A quiet executive order could soon make your next online purchase a lot more expensive. By moving to eliminate the de minimis tariff exemption, the Trump administration is effectively slapping a tax on all cheap imports—a policy that punishes consumers, especially low-income Americans, in the name of economic nationalism.
Since its inception in 1938 the de minimis exemption has evolved from a tool for tax efficiency into an engine of e-commerce and small business success. At first it only allowed imports to enter America tariff free if it would cost too much to collect the tax, eventually growing to allow any imports under $800 to enter duty free. Between 2015 and 2023, de minimis exempt shipments surged from 139 million to over one billion annually. Critics, from labor unions and domestic manufacturers to human rights groups, argue the exemption enables drug smuggling, counterfeits, products made with forced labor, and other illicit goods to enter the country without scrutiny.
But eliminating the de minimis exemption comes with real costs. One estimate suggests consumers and businesses could pay up to $47 billion more per year without it. These costs aren’t spread evenly: roughly three-quarters of purchases in the poorest U.S. zip codes employ the de minimis exemption, compared to just over half in the wealthiest. While everyone will end up paying more, removing the de minimis exemption will hit lower-income Americans the hardest.
American businesses would also be hit hard. The de minimis exemption has empowered startups, e-commerce ventures, and small businesses to access international supply chains without dealing with expensive tariffs and complex customs procedures. The exemption helps them compete with the economies of scale of their larger competitors. Removing de minimis exemptions would reduce small business margins, slow delivery times, make it harder for them to compete, and ultimately reduce consumer choice.
While concerns that the de minimis system is being abused are valid and need to be addressed, eliminating the de minimis exemption entirely is throwing the baby out with the bathwater. If the current administration wants to stop bad actors while keeping the massive economic benefits for consumers and businesses, there is an alternative: make importers more accountable and transparent—without nuking the system.
Real full piece here.
Read ACI’s report on de minimis reform here.
Justin Leventhal is a senior economist for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.