When de minimis exemptions ended in the U.S. on Aug. 29, following an executive order from the White House, the math shifted significantly for the costs of importing goods that previously fit through the long-standing loophole.
The changes have implications not only for Shein and Temu, two East Asia-based ecommerce giants that benefited when de minimis exceptions were in effect. With the loophole now off the table for U.S. imports from all other countries globally, other marketplaces and online retailers will be forced to adjust as well.
Those impacted will include Coach and Kate Spade owner Tapestry, as well as the online marketplace Etsy. Both have already communicated what the suspension of de minimis rules will mean for them.
When and why did de minimis exemptions end?
On July 30, U.S. President Donald Trump issued an executive order to end duty-free provisions that businesses enjoyed when de minimis rules were in effect. Prior to the order, thanks to a 2016 rules update, businesses could receive shipments valued under $800 in the U.S. without formal customs declarations, import duty and tax obligations. Previously, that bar had been set at $200.
The executive order stated that the suspension of duty-free de minimis treatment for all countries would “be effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on August 29, 2025.”
The annual volume of de minimis shipments into the U.S. peaked during the federal government’s 2024 fiscal year at 1.36 billion. As of June 30, the total for the current fiscal year had reached 945.3 million, according to U.S. Customs and Border Protection.
What the end of de minimis means for retailers
New tariffs and retaliatory tariffs between the U.S. and other countries had already introduced volatility into retailers’ plans and forecasts in 2025. As of May, consumers noticed price increases beginning to follow, recent Digital Commerce 360 and Bizrate Insights survey results showed.
In August, Tapestry shared with investors that it anticipated a hit to profits for the year, attributable to the recent de minimis and tariff changes.
Tapestry faces “greater than previously expected profit headwinds from tariffs and duties with the earlier-than-expected ending of de minimis exemptions being a meaningful factor,” said Scott Roe, the chief financial and operating officer at Tapestry, on an Aug. 14 earnings call.
Roe assessed just how meaningful those headwinds would be, in addition to outlining steps Tapestry was taking in response.
“In aggregate, the total expected impact on profitability this year from tariffs is $160 million, representing approximately 230 basis points of margin headwind,” he stated. “We’re taking thoughtful actions to mitigate these impacts while continuing to deliver the compelling value, quality and innovation that is foundational to our brands.”
Tapestry is No. 47 in the Top 2000 Database. The Top 2000 ranks North America’s largest online retailers by their annual ecommerce sales.
Temu and Shein
In 2023, a briefing from the U.S. International Trade Commission asserted that Shein and Temu together accounted for more than 30% of de minimis imports into the U.S. in 2022. In April, the two companies found themselves among retailers announcing price increases due to tariffs. As that happened, their ad spending to reach U.S. consumers fell, following an extended period of outreach that reportedly included millions of dollars that Temu alone had spent on Super Bowl ads.
Temu ranks No. 14 in Digital Commerce 360’s Global Online Marketplaces Database. The database ranks the 100 largest such marketplaces by annual third-party gross merchandise value (GMV). Shein is No. 67. It is also No. 2 in Digital Commerce 360’s Asia Database ranking ecommerce retailers in the region by annual online sales.
Both Temu and Shein will need to adapt to the new environment as they chart paths to further global expansion. In August, Bloomberg reported that Shein was considering relocating its headquarters from Singapore to Hong Kong. The move would potentially help its efforts to go public there with approval from the Chinese government.
“I think for all retailers, the biggest challenge is the uncertainty,” said John Harmon, managing director of technology research at the firm Coresight Research.
Harmon, who follows online retail activity, expects that companies based in China, even if they are among the hardest hit by U.S. tariffs, also have key advantages.
“Chinese companies are more agile and innovative,” he told Digital Commerce 360. “They can and they have less legacy technology, infrastructure and things to hold them back.”
Etsy’s guidance for sellers
Meanwhile, U.S.-based Etsy updated its seller handbook on Aug. 20, adding guidance for the community on its marketplace.
“As you communicate with your buyers about their orders, keep in mind that some buyers may not have paid tariffs before,” the company wrote. “For example, many US-based buyers have not directly paid tariffs before because of the longstanding $800 de minimis threshold.”
As a result, Etsy is recommending that sellers be transparent with buyers to accurately represent tariffs or costs related to tariffs.
Etsy ranks No. 20 in the Global Online Marketplaces Database.
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