The End of ‘De Minimis’: How the US Tax Policy Shift is Transforming Cross-Border E-Commerce

New presidents bring new waves.

On February 1, 2025, the U.S. President signed an executive order, introducing a series of significant tariff policy adjustments. Among them, the exemption policy for packages valued under $800 was canceled, causing a huge stir in international trade and cross-border e-commerce. This policy, which took effect at 12:01 a.m. Eastern Time on February 4, 2025, is one of the major challenges the cross-border e-commerce industry has faced in recent years. The policy not only imposes new tariffs on China, Canada, and Mexico—25% on the latter two and 10% on China—but also cancels the long-standing “de minimis” exemption policy. Previously, goods valued under $800 could enter the U.S. market tariff-free, but this convenience is now gone, and the impact is enormous.

This policy change directly alters the cost structure for cross-border e-commerce entering the U.S. market. Both large e-commerce platforms and small and medium-sized sellers need to re-evaluate their operational strategies.

Behind the U.S. Policy Change

Increasing Fiscal Revenue: The Peterson Institute for International Economics estimates that the new policy will add approximately $12 billion in tariff revenue for the U.S. annually. Data from U.S. Customs and Border Protection shows that in the first nine months of 2024, U.S. consumers imported about $48 billion worth of goods globally through this exemption policy, highlighting its significant impact on tariff revenue.

Protecting Domestic Industries: According to the National Retail Federation, Chinese cross-border e-commerce has captured 38% of the U.S. fast-fashion market, putting immense pressure on local businesses. These businesses have been lobbying the government to adjust policies to protect domestic industries.

Strategic Containment: Against the backdrop of the U.S.-China tech war, the U.S. aims to restrict China’s digital economy from expanding overseas, using this as a new strategic containment tool. On the day the policy was announced, the market value of Temu’s parent company plummeted by $12 billion, highlighting the capital market’s sensitivity to this move.

Public Safety Concerns: The Trump administration believes that the exemption policy has loopholes that are exploited by criminals, becoming a smuggling channel for drugs like fentanyl. U.S. lawmakers have pointed out that fentanyl and its precursor chemicals use the exemption to evade customs checks, posing a threat to public health and safety.

From these reasons, it is clear that the U.S. policy adjustment is the result of a combination of factors. The cross-border e-commerce industry must not only focus on the surface tariff changes but also deeply understand the strategic intentions behind them to better formulate response strategies.

Impact on Cross-Border E-commerce

Price System Collapse: A cross-border logistics company estimates that the 10% tariff, combined with increased logistics costs, will raise the terminal price of goods by 15%-20%. For example, a popular $5 T-shirt on T platform might rise to $6, severely shaking its price competitiveness.

Logistics Model Restructuring: The current “single-piece direct mail” model, with its high per-package customs clearance costs, forces companies to switch to bulk sea freight. However, this consolidated shipping model requires pre-stocking in overseas warehouses, posing a huge challenge to supply chain response speed.

Market Share Shuffle: Morgan Stanley predicts that the new policy could lead to a 30% plunge in China’s cross-border e-commerce exports to the U.S., with some small and medium-sized sellers potentially exiting the U.S. market due to cost pressures. Well-known e-commerce platforms like Alibaba, JD.com, Temu, and Shein are all affected, with Temu, once rapidly growing, now facing difficulties.

E-commerce Platforms’ Response Strategies

Overseas Warehouse Pre-stocking: Some platforms plan to build 10 North American warehouses by 2025, reducing logistics time to 3 days, but this also lowers inventory turnover rates by 40%.

Supply Chain Localization: Temu is in talks to acquire a U.S. brand, but faces risks of cultural integration and quality control.

Tariff Cost Pass-through: AliExpress is piloting a “tariff transparency plan,” but tests show an 18% drop in order conversion rates.

Third-Country Transshipment: Some sellers are shifting production to Mexico, but face restrictions from the North American Free Trade Agreement’s rules of origin.

Social Impact of the Policy Change

The cancellation of the exemption policy significantly affects low-income consumers in the U.S. A Yale University professor points out that this group relies on low-priced goods from cross-border e-commerce. After the policy change, they will have to pay more tariffs, increasing their living costs and compressing their consumption budgets.

From a societal perspective, this policy adjustment may trigger a series of chain reactions. Low-income U.S. consumers may reduce cross-border shopping and seek alternatives, which will indirectly impact the sales of Chinese cross-border e-commerce in the U.S. market.

Conclusion

In the face of globalization and frequent policy changes, Chinese cross-border e-commerce must actively respond. In the future, expanding new market channels, controlling costs, innovating products, and exploring new logistics and supply chain models are all directions worth paying attention to and exploring.

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