China.

These changes will significantly impact third-party logistics providers (3PLs), e-commerce sellers, and fulfillment centers. This article explores the policy implications, economic effects, business responses, and future trends surrounding these reforms.

Policy Implications

Alignment with Broader Trade Policy

The move to restrict de minimis is part of a larger U.S. trade policy shift toward stricter enforcement and reciprocity. Critics argue that the $800 threshold put U.S. manufacturers and retailers at a disadvantage, allowing Chinese e-commerce giants to sidestep tariffs while American businesses paid full import duties. Lawmakers, including Sen. Bill Cassidy (R-LA), have called the exemption a "loophole that benefits China", enabling companies to flood the market with cheap, potentially unregulated goods.

This policy shift aligns with Section 301 tariffs on China, which were imposed under the Trump administration and maintained under Biden. Until now, de minimis shipments provided a backdoor for Chinese sellers to avoid these tariffs. The crackdown on de minimis entries is meant to close that loophole, ensuring that all imports, regardless of value, comply with tariff regulations.

Economic Impact on Cross-Border Trade

The policy change will reshape trade dynamics with China, Canada, and Mexico. The U.S. imports over 1.3 billion de minimis shipments annually, with around 60% coming from China. Analysts estimate that the number of duty-free parcels could drop by 60%, affecting platforms like Shein and Temu, which may have to raise prices or absorb higher costs (Bloomberg).

Trade with Canada and Mexico will also feel the effects. The temporary extension of de minimis for these countries suggests that the U.S. government is wary of disrupting regional e-commerce flows. However, once the exemption is removed, companies using Mexico as a logistics hub to bypass tariffs will face higher compliance costs.

Political and Industry Reactions

The domestic manufacturing sector supports these changes, arguing that restricting de minimis will help U.S. businesses compete. The National Council of Textile Organizations and other trade groups have long pushed for closing what they call an unfair loophole. However, logistics providers and e-commerce platforms warn that an abrupt shift could overwhelm customs agencies and increase shipping delays.

For example, when China briefly lost de minimis status in early 2024, U.S. Customs faced massive backlogs, and major carriers, including FedEx and USPS, struggled to process shipments (Supply Chain Dive). Policymakers are now trying to phase in changes gradually to avoid another disruption.

Effects on 3PLs and E-

Commerce Sellers

Challenges for 3PLs and Fulfillment Centers

Third-party logistics providers that specialize in cross-border fulfillment are facing new operational hurdles. The elimination of de minimis means:

• More paperwork and customs filings for previously duty-free shipments.

• Higher costs for import processing, leading to increased shipping fees.

• A shift from direct international shipping to U.S.-based fulfillment models.

Some ecommerce sellers are already adapting by importing in bulk rather than handling individual shipments. By warehousing inventory inside the U.S., they can clear goods through customs once and fulfill orders domestically, avoiding new compliance burdens.

Impact on Small and Mid-Sized E-Commerce Sellers

Small online sellers who rely on drop-shipping from China will be hit the hardest. Many built their business models on sourcing low-cost goods and shipping them directly to customers under de minimis rules. Now, they must choose between:

• Raising prices to cover new tariffs.

• Absorbing higher costs and taking a hit to margins.

• Switching to domestic or nearshore suppliers, which may be more expensive but reduce import complexity.

Some sellers are already exploring Fulfillment by Amazon (FBA) and third-party U.S. warehouses to mitigate the impact. However, this requires higher upfront inventory investment, making it less viable for smaller businesses.

Potential Business Responses

Shifting to Domestic or Nearshore Fulfillment

E-commerce brands and 3PLs are increasingly moving inventory closer to customers. Companies are now:

• Using U.S.-based 3PLs to store and ship products domestically.

• Exploring Mexican and Canadian fulfillment centers under USMCA trade advantages.

• Importing in bulk and using domestic distribution networks.

This shift allows sellers to maintain faster shipping times while avoiding customs delays and higher per-unit tariff costs.

Customs Compliance Strategies

To navigate new import requirements, businesses are:

• Leveraging customs brokers to classify shipments and optimize duty payments.

• Using Foreign Trade Zones (FTZs) to defer or reduce tariff costs.

• Adopting duty-paid shipping (DDP models) to improve customer experience.

Marketplaces like Amazon, eBay, and Shopify are integrating automated duty calculation tools, allowing sellers to charge import fees at checkout rather than surprise customers with unexpected costs.

Final Thoughts

The tightening of de minimis rules represents a major shift in global e-commerce logistics. While these policies aim to level the playing field for U.S. manufacturers, they introduce new costs and complexities for 3PLs and small online sellers.

Businesses must adapt by restructuring supply chains, leveraging technology, and investing in compliance expertise. The future of cross-border e-commerce will likely favor regional fulfillment models and automated customs processing, requiring companies to rethink how they import and distribute goods. For those who navigate these changes strategically, there will be opportunities amid the disruption.