With the end of the de minimis tax exemption taking effect, more changes are in store for footwear retailers and their customers.
On the upside, the move is meant to level the playing field for domestic retailers by closing the loophole that let foreign goods valued under $800 slip into the U.S. duty-free. De minimis is widely blamed for the rise of low-value, fast-fashion imports from ecommerce brands like Shein and Temu, a fad that led to millions of foreign products arriving in the U.S. every day. (The U.S. International Trade Commission estimated in about 83 percent of all e-commerce imports were de minimis in 2022.)
Duty-free exemptions ended in May for all packages from China and Hong Kong, which accounted for about two-thirds of imports. The move made Shein, Temu, and their ilk subject to 30 percent tariffs, an increase shoppers have already seen reflected in higher prices on the companies’ websites.
“Chinese retailers who previously utilized the de minimis program have likely begun to develop or update their import compliance programs to meet U.S. Customers and Border Protection admissibility requirements,” says Lucas Rock (above), an associate with law firm ArentFox Schiff specializing in international trade matters and tariff regulations. “They’ve also likely needed to increase their import bonds to account for the increased duties.”
Ending de minimis for all imports means shoppers who buy footwear and other goods from abroad are likely in store for higher prices. “Duties, along with the administrative costs of adhering to admissibility requirements, will likely be passed on to U.S. consumers,” Rock predicts.
What’s more, with virtually every imported package in need of a customs declaration stating its value and its contents’ place of origin, and no simple answers about who will collect tariffs and how, there is a lot of confusion among suppliers and foreign post offices. Delayed shipments as foreign companies grapple with red tape and unfamiliar forms—not to mention complications with any returns and exchanges—may frustrate shoppers.
All this sounds like good news for U.S. footwear retailers. On the downside, though, the end of de minimis may add a layer of bureaucracy for U.S. businesses too, according to Rock. “If U.S. retailers purchase goods or materials that previously qualified for duty-free de minimis treatment, they will see the costs of these goods increase,” he cautions. “They may also need to develop import compliance processes they didn’t need to maintain previously.”
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