How to handle U.S.-China tariffs and the eventual end of de minimis

Last updated on Monday, March 3, 2025, at 7:10 p.m. ET. We’re updating this blog post as new information becomes available.

It’s a volatile time for the international trade community.

On February 1, 2025, President Donald Trump issued an executive order imposing additional 10% tariffs on China and eliminating the de minimis exemption for low-value products made in China or shipped from China. The tariff changes took effect Tuesday, February 4.

On February 5, the president signed another executive order pausing the end of the de minimis trade exemption for China, though the news didn’t break until February 7. The 10% tariffs on other imports from China remained in effect.

President Trump issued a further amendment to the China tariffs on March 3, 2025. In this executive order, he said the People’s Republic of China “has not taken adequate steps to alleviate the illicit drug crisis” and that instead of 10% tariffs, the U.S. was imposing a 20% tariff on imports of products made in or shipped from China. No additional details, like an effective date, were provided.

This rapid pace of change is hard on a host of businesses. The short-lived de minimis exemption change was particularly difficult for ecommerce sellers and online marketplaces as well as customs brokers, shipping companies, and U.S. Customs and Border Protection (CBP). The impact on online selling was brief, but huge.

Though many businesses now have a minute to breathe, more change to the de minimis exemption is coming. The February 5 executive order was issued to give the Secretary of Commerce and CBP time to implement “adequate systems ... to fully and expediently process and collect tariff revenue.” As soon as those systems are in place, President Trump will likely eliminate the de minimis exemption for China once more.  

In other words, businesses need to start preparing for the end of de minimis (and other last-minute tariff changes) now.

We’ll get right into the issues and how businesses can best respond to them. If you have questions about de minimis in general, jump down to our FAQ.  

On February 1, 2025, President Trump used his executive power to impose an additional 10% tariff on virtually all imports that are products of the People’s Republic of China, including products from Hong Kong. This went into effect February 4, 2025.  

The executive order allows a time-limited exception for goods:

• Loaded onto a vessel at the port of loading or in transit before 12:01 a.m. ET on February 1, 2025

• Entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on February 4, 2025, and before 12:01 a.m. ET on March 7, 2025

To qualify for the time-limited exception, the importer must certify to U.S. Customs and Border Protection (CBP) that the goods were en route before February 1.  

The executive order doesn’t provide for a drawback, and there’s no stated exclusion process for the new 10% tariffs.

On March 3, 2025, a new executive order increased the China tariffs from 10% to 20%. It provided no other information, such as an effective date for the higher rate of duty.

President Trump eliminated the de minimis provision for China and Hong Kong effective February 4, reinstated de minimis for China and Hong Kong on February 5, and looks to be preparing to remove the provision for China and Hong Kong again as soon as possible.  

If the current pause is in fact temporary, products made in China or Hong Kong or shipped from China or Hong Kong soon may no longer qualify for the de minimis provision allowed under 19 U.S. C. § 1321(a)(2)(C) (aka Section 321 shipments). 

The de minimis exemption allows one shipment of goods (per person, per day) valued at or under $800 to enter the U.S. free from duty and import taxes. Many countries offer de minimis exemptions, but most use a threshold much lower than $800.

Note that Trump isn’t looking to completely abolish de minimis right now (though the president is looking to change its de minimis policy eventually). When CBP can expediently process and collect tariffs on low-value imports, and if the U.S. removes de minimis for products made in or shipped from China or Hong Kong, the U.S. will likely continue to accept duty-free low-value imports from most other countries.

No grace period for low-value shipments in transit

One element of the policy in particular that strained compliance for businesses and customs during the first week of February was the fact that there was no grace period for shipments already in transit. The CBP was to reject requests for de minimis entry and clearance for ineligible shipments as of 12:01 a.m. ET on February 4.  

De minimis changes upend USPS 

The de minimis tariff policy change was so significant and unexpected that the United States Postal Service (USPS) temporarily stopped accepting inbound packages from China and Hong Kong on February 4. 

The next day, USPS said it would continue accepting all international inbound mail and packages from China and Hong Kong Posts, and that it was working with CBP “to implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery.”

They weren’t the only ones scrambling. The immediate elimination of the de minimis exemption for products from China and Hong Kong required CBP and all businesses involved in importing low-value shipments to implement new processes immediately.  

With the February 7 executive order, CBP isn’t the only entity granted more time to prepare. Ecommerce sellers, online marketplaces, carriers, customs brokers, third-party logistics providers (3PLs), and similar businesses can take advantage of this respite to figure out how to handle low-value imports if the de minimis exemption is in fact removed for China and Hong Kong.

A new import process could soon be required for shipments of products of China and Hong Kong, including postal shipments. Entry Type 86 will no longer be accepted for low-value imports from China and Hong Kong if the U.S. eliminates de minimis for those markets.  

This will increase costs and shipping times. Filers and importers will likely need to: 

• File the appropriate formal or informal entry 
• Pay all applicable duties, taxes, and fees

Formal entry (Entry Type 1) is required for shipments with a value greater than $2,500. 

Informal entry (Entry Type 11) will likely be the best option for most low-value shipments from China and Hong Kong once de minimis is eliminated. It will also be appropriate for certain low-risk goods (e.g., products exempt from quotas or countervailing duties).  

Entry Type 11 is an informal entry process, but it’s still more burdensome than the process many businesses may currently use for de minimis shipments.  

The main requirement with Entry Type 11 is the completion of CBP Form 7501, which must be filed electronically through the CBP Automated Commercial Environment (ACE) system. 

“Completing the form is an additional administrative step that many will find burdensome,” says Patrick Frith, Avalara Senior Director of Growth, Cross-Border.

Information requirements for Entry Type 11

The key information required for CBP Form 7501 includes:

• Importer and entry information
• Shipment and transport details
• Merchandise and classification, including the 10-digit Harmonized Tariff Schedule (HTS) code for each item
• Valuation and duty calculation (transaction value is based on the price paid for the merchandise when sold for export to the U.S., plus any applicable packing costs, selling commission, royalty fees, etc.)
• Additional declarations and certifications

Estimated duties must be deposited within 10 days of the release of the merchandise.

Challenges of using Entry Type 11

Determining the proper 10-digit HTS code is one of the most challenging tasks for businesses shipping goods internationally. But it’s essential: If ecommerce sellers, online marketplaces, importers, shippers, or others responsible for filing the informal entry use the wrong code, the incorrect duty may be applied. This can result in additional delays at customs and/or penalties and fines.

Businesses that have benefited from the de minimis exemption may not be accustomed to classifying products with 10-digit HTS codes. Their systems may not be set up to apply tariffs for these shipments.

Calculating the rate of duty can also be tricky. “China now has standard commodity duty rates, plus Section 301 tariffs, plus this additional 10% blanket duty,” explains Frith.

The most effective way for businesses to meet the changing demands of tariff changes is to automate customs duty compliance.

Avalara Cross-Border delivers real-time calculation of customs duties and import taxes and automates the assignment of the full 10-digit HS codes required under Entry Type 11.

Our customers are benefitting from our technology: Avalara began applying the new China tariffs for customers on February 4, as required by Trump’s executive order. When the February 7 executive order was announced, Avalara began rolling back the de minimis changes. The Canada and Mexico tariffs will be deployed on March 4, 2025, per the official announcment.

“Avalara’s suite of compliance services can help you stay on top of this rapidly changing environment, giving you peace of mind that you are keeping pace with the changes,” says Craig Reed, General Manager of Cross-Border at Avalara.  

More tariff changes are likely, and finding accurate, up-to-date information can be difficult. China has promised to implement new tariffs on February 10, and the U.S. could impose new tariffs on Canada and Mexico as early as March 4, 2025. And that’s just what we know today; who knows what tomorrow will bring? 

Whatever happens, let us help you stay ahead of change and continue to grow globally. Contact us today to learn more.

What is the de minimis exemption?  

The de minimis provision allows many goods valued at or under $800 to enter the U.S. duty free and via an expedited entry process known as Entry Type 86. The $800 de minimis threshold is per person per day. 

Many countries provide a de minimis exemption, though most use a much lower price threshold. It used to be lower in the U.S. too: Congress raised the de minimis threshold from $200 to $800 in 2016, opening the floodgates for low-value shipments. 

U.S. Customs and Border Protection (CBP) processed more than 1.36 billion de minimis shipments in fiscal year 2024. For this reason, and because bad actors have been exploiting de minimis to smuggle illegal goods into the country, the U.S. is looking to change its de minimis policy.  

CBP proposed new rules to limit the duty exemption for low-value shipments on January 17, 2025. One option on the table is to eliminate the de minimis exemption for imports sold through an online marketplace. We’re waiting to see what happens next. 

What is Entry Type 86?

Entry Type 86 is a customs entry process that requires the importer of record to file the necessary import documents electronically with U.S. Customs and Border Protection (CBP) through the agency’s Automated Commercial Environment (ACE) portal. 

Harmonized Tariff Schedule (HTS) codes are required for low-value shipments imported into the U.S. under Entry Type 86.  

What are HTS codes?

The Harmonized System (HS) is a global product classification system used throughout import and export processes. The World Customs Organization (WCO) updates the HS every five years. The next update is slated for 2027. 

Harmonized System (HS) codes are the common six-digit import/export codes assigned to every product. 

Harmonized Tariff Schedule (HTS) codes are the extended 10-digit codes assigned to goods entering the U.S. HTS codes consist of the six-digit HS code plus an additional four-digit code unique to the U.S. They are sometimes called HTSUS codes (Harmonized Tariff Schedule of the United States). 

HS, HTS, and HTSUS codes are linked to international tariffs. If you assign the wrong code to a product, you may end up assigning the wrong tariff rate. Watch a webinar about HS codes. 

What’s China’s response to the U.S. tariffs?

According to the Chinese Ministry of Finance, retaliatory tariffs by China took effect February 10, 2025: 

• A 15% tariff on coal and liquified natural gas imports from the U.S. 

• Additional 10% duties on crude oil, agricultural machinery, and some cars and pickup trucks 

These additional tariffs won't be reduced or exempted. It’s unclear as of this writing how China will respond to Trump’s February 7 executive order or the 10% tariff increase announced on March 3. 

What’s happening with Canada and Mexico? 

On February 1, 2025, President Trump issued executive orders imposing 25% tariffs on imports from Canada and Mexico. The orders also eliminated the de minimis exemption for Canada and Mexico.  

On February 3, agreements were made to pause the tariff changes for one month to allow time for negotiations. Trump wants Canada and Mexico to do more to prevent the flow of fentanyl and illegal migration into the U.S. 

Per unofficial guidance issued on March 3, 2025, the 25% duties for Canada and Mexico take effect for products entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on March 4, 2025.

Canada, for one, may retaliate with increase tariffs on many U.S. imports. You can find more details here.