Pam Duthie, a 51-year-old U.K.-based artisan, built her business selling Americans a unique way to capture their love of their furry friends.
Her craft venture, selling miniature stuffed replicas of dogs and cats on Dumbo-headquartered Etsy, went international thanks to a U.S. law that exempted small packages from import taxes.
That business model, which Duthie and scores of other online sellers have used for years, was threatened earlier this month when President Donald Trump announced a raft of new tariffs in an effort to overhaul the global economy — including eliminating the exemption for parcels worth up to $800.
While the Trump administration has delayed implementation as they design a system to capture the new tariffs, the sweeping elimination of what’s known as the “de minimis” exemption means the days of Americans cheaply shopping the world’s storefronts from the comfort of their couches could be ending.
“Potentially, we’d be dealing with a lot of angry customers who’ve bought something for $20, $30, and they’re saying, ‘Why am I having to pay more for this?’” Duthie said.
“There’s also the fear, obviously, that this will slow things down,” she added. “If everything starts having to be stopped at customs, then shipping is going to take a lot longer.”
Some Asian e-commerce giants, including Shein and Temu, face an imminent threat with the Trump administration planning to close the exemption for imports from China and Hong Kong on May 2. Sellers from other nations are in limbo while they wait for the White House to announce when their products will no longer cross the border tax free.
The move also carries risks for Trump at home by providing Americans, already on edge about inflation and the state of the economy, a tangible example of how the president’s tariff agenda could upend their online shopping habits.
Shipments claiming the de minimis exemption increased by more than 600% to over one billion packages between fiscal years 2015 and 2024, according to US Customs and Border Protection. Phasing out the exemption could mean each American could pay as much as $89 per year in new taxes, according to a study conducted by the National Bureau of Economic Research.
‘State of flux’
Another merchant, Emmanuel Nwibana, 25, says eliminating the duty-free treatment would threaten his main source of income.
“Most of my sales, my customers come from America. I barely get sales from other areas,” said Nwibana, who sells with his partner Maggie, on Etsy. Orders shipped to the U.S. make up the vast majority of their sales of Kenyan-made beaded jewelry.
The Trump administration has not provided a timeline for when they expect the broad de minimis rollback to take place. That’s left business owners like Chris Grant, a Florida-based seller of clothes, beauty products and other items on Amazon.com Inc.’s platform who buys some of his inventory from Europe, hesitant about future plans.
“The biggest thing that I see is everything is just in a state of flux, and we have no idea what the next step is,” said Grant, who added that his inventory purchases from Europe “will likely go on hold” until he knows what lies ahead.
Grant is hopeful consumers will continue to spend, but acknowledged tariff hikes could freeze sales. “If the consumer does decide to pull back, then we do get into an area where that’s not going to be fun for a lot of people,” he said.
Etsy has sought to keep sellers informed about the potential changes with a handbook on their website, noting that the “overwhelming majority of orders” on the site fall below the de minimis threshold. Sellers’ locations are listed on their store pages, giving buyers a heads up of where their purchases will be shipped from.
Amazon, the largest online marketplace for US consumers, is also bracing for the impacts of tariffs. Amazon canceled orders for multiple products made in China and other Asian countries, according to a document reviewed by Bloomberg News, and the company’s chief executive officer told CNBC that he expects third-party sellers to pass on tariff-related price increases to customers.
Amazon did not respond to a request for comment.
Logistical headache
Beyond the prospect of higher costs for US consumers, the de minimis changes also portend a potential logistical nightmare as shipments are ensnared in customs.
Flexport Inc.’s Ryan Petersen, who runs one of the largest customs brokerages in the US, says his company is seeing a “huge surge” in demand for consulting services to help businesses navigate the changing tariff landscape.
“That part of our business, the advisory services, is absolutely on fire,” Petersen said.
Merchants and parcel carriers got a glimpse of the potential mayhem when Trump first tried to eliminate the loophole for China in February. That order sparked chaos as the US Postal Service temporarily stopped accepting packages from China and Hong Kong altogether. Trump ultimately reinstated the loophole days later as the Commerce Department continued working on systems to collect tariffs on low-value packages.
Aaron Rubin, founder of warehouse-software company ShipHero, predicted many companies will set up US entities to account for new tariffs or change shipping routes to avoid higher-end levies.
“There will be major winners and losers in the short term with those who know how to navigate the current setup,” Rubin said. “A lot of money will be made and lost over the next several months as people get this right or wrong.”
But those resources may not be available to smaller business owners such as Duthie.
With limited information about what lies ahead, she’s going ahead with business as usual for now, but worries about the lasting impact.
“I don’t expect customers in the US to understand the breakdown of all the tariffs everywhere,” she said. “They might just literally stop buying internationally altogether.”
