A quiet executive order could soon make your next online purchase a lot more expensive. By moving to eliminate the de minimis tariff exemption, the Trump administration is effectively slapping a tax on all cheap imports—a policy that punishes consumers, especially low-income Americans, in the name of economic nationalism.
Since its inception in 1938 the de minimis exemption has evolved from a tool for tax efficiency into an engine of e-commerce and small business success. At first it only allowed imports to enter America tariff free if it would cost too much to collect the tax, eventually growing to allow any imports under $800 to enter duty free. Between 2015 and 2023, de minimis exempt shipments surged from 139 million to over one billion annually. Critics, from labor unions and domestic manufacturers to human rights groups, argue the exemption enables drug smuggling, counterfeits, products made with forced labor, and other illicit goods to enter the country without scrutiny.
But eliminating the de minimis exemption comes with real costs. One estimate suggests consumers and businesses could pay up to $47 billion more per year without it. These costs aren’t spread evenly: roughly three-quarters of purchases in the poorest U.S. zip codes employ the de minimis exemption, compared to just over half in the wealthiest. While everyone will end up paying more, removing the de minimis exemption will hit lower-income Americans the hardest.
American businesses would also be hit hard. The de minimis exemption has empowered startups, e-commerce ventures, and small businesses to access international supply chains without dealing with expensive tariffs and complex customs procedures. The exemption helps them compete with the economies of scale of their larger competitors. Removing de minimis exemptions would reduce small business margins, slow delivery times, make it harder for them to compete, and ultimately reduce consumer choice.
While concerns that the de minimis system is being abused are valid and need to be addressed, eliminating the de minimis exemption entirely is throwing the baby out with the bathwater. If the current administration wants to stop bad actors while keeping the massive economic benefits for consumers and businesses, there is an alternative: make importers more accountable and transparent—without nuking the system.
First, make reporting requirements mandatory. Right now, importers using the de minimis exemption don’t need to report product categories. Mandating product code reporting for de minimis exempted shipments would give Customs and Border Protection (CBP) the information it needs to spot many problems—without driving up consumer prices.
The systems to make this work already exist and have been quite successful. CBP has been piloting two de minimis data collection programs for years. The Entry Type 86 and Section 321 Data Pilot programs collect product-level and shipper-level data on de minimis exempt shipments. Section 321 has been a particular success with participation in this voluntary system jumping from 29 percent in 2020 to 79 percent by 2023, demonstrating compliance is possible without driving up consumer prices. Building on these efforts is smarter and faster than waiting for the Department of Commerce to conjure up an entirely new tariff collection infrastructure for over a billion packages a year.
Second, require a U.S.-based shipper of record for de minimis imports. This would make any foreign seller shipping under de minimis partner with a domestic entity, which would be legally liable for compliance. This change would dramatically improve enforcement by incentivizing better vetting of foreign sellers, without requiring new infrastructure or bloating bureaucracy.
The elimination of de minimis will be costly for Americans and would ignore the real-world benefits this exemption provides to consumers, small businesses, and the economy. Instead, reforming de minimis to increase transparency and require legal and financial accountability when the rules are broken would protect Americans without driving up prices for everyday goods.
