Tariff Watch: The End Of The De Minimis Loophole Has Arrived

For years, the U.S. de minimis exemption served as a quiet engine powering the rise of cross-border e-commerce. Under this rule, imported shipments valued at $800 or less could zip through customs without tariffs or elaborate paperwork, a boon for consumers, small sellers and international brands looking to reach U.S. shoppers directly, one package at a time.

But as of August 29, 2025, that era is over. While the Trump administration had ended this loophole with China and Hong Kong as of May 2, the loophole has now closed globally. With the stroke of a regulatory pen, nearly all imports, regardless of value or origin, are now subject to the full weight of U.S. tariffs, customs declarations and taxes. The implications for fashion, consumer goods and online retail are profound.

At the most practical level, every low-priced item arriving from abroad, whether that’s a $12 pair of socks or a $50 skincare kit, now faces a potentially hefty tariff. That could mean an added 15%, 25%, or even more on top of the sale price, depending on the country of origin. The change hits hardest at the business models that flourished under the old regime: direct-to-consumer brands, global marketplaces and the viral drop-shippers who had mastered the art of rapid, inexpensive delivery from overseas warehouses straight to the American doorstep. One early sign of the strain is Canada-based retailer Ssense, which recently filed for bankruptcy protection and pointed directly to US trade policies as a key factor.

With the exemption gone, administrative costs are set to soar. Every shipment, no matter how small, requires full customs clearance. Automation and digital filing offer some relief, but the days of quick, hands-off entry, especially through programs like Entry Type 86, are history. Many e-commerce sellers and logistics providers now face a mountain of new compliance work, from accurately reporting country of origin to meeting FDA pre-entry reviews on regulated products.

For American shoppers, the new rules will be felt immediately and uncomfortably. Checkout totals will climb as duties are passed along, and the convenience of quick, cheap direct imports will give way to slower or less frequent consolidated shipments. Some low-cost imports may disappear entirely, unable to absorb the tariff shock.

We’re already seeing the effect at checkout; for example, a duty of more than 30% applied directly to a customer order. At the same time, many smaller businesses are warning customers of shipment delays or temporary pauses, as they wait for clarity on tariff enforcement or hope for a reduction in duty rates.

Behind the scenes, a key avenue for cost-cutting, misstating value or routing goods through third countries to sidestep tariffs, is now largely closed. Transparency and compliance are the order of the day.

In theory, closing the de minimis loophole creates a fairer marketplace. Domestic brands have long argued that foreign sellers exploited the system, enjoying price and process advantages. By forcing all importers—large and small, mass and boutique—to play by the same tariff rules, the field is indeed leveled. But that new level comes at a steeper cost for every stakeholder in the supply chain.

Those thriving in the direct-to-consumer, global dropship model face urgent questions.
Sourcing, pricing, logistics and customer experience must be reimagined in this new, tariff-heavy landscape. Third-party logistics firms will need to handle vastly more customs work, potentially grappling with capacity bottlenecks and pushback on rising fees.

Most crucially, brands must decide whether to absorb these new costs or pass them along to shoppers—who may be less forgiving and more price-sensitive than ever. The end of the de minimis exemption doesn’t just tweak the math on imports. It signals a new chapter in the story of U.S. trade: one where agility and compliance are as vital to success as style and speed.

The tariff environment is now a permanent fixture of the retail landscape, not a temporary disruption. Brands that respond proactively, with clear contingency planning and nimble pricing strategies, will be best positioned to protect margins and preserve consumer trust.

The next few weeks will be pivotal. We’ll continue monitoring the data and will share updated insights as the situation evolves.

To track ongoing price and product shifts in your category and competitive set, visit our Tariff Watch Dashboard.

Centric Software® (centricsoftware.com)

From its headquarters in Silicon Valley, Centric Software provides an innovative and AI-enabled product concept-to-commercialization platform for retailers, brands and manufacturers of all sizes. As experts in fashion, luxury, footwear, outdoor, home, food & beverage, cosmetics & personal care as well as multi-category retail, Centric Software delivers best-of-breed solutions to plan, design, develop, source, comply, buy, make, price, allocate, sell and replenish products. 

• Centric PLM™, the leading PLM solution for fashion, outdoor, footwear and private label, optimizes product execution from ideation to development, sourcing and manufacture, realizing up to 50% improvement in productivity and a 60% decrease in time to market.
• Centric Planning™ is an innovative, cloud-native, AI solution delivering end-to-end planning capabilities to maximize retail and wholesale business performance, including SKU optimization, resulting in an up to 110% increase in margins.
• Centric Pricing & Inventory™ leverages AI to drive margins and boost revenues by up to 18% via price and inventory optimization from pre-season to in-season to season completion.
• Centric Market Intelligence™ is an AI-driven platform delivering insights into consumer trends, competitor offers and pricing to boost competitivity and get closer to the consumer, with an up to 12% increase in average initial price point.
• Centric Visual Boards™ pivot actionable data in a visual-first orientation to ensure robust, consumer-right assortments and product offers, dramatically decreasing assortment development cycle time.
• Centric PXM™, AI-powered product experience management (PXM) encompasses PIM, DAM, content syndication and digital shelf analytics (DSA) to optimize the product commercialization lifecycle resulting in a transformed brand experience. Increase sales channels, boost sell through and drive margins.

Centric Software’s market-driven solutions have the highest user adoption rate, customer satisfaction rate and fastest time to value in the industry. Centric Software has received multiple industry awards and recognition, appearing regularly in world-leading analyst reports and research.

Centric Software is a subsidiary of Dassault Systèmes (Euronext Paris: #13065, DSY.PA), the world leader in 3D design software, 3D digital mock-up and PLM solutions.

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