On July 30, President Trump signed and issued Executive Order 14324 titled “Suspending Duty-Free De Minimis Treatment for All Countries.” It eliminated de minimis (“of the smallest thing” in Latin) duty-free privileges, ending the duty-free exemption of shipments worth under $800.
While the order targets global e-commerce and counterfeit goods, it also impacts the United States territories, which depend heavily on small parcel imports. For them, the suspension of de minimis treatment reshapes local pricing, supply chains, and consumer behavior.
“They [small packages] carry essentials, tools, and hope in a box,” Governor Albert Bryan Jr. (D) of the US Virgin Islands stated in a press release. “We can meet national enforcement goals without making everyday life harder for people who already pay more for distance.”
Bryan supports a continued de minimis exemption for shipments traveling to and from the territories.
Understanding the de minimis system
Under Title 19 of the US Customs Duties Section 1321, de minimis shipments are “articles imported by one person on one day and exempted from the payment of duty [which] shall not exceed an amount specified by the Secretary by regulation, but not less than $800”.
The US territories, especially Puerto Rico and Guam, benefited hugely from the previous de minimis exemption that allowed shipments valued at $800 or less to enter the United States duty-free. People in the territories were easily able to import small packages from the US mainland and Asia without heavy customs paperwork or tariffs.
Specifically, with the rise in micro-imports through online shopping, the amount of small packages imported has grown significantly over the past 15 years. The territories have a heavy reliance on small-volume shipping via companies such as Amazon, eBay, Shein, AliExpress, and Shopify.
Immediate impacts of suspending duty-free de minimis treatment
Trump’s executive order has many immediate impacts on the territories. Tariffs and duties on de minimis raise landed costs for everyday goods and necessities, such as electronics, clothing, and household supplies. Small retailers will likely raise prices in order to afford to import stock. However, they may lose support from consumers in territories that already face high costs from big-name vendors, but who still need to buy necessities.
Additionally, local online sellers who use dropshipping or import-on-demand lose a cost advantage. New paperwork requirements, such as customs entries, bonding, and carrier fees, raise barriers for small businesses in the territories. For example, a Guam boutique owner can pay up to 10-15% more for imported fabric.
The order also forces carriers such as USPS, DHL, and FedEx to adjust systems to collect and remit duties on low-value goods. Incorporating this third party into what was once a smooth trip for de minimis can complicate delivery times and efficiency. Temporary suspensions or delays in shipping are expected, especially in outer territories.
What does this mean? Sector-by-sector breakdown
For retail and consumer goods, this order is not good news. It means higher import costs and lower purchasing power. For popular vacation destinations like Puerto Rico, raised costs for imported supplies in the hospitality and tourism industry significantly limit profits and viability. For small businesses and entrepreneurs, territory-based online boutiques and resellers lose competitive advantages against mainland firms. Both of these things directly compromise the territories’ revenues and economies.
In the short term, federal customs revenue may rise slightly. However, long-term suspension of the de minimis exemption most likely equates to crippled territorial economies. Local territorial governments may lobby for exemptions or implementation flexibility. However, any concession (or even attention) from the federal government to these pleas is unlikely.
The Trump administration issued “Suspending Duty-Free De Minimis Treatment” with the goal of closing smuggling loopholes coming into the United States. However, the order subjects a wider population of people in the US territories to unjust expenses.
0 Comments