Confusion over ending of de minimis exemption prompts temporary pause

International mail carriers in nearly 30 countries have temporarily stopped sending parcels with merchandise to the United States over confusion about the end of the "de minimis" exemption set for Friday.

The exemption had allowed low-cost goods to enter the country duty free if valued under $800.

Over 22 postal services from Europe, including the UK, Germany and France, suspended services, some as early as last Friday. In Asia and the Pacific, carriers in Australia, New Zealand, India, Japan, South Korea and Singapore stopped deliveries or halted them to the US. Most said that they had not been given enough time to prepare for the changes to the rule and were seeking more clarity before resuming services.

In May, China was the first to have the exemption suspended on its shipments, but the rule will now extend to the global community as of Friday. It will mean that Americans or US based companies will have to pay higher import duties on goods received by mail. But gifts and letters under $100 may still be delivered free of tariffs.

DHL said in a statement: "Key questions remain unresolved, particularly regarding how and by whom customs duties will be collected in the future, what additional data will be required, and how the data transmission to the US Customs and Border Protection will be carried out."

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The company, the largest shipping provider in Europe, told the Associated Press that it "will no longer be able to accept and transport parcels and postal items containing goods from business customers destined for the US."

Belgium's Bpost said their services would be halted until more information was gathered from the US government. Italy's postal service, Poste Italiane, issued a similar response.

Royal Mail, the British postal service, confirmed it would halt shipments to the US on Tuesday so that anything sent recently can avoid duties. But from Friday, anything worth over $100, such as gifts to friends and family, will face a 10 percent duty.

PostNord, a Nordic firm, said its pause was "unfortunate but necessary to ensure full compliance of the newly implemented rules."

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In the Netherlands, PostNL told the AP it was working closely with its US counterparts to find a solution.

France's national postal service, La Poste, said it too had not been given enough details from the US to prepare for the new customs procedures.

Austrian Post, Austria's logistics and postal service provider, added that its last shipments to the US would be on Tuesday.

PostEurop, an association of 51 European public postal operators, said that all of its members would likely cease business operations to the US if no solution was found by Friday.

In fiscal year 2024, $64.6 billion worth of goods in over 1.36 billion small shipments utilized de minimis, according to Yale University and US Customs and Border Protection.

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In February, an initial suspension of the rule for China caused similar confusion as the US Postal Service said it would stop accepting their inbound parcels temporarily. But service resumed hours later.

The Trump administration announced that it ended the rule for China in an effort to wean Americans off buying low-cost goods from China.

The Trump administration blamed the exemption for enabling parcels to "evade tariffs and funnel deadly synthetic opioids … that harm American workers and businesses into the United States."

In an executive order from July, the government said that any country that sends a low-value shipment to the US through the postal system will face one of two tariffs: either an "ad valorem duty" equal to the effective tariff rate of the package's country of origin. Or, for six months, a specific tariff of $80 to $200 depending on the country of origin's tariff rate, Reuters reports.

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In 2018, at least 75 percent of all packages that came to the US under de minimis were from China, according to Baird Equity Research. Today it is estimated at 60 percent.

Delivery companies FedEx and UPS recently reported that they had picked up many fewer shipments from China this year than a year ago after the exemption was ended, The New York Times reported.

Low cost online Chinese stores such as Shein and Temu had used the duty-free loophole to attract an army of American shoppers.

"There is absolutely no other country in the world that's better at taking advantage of this loophole," Z. John Zhang, a professor of marketing at the Wharton School of the University of Pennsylvania, told China Daily. "I believe that with all said and done, these companies (Shein and Temu) will survive in some form."

The de minimis exemption, section 321 of the Tariff Act of 1930 was created in 1938 to allow Americans to bring back souvenirs from abroad.

It allowed for small packages valued at less than $5 ($160 today) to get to customers quickly and efficiently. The value allowed went from $200 per person, per day in 1994 to $800 in 2016.