Amid the chaos of President Donald Trump’s Feb. 1 announcement of tariffs on China, Mexico, and Canada and then prompt suspension of the Mexico and Canada duties, it appeared that at least perhaps the dangerous de minimis trade loophole had been closed with respect to China. Unfortunately, a Feb. 5 Customs and Border Protection Federal Register notice implementing the China EO revealed that is not the case.
De minimis is the trade loophole that Shein, Temu, Amazon, and other e-commerce giants exploit to evade tariffs, taxes, normal customs requirements and inspection when they ship directly from China to US consumers. For decades, the policy was mainly used by people returning from overseas to bring in souvenirs without formal customs paperwork or paying tariffs. But an unfortunate 1995 customs regulation and the rise of online shopping and direct-to-consumer delivery empowered ecommerce giants to exploit de minimis. Last year, four million commercial shipments entered the US daily, mainly from China, through the loophole. The total number of de minimis shipments was more than one billion in 2024, up from 139 million in 2015.
Not only do these imports dodge tariffs, including the Section 301 China tariff imposed during the first Trump administration, they arrive via an informal process. As a result, these packages also evade normal customs forms requiring a tariff code identifying the good and information about where it was made and dodge key requirements applying to the “Formal Entry” previously used to import commercial goods. Thus the de minimis shipments are not required to use a US-government-licensed customs broker (a US entity responsible for ensuring that customs information is correct and the tariff is paid), post a surety bond, and pay a customs fee.
Trump’s Feb. 1 executive orders stated: “Duty-free de minimis treatment … shall not be available” for imports covered by the new tariffs, which was everything imported to the United States from China, Canada, and Mexico. Even after Trump suspended the Mexico and Canada tariffs, that meant that de minimis access was suspended for goods from China. Except, it turns out it only covers the tariffs part of de minimis.
The Trump administration bills its actions on de minimis as part of an effort “to address the synthetic opioid supply chain in the People’s Republic of China.” But it has left the “informal entry” customs dodge in place, allowing for daily mountains of low-value packages in which smugglers bury shipments of fentanyl-laced pills and fentanyl precursor chemicals.
And it doesn’t seem like an oversight, because CBP does require Formal Entry for the tiny share of these packages sent via international mail: “Without regard to their value, no mail shipments from China will be cleared or released by CBP unless and until formal entry is properly filed.” But the vast majority of low-value shipments come in via air cargo or express shippers, such as UPS, FedEx, and DHL. Each day, millions of packages will still get the “informal entry” customs dodge.
An advanced CBP notice about Formal Entry for mailed China shipments generated a mini press frenzy and considerable shrieking from importers. On Tuesday night, without a system to process formal entries or collect lots of tariffs, the US Postal Service stopped and then on Wednesday morning restarted taking packages from China.
Some in the administration suggest their intention was to require Formal Entry for all China packages. But, that is not what CBP is doing, as also noted in a circular from Monday that informed importers they can use informal or formal entry but either way have to pay the tariff.
The outcry from major de minimis importers along with confused press coverage (E-commerce is over! Consumer prices will jump!) has obscured just how partial and fragile the progress has been. At any moment, Trump could lift the tariffs on China, just as he backed away from imposing tariffs on Mexico and Canada, and that would allow goods from China to again enter the US duty-free through de minimis. Even if the current requirement to pay tariffs on low-value shipments from China remains in place, it is only the beginning of a sufficient de minimis fix.
Unless Formal Entry is required for all commercial shipments, the daily flood of millions of small-value packages will continue to overwhelm the possibility of inspection or even tariff enforcement. Fentanyl-laced pills and other deadly imports will still flow from China directly to American homes.
“The only way really to fix the problem is to issue a separate executive order.”
If Formal Entry were once again required for commercial shipments, inexpensive clothes would still be available and sent quickly from online platforms. The difference is the goods would be imported in shipping containers with full customs information filed online two days before arrival in a US port, as required by the Security and Accountability For Every (SAFE) Ports Act. This allows Customs and Border Protection and its partner agencies, like the Consumer Product Safety Commission, the Food and Drug Administration, and Drug Enforcement Administration to run the tariff codes through risk assessment and decide what to pull for inspection.
Online orders still would be speedily fulfilled, but from a US warehouse. And, no, contrary to some of the studies the big de minimis importers have paid for, this would not boost prices significantly. These studies assume each of the daily four million current de minimis packages would still come in and pay separate brokers and customs fees and bonds. Obviously, a formal entry requirement would change the business model. Low-value stuff would be shipped in containers, with a single fee being charged for a container of 10,000 t-shirts.
It is essential that the de minimis loophole is closed for all countries. Stopping de minimis only for China invites circumvention and evasion. Packages coming in informally via de minimis need not list the country of origin of the goods, only the country from which they are being sent. So, even without lying or cheating the Sheins, Temus et al can just send their wares using de minimis from Vietnam or elsewhere to the United States.
We should welcome the Trump administration’s interest in addressing the de minimis disaster. But the only way really to fix the problem is to issue a separate executive order that both ends de minimis duty-free access for all countries (which is what the European Union, Brazil, South Africa and other countries have done) and that also requires Formal Entry for all commercial imports. Groups representing law-enforcement and families who lost loved ones to fentanyl have asked Trump to do just that. Trump has ample authority to do so right now. It is unclear if the problem is a lack of will or a gaping disconnect between intention and delivery.