One development that has not received as much attention in President Trump’s tariff upheaval is his latest move to eliminate the de minimis exception for certain goods purchased by American consumers, which took effect on May 2nd.
The de minimis rule has allowed Americans to receive overseas purchases swiftly and affordably, fueling everyday convenience and expanding consumer choice. Many American small businesses have also come to count on de minimis shipments in their supply chains, with one study confirming that savings for small businesses are “disproportionately large.”
The policy has been in place since 1938, and was created “to avoid expense and inconvenience to the Government disproportionate to the amount of revenue that would otherwise be collected,” as well as allowing for expedited shipments to consumers by avoiding bureaucratic entry paperwork for every low-dollar item. The current $800 threshold was set in 2015. Analysis
A National Bureau of Economic Research paper found that the pre-Trump de minimis policy was “pro-poor.” Eliminating it will cost those with lower incomes between $10.9 billion and $13 billion. Analysis by Oxford Economics shows a 40 to 55 percent cost increase for American consumers by restricting de minimis shipping. Notably, those deep dives were done before Trump initiated the current tariff war.
That ongoing tariff roller coaster is of course creating massive uncertainty and economic instability. But refining the de minimis system to preserve its benefits while also enhancing security measures can be a simple fix.
The Trump Administration issued an Executive Order on April 2, “eliminating duty-free de minimis treatment for low-value imports from China, a critical step in countering the ongoing health emergency posed by the illicit flow of synthetic opioids into the U.S.”
Stopping fentanyl is certainly uncontroversial—and yet there is nothing in the Order or subsequent administration action addressing security measures to combat any illicit substance related to relevant shipping processes. Current law does provide a foundation—all imports are subject to inspection for fentanyl and other drugs, counterfeits, products produced by forced labor, etc., as U.S. Customs and Border Protection (CBP) outlines. The Drug Enforcement Agency (DEA), meanwhile makes an extensive case for cross-border enforcement as the most effective way to counter smuggling.
The April 2nd Order is Trump’s second attack on de minimis this year. A similar Order in early February proved disastrous. Customs and Border Protection officials scrambled to deal with incoming shipments. The “administration put the order on hold after more than a million packages piled up at New York's John F. Kennedy International Airport.” Even packages for which import fees were paid were affected, as were other processing facilities.
The best path forward is to implement efficient reforms and procedures to ensure proper screening of packages without overburdening CBP and to increase accountability measures to prevent unscrupulous operators from exploiting the system.
The American Consumer Institute’s recent report on “Consumer-Friendly Alternatives to Ending De Minimis” recommends that “foreign shippers partner with a U.S. firm that assumes legal and civil responsibility for compliance with U.S. laws.” ACI predicts the effect: “by requiring a U.S.-based shipper of record, those U.S. companies are incentivized to investigate and vet importers to prevent problems before they happen.”
Establishing Importers of Record (IOR), which almost certainly requires surety bonds to hold e-commerce companies responsible if they do put illicit products into their packages, is a practical way to both address concerns about the flow of fentanyl.
The downside would be a price increase for American consumers, an effect that ACI acknowledges. But any increase is highly likely to be more palatable than what would result from other regulations or killing de minimis altogether.
Another option would be to expand CBP programs that have been improving oversight of de minimis imports. One is the Entry Type 86 Test Program that requires electronic reporting of imports for proper classification. The other is the Section 321 Data Pilot Program, a system that collects detailed shipment data, including the names and addresses of the sender and recipient.
Both established procedures increase the information customs officials have about incoming goods, helping to stop illegal shipments and increasing accountability for bad actors. Unfortunately, ACI notes that “these programs are likely to be of limited use as de minimis exemptions are phased out by President Trump’s recent Executive Order.”
Ignoring the capabilities of existing government processes and crippling what has been an efficient system that helps ordinary Americans pay much less for their purchases is counterproductive, especially when it won’t result in the stated goal of combating fentanyl.
Instead, the Administration should look to strike the right balance by establishing consistent, transparent rules and strong accountability measures. A smartly recalibrated de minimis rule can both preserve Americans’ access to affordable goods they choose to purchase and increase protection against illicit substances.
Mario H. Lopez is the president of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity and prosperity for all.
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