President Donald Trump has increased tariffs applied to small parcels from China that were previously exempt under the de minimis loophole that he eliminated earlier this month.
The United States will now tax imports of shipments priced up to $800 at the rate of 120% of their value starting May 2, the White House announced. That’s up from the previous plan to levy a 90% ad valorem tax, Bloomberg reported.
The U.S. will also increase the per-postal-item fee from the planned $75 to $100 on parcels entering before June 1. After that date, the fee increases to $200 per item instead of the previously announced $150.
- The U.S. has currently imposed 145% tariffs on imports from China, which has responded with 125% retaliatory tariffs on imports from the U.S.
- Meanwhile, Trump has lowered tariff rates on all other countries to 10% and issued a 90-day pause on reciprocal tariffs for countries who haven’t retaliated against the U.S.
Promo Perspective
Several suppliers in the promotional products industry, particularly those offering on-demand or direct-to-consumer fulfillment, relied upon the de minimis exemption for small-batch imports directly from overseas to deliver to U.S. end users.
- As of May 2, these imports will be fully subject to tariffs.
- On average, U.S. Customs and Border Protection processes over 4 million de minimis shipments into the U.S. each day.
“Our research shows that small distributors process an average order size under $600, well under the $800 threshold,” says Rachel Zoch, public affairs and research editor for PPAI. “Small operators collectively accounted for almost half of U.S. distributors’ sales volume last year, so we anticipate that many promo orders will definitely be affected going forward.”
Rachel Zoch
Public Affairs & Research Editor, PPAI
At the same time, several PPAI 100 firms report pricing disadvantages as high as 40% due to competitors exploiting the de minimis loophole. Now that Trump’s recent executive order effectively ends the practice for shipments from China, the promo industry may see a more level playing field.
However, even firms not using de minimis now may need to tighten compliance processes, especially around country-of-origin labeling and Harmonized Tariff Schedule classifications, given the increased scrutiny and new enforcement mechanisms.
Going forward, promo companies must ensure to have:
- Proper HTS classification
- Documentation for country-of-origin verification
- Awareness of CBP reporting rules and potential bond requirements
PPAI, along with our lobbying partners in Washington, Thorn Run Partners, will continue monitoring these developments and outline a clear compliance process, particularly to support small and mid-sized firms navigating these new rules.
For questions or suggestions on regulatory or government affairs issues, please contact Rachel Zoch at RachelZ@ppai.org.
