Tariff Changes and the End of De Minimis: What Ecommerce Sellers Need to Know in 2025–2026

Two major trade policy changes have fundamentally altered the cost structure for ecommerce sellers sourcing from China. On August 29, 2025, the United States eliminated the de minimis exemption that had allowed packages valued under $800 to enter duty-free. Combined with Section 301 tariffs that have reached 145% on certain Chinese goods, sellers who built their business model on cheap direct-from-China shipments are facing a completely different landscape.

This guide explains what changed, what it means for your landed cost, and what strategies sellers are using to adapt.

What Was the De Minimis Rule?

The de minimis exemption under Section 321 of the Tariff Act allowed individual packages valued at $800 or less to enter the United States without paying customs duties or going through formal entry procedures. This rule was the foundation of the business model for platforms like Shein, Temu, and AliExpress — and for many small ecommerce sellers who shipped directly from Chinese warehouses to US customers.

In 2024, approximately 4 million de minimis packages entered the US every day, totaling over $1 billion in daily shipments. The exemption effectively subsidized direct-from-China ecommerce by eliminating the duty cost that domestic sellers and importers had to pay.

What Changed on August 29, 2025

As of August 29, 2025, the de minimis exemption was eliminated for all countries. Every package entering the United States, regardless of value, is now subject to customs duties and formal entry procedures. For packages from China specifically, this means:

• A 120% ad valorem tariff on the declared value of the goods, or
• A flat fee of $100 per item (rising to $200 per item after May 2026)

The importer or shipper pays whichever amount is higher. For a $20 item, the flat fee of $100 is far higher than 120% of $20 ($24). This effectively makes direct-from-China dropshipping to US customers economically unviable for most product categories.

Section 301 Tariffs: The Existing Layer

The de minimis change is on top of, not instead of, the existing Section 301 tariffs on Chinese goods. Section 301 tariffs were first imposed in 2018 and have been expanded and increased multiple times since. As of early 2026:

The total tariff rate on Chinese goods is the sum of the base MFN duty rate, the Section 301 rate, and any additional IEEPA tariffs applied in 2025. For some categories, this total has reached 145%.

How to Find Your Product's Exact Tariff Rate

Every product imported into the United States has a Harmonized Tariff Schedule (HTS) code that determines its exact duty rate. To find your product's rate:

1. Look up your product's HTS code at hts.usitc.gov
2. Note the base MFN (Most Favored Nation) duty rate
3. Check the USTR Section 301 list for your HTS code at ustr.gov
4. Add any applicable IEEPA tariff rates
5. The total is your effective duty rate on Chinese-origin goods

Your customs broker can also provide this calculation — it is a standard part of their service and worth asking for before you place a large order.

How This Changes Your Landed Cost Calculation

Before these changes, a seller importing $10,000 worth of goods from China (500 units at $20 FOB cost) might have paid:

A 20%+ increase in landed cost on a product with a 40% gross margin reduces that margin to approximately 33% — a significant hit that can make previously profitable products unviable.

Strategies Sellers Are Using to Adapt

1. Diversify Sourcing to Lower-Tariff Countries

Vietnam, India, Mexico, and Bangladesh have become increasingly popular alternatives to China for many product categories. These countries are not subject to Section 301 tariffs and have significantly lower effective duty rates. The trade-off is typically higher per-unit costs and longer lead times to build supplier relationships.

Mexico benefits from USMCA (formerly NAFTA), which provides duty-free access for qualifying goods. For sellers who can find Mexican manufacturers, this is a significant cost advantage.

2. Negotiate Lower FOB Prices to Offset Tariff Increases

Some Chinese suppliers have absorbed a portion of tariff increases to retain customers. If you have an established relationship with a supplier, it is worth negotiating a price reduction to offset the tariff impact. Suppliers who want to retain your business may be willing to accept lower margins.

3. Apply for Section 301 Exclusions

The USTR periodically opens exclusion processes that allow importers to apply for exemptions from Section 301 tariffs for specific products. If your product is not commercially available outside China, you may qualify for an exclusion. The process is time-consuming but can result in significant savings.

4. Raise Prices (and Communicate Why)

In a market where all sellers sourcing from China face the same tariff increases, price increases are more defensible than they were before. Customers who understand that tariffs are a government-imposed cost are more accepting of price increases than they would be for unexplained margin grabs.

5. Recalculate Your Minimum Viable Margin

The most important immediate action is to recalculate your landed cost and gross margin for every product with Chinese sourcing. Products that were marginally profitable before tariff increases may now be loss-makers. Identify which products are still viable at the new cost structure and which need to be repriced, re-sourced, or discontinued.

The Supreme Court Tariff Decision (February 2026)

In February 2026, the US Supreme Court issued a ruling that raised questions about the legal authority for the IEEPA-based tariffs imposed in 2025. As of March 2026, the situation remains in flux — the ruling did not immediately eliminate the tariffs, and the legal and political process for resolving the question is ongoing.

Sellers should not make sourcing decisions based on the assumption that tariffs will be eliminated. Plan for the current tariff environment and treat any reduction as a potential upside, not a baseline assumption.

References

[1] NPR. "De Minimis Is Ending. What Does That Mean for U.S. Consumers?" August 2025.

[2] DHL. "What Does the Removal of U.S. De Minimis Tariff Mean for Your Business?" September 2025.

[3] Nventory. "2026 US Tariff Changes for Ecommerce Sellers." February 2026.

[4] Strtrade. "Section 301 Tariffs on China." Continuously updated.

[5] Saltbox. "Supreme Court Kills Trump Tariffs: What Ecommerce Sellers Need to Know." February 2026.