President Donald Trump’s sweeping executive order to eliminate duty-free treatment for low-value imports from China — using the de minimis exemption — is sending shockwaves across the ecommerce and direct-to-consumer (DTC) landscape, forcing brands to rethink pricing, sourcing, and inventory strategies as tariffs threaten to reshape the industry’s financial foundation.
Signed April 2, the order ends the de minimis exemption for goods under $800 shipped from China and Hong Kong, effective May 2. For years, the de minimis loophole allowed global ecommerce players like Shein and Temu to flood the U.S. market with low-cost products delivered directly to American consumers — all without paying duties.
Now, those shipments will be subject to standard tariffs. Meanwhile, packages moving through postal services face a flat 30% duty or a minimum of $25 charge per item, rising to $50 in June.
According to tax-compliance firm Avalara, over 1 billion de minimis shipments entered the U.S. last year. That’s an estimated $55 billion worth of merchandise, or 5% of total 2024 U.S. ecommerce volume.
“This is a major structural shift,” said Andrew Sebastian, lead analyst at eComm Insights. “Fast fashion and DTC brands have long relied on the low cost of global shipping to deliver competitively priced goods. With that advantage eroding, we’re looking at major disruptions to margins, pricing, and consumer expectations.”
How changes to the de minimis exemption affect ecommerce
The new policy is part of a broader crackdown on illicit fentanyl shipments, which the White House says are often concealed in small, low-value packages from China. But the economic fallout could be just as profound as the policy’s public health goals.
In a research note released the night of April 2, analysts from investment firm Baird warned investors to prepare for earnings turbulence.
“We wish this was another note about AI or generative technologies,” wrote Baird senior analyst Colin Sebastian. “But if these tariffs aren’t part of a short-term negotiating strategy, then investors should brace for earnings cuts across the sector.”
Ecommerce industry reactions to tariffs
To understand how the industry is reacting, DTC Newsletter & Podcast surveyed more than 500 direct-to-consumer brands this week. The findings paint a clear picture: The pain is widespread, and it’s only just beginning.
Across all revenue brackets, 49% of brands said the new tariffs have significantly increased their landed product costs. Meanwhile, another 24% reported smaller cost hikes. Just 11% saw no impact, and 16% said they’re still unsure — signaling that uncertainty remains high.
Notably, 76% of survey respondents were U.S.-based, yet there was little difference in sentiment between American and international brands.
“Tariff pressure is being felt globally,” said one survey contributor. “This isn’t just a U.S. issue — it’s a shake-up for cross-border commerce.”
When asked about the timing of the impact, 34% of brands said they expect a hard hit on their very next purchase order. Another 31% expect the squeeze to come within 3 to 6 months. Already, 22% are reporting margin compression.
How retailers plan to manage tariffs
In response, most brands are moving quickly to protect profitability:
- About 71% said they plan to raise prices.
- 45% are seeking new suppliers.
- 34% are cutting costs or laying off staff.
- 41% are pausing growth initiatives.
- 23% are reducing order volumes.
These are signs indicating that the policy is triggering ripple effects in hiring, planning, and inventory.
13% of respondents selected “other” when asked about their response strategy. Some reported taking no action — either because they’re unaffected, still assessing the situation, or already insulated through domestic sourcing. Others are getting creative: launching new revenue streams, adjusting warehouse logistics, or improving operational efficiency to absorb the impact.
Larger brands appear especially exposed. Among companies generating over $10 million in annual revenue, 40% expect their next purchase order to be significantly affected — compared to 30% of brands under $1 million. This suggests that while some smaller players may weather the change, the largest and most globalized DTC businesses could bear the brunt.
“The financial squeeze is just beginning,” said eComm’s Sebastian. “For many in ecommerce, this isn’t just a pricing challenge — it’s a moment of reckoning. The advantage of ultra-cheap imports is vanishing, and the industry must now adapt or fall behind.”
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