End of Cheap Parcels: How the De Minimis Repeal Changed US E-commerce

What De Minimis Was, in Plain English

De minimis is the rule under which goods below a certain value could enter the US through a simplified procedure and without standard duties. The legal basis is Section 321 of the Tariff Act (19 U.S.C. § 1321). The threshold was $800 per recipient per day.

For e-commerce that mattered a lot. A seller could ship many small orders directly to customers. If each parcel was under the threshold, the model looked very attractive.

The customer got cheap product. The seller saved on duty. The supplier shipped small batches quickly. Everything worked — until the rules moved.

Timeline of the Repeal

According to Marketplace, the volume of sub-$800 parcels from China dropped by roughly 54% after May 2, 2025. That's the size of the break — more than half of those shipments stopped making economic sense.

Why the Repeal Is Not a Small Thing

At first glance it might look like: they removed one exemption, sellers will just nudge prices up a little.

In practice the impact is deeper. When the duty-free regime disappears, the seller has to count:

• duties;
• customs clearance;
• additional fees;
• broker costs;
• border delays;
• returns;
• warehouse logistics;
• impact on delivery times;
• the bottom-line margin after all costs.

What used to be a $20 product shipped directly to the customer with almost no customs burden often stops making sense now. Especially if the product is low-margin, competition is high, and the customer is price-sensitive.

Why Amazon Sellers Got Hit Hardest

Amazon is a market where price, delivery speed, rating, stock availability and supply stability decide most of the outcome. If a seller relies on direct shipments from China, any change in duties or delivery times hits them in several places at once.

First, COGS goes up. Second, delivery becomes slower and less predictable. Third, returns and unhappy customers rise. Fourth, the competitor whose product already sits in a US warehouse gets a Buy Box advantage and a ranking advantage.

For many sellers the question is no longer "how do I save on each parcel" but "how do I rebuild the entire supply chain."

Why You Can't Rely on Tariff Headlines Alone

News headlines say "tariffs went up to X%" or "court struck down tariffs." That's not enough for an actual seller. What matters for a specific business:

• HTS code;
• country of origin;
• product category;
• date of entry;
• importer of record;
• active sector-specific tariffs;
• shipping route;
• documents from the manufacturer;
• product cost and shipping;
• applicable exclusions or additional fees.

Two products in the same category may have different rates. So the seller can't make decisions on "I read in the news that tariffs are now X." We covered the broader tariff picture of 2026 separately: "Tariffs, Duties and Import Chaos: Why International E-commerce Sellers Open US Companies".

What Sellers Are Doing Now

Sellers have several options.

First — raise the price. The simplest path but not always workable. If competitors are cheaper or the customer has alternatives, raising prices may cut sales.

Second — accept a lower margin. A temporary fix. It may help survive the transition, but if the margin was already thin, the business gets fragile fast.

Third — change the supplier or country of manufacture. Some entrepreneurs start sourcing in Vietnam, India, Mexico, Turkey or elsewhere. Not always fast, not always cheaper. A new supplier means quality control, samples, lead times, contracts, logistics and new risks.

Fourth — import in batches and store the product in the US. Requires more planning and working capital but gives much more control: product is closer to the customer, delivery is faster, returns are easier, Amazon and 3PL operate more stably.

Fifth — build a proper US structure: company, bank account, importer of record, contracts with logistics providers, duty accounting, bookkeeping, sales tax and a clear operating model.

For many e-commerce businesses the fifth option is no longer a luxury — it's a necessity.

Why a US Company Belongs Here

A US company doesn't cancel duties. But it helps the business move from a chaotic model to a managed one. With a US company it's easier to:

• sign contracts with 3PL and fulfillment centers;
• open business bank accounts;
• connect payment processors;
• work with Amazon, Walmart, Shopify and other platforms;
• track imports and COGS properly;
• store supply documents;
• build relationships with customs brokers;
• manage taxes, sales tax and nexus;
• separate personal and business finances.

Where the seller used to be able to test a niche from the kitchen table, the market now demands more maturity. Which state to register the company in is its own question — and Delaware isn't always the right answer. See: a separate article on state choice.

A Real-World Example

Picture a seller who sources accessories from China and sells them on Amazon.

Previously, they could ship small batches or even individual orders directly. Their unit economics looked like this: cheap product, acceptable shipping, almost no duty, decent margin.

After the rules changed, new costs appear. Delivery becomes less predictable. Customers wait longer. Amazon ranks the product lower because of fulfillment problems. Returns grow. Margin drops.

The seller starts modeling an alternative: import in batches, store in the US, use 3PL or FBA, operate through a US company, keep proper accounting and know COGS in advance.

Yes, this is harder. But it's no longer a hobby or a test. It's a business.

What to Check Right Now

If you sell into the US, check several things:

1. What HTS codes do your products fall under?
2. What country of origin is in the documents?
3. Who is the importer of record?
4. How do duties and fees affect your actual margin?
5. What happens if shipping cost rises another 10–15%?
6. Do you have a US warehouse alternative?
7. Can you operate through 3PL or FBA?
8. Do you have a US company and a US business bank account?
9. Are you handling sales tax and nexus?
10. Do you have accounting that properly reflects COGS, shipping, duties and fees?

If there are no answers, the business depends on luck, not strategy.

Bottom Line

The end of de minimis and the changes in tariff policy don't mean US e-commerce is dead. They do mean the old model of cheap direct shipments has become much less reliable.

Now the winners are the ones who count the entire chain: production, import, duties, warehousing, fulfillment, taxes, returns and margin.

A US company in this model is not a way to "bypass customs." It's the foundation for grown-up operations on the US market.