For years, SMB importers shipping into the U.S. benefited from a quiet shortcut. Under the de minimis rule (Section 321), any shipment valued under $800 could enter duty-free with minimal paperwork. Not surprisingly, de minimis began to fuel thousands of small ecommerce businesses – it was simple, fast, and cheap.
Then, almost overnight, that system ended.
In a recent webinar, Clearit President Adam Lewis and Business Development Manager James Stewart broke down what the end of de minimis means for importers, and how to turn a potential disaster into a manageable transition.
Read on for their insights, or skip straight to the full recording.
When “easy mode” disappeared
The de minimis system had been “the easy button” for small shippers, James explained. Businesses could ship directly to U.S. customers through couriers like UPS or FedEx without thinking about duties, classifications, or even importer registrations. Now, that landscape is gone, replaced by new customs requirements and stricter enforcement.
For importers who built their supply chains around one-off shipments, the impact has been dramatic: “Some businesses are finding that the cost of delivering an item now exceeds the value of the product itself,” he said.
And change doesn’t just affect small sellers – it’s hitting larger direct-to-consumer (D2C) brands too. The upshot is that importers from Canada, Mexico, or directly from Asia now need to manage shipments more systematically and operate with greater compliance discipline.
Why compliance suddenly matters
Why has the de minimis exemption been cancelled? To answer, we need to go back to why it was implemented in the first place.
The de minimis rule, also known as Section 321, was originally implemented in the 1930s because the cost to the government of collecting duties and taxes on very small shipments was higher than the revenue those duties generated. Back then, the limit was set at $1, with anything higher requiring regular customs entries.
That threshold stayed low for decades, then rose to around $200 in 1993, and in 2016, the Obama administration increased it to $800. According to Adam, that change “really underpinned the explosion of B2C commerce in the United States” – online sellers could now send small orders directly to U.S. customers without dealing with customs.
But the same policy eventually created problems. When the first Trump administration introduced Section 301 tariffs on Chinese goods in 2017-2018, many importers began routing more freight through the de minimis channel to avoid those 7.5-25% duties. Adam said this “exploded the number of packages coming into the U.S. under de minimis,” and even led to entire businesses forming in Canada and Mexico that warehoused goods and then shipped them one by one across the border.
The loophole also allowed “tons of illegal or regulated cargo” to flow in “completely unchecked,” since de minimis shipments required minimal documentation and were rarely inspected. Efforts to tighten oversight gathered more data but “didn’t really fix the problem.”
Eventually, with political and economic pressure building, the Biden administration discussed closing de minimis, and the second Trump administration “fast-tracked that under economic duress,” Adam explained, first targeting shipments from China and later expanding the restrictions more broadly.
That brings us to today, where a system once designed to simplify tiny, low-value shipments had grown into a high-volume back door for global e-commerce – and regulators finally shut it.
“We’re going from a zero-compliance landscape to compliance in overdrive.
– Adam Lewis, President, Clearit”
Adapting to the end of de minimis
For importers, the end of de minimis has been a significant adjustment.
Shippers who once thought compliance meant little more than “filling in a form” are discovering they may also need FDA or EPA clearance, proof of origin audits, or pre-clearance submissions up to 24 hours before a truck reaches the border.
James described the result as a “paradigm shift.” Carriers and brokers now expect a higher level of readiness from small businesses. Even a single missing document, he warned, “can compromise an entire truckload.”
Sound daunting? Here’s how to face the changes head-on and set yourself up for success.
Step #1: Own the process
The new rules have made one thing clear: importers are the ones responsible for getting compliance right – not forwarders, carriers, or anyone else. Treating compliance as part of your operation helps you stay focused, avoid risky shortcuts, and make smarter decisions from the start.
Step #2: Master compliance
Adam broke compliance into three pillars: accurate classification (HS codes), correct valuation, and full country-of-origin documentation.
Getting these right prevents penalties and delays – and can help avoid refused entries or returned goods.
Step #3: Get aligned with providers early
Adam stressed that with the new requirements, importers must provide customs brokers with all the necessary information from the start: classifications, valuations, country-of-origin data, and any PGA documentation. As he put it, success now depends on providing a “customs-ready invoice” – a single, accurate record that eliminates back-and-forth at the border.
Step #4: Rethink how goods cross the border
There’s no way around it – the end of de minimis means continuing with small parcel shipments means extra cost and complexity. Adam and James suggested rethinking your supply chain in three key ways:
Consolidate shipments
Instead of shipping hundreds of small parcels individually, consolidate them into one larger shipment for customs clearance, and then distribute domestically from within the U.S.
This approach means that instead of paying brokerage and processing fees for each small parcel, importers can clear everything under a single entry. The difference can add up to big savings.
Work with US-based 3PLs
Working with a U.S.-based 3PL can further reduce costs: once goods are already stateside, last-mile shipping becomes cheaper, faster, and more predictable. “When you scale up,” James explained, “you open up a whole other tier of lower cost per unit.”
Update your supply chain in phases
Rather than overhauling operations all at once, James recommended that importers test new setups with a beta shipment: start with a small, consolidated load designed to reveal true landed costs and identify compliance snags early.
“You can consolidate hundreds of packages into a single shipment and pay a $85 or $100 brokerage fee instead of $25 or $35 per package. It’s really the only way to go now.
– Adam Lewis, President, Clearit”
Step #5: Explore other ways to save time and money
Once your classification is solid, Adam recommended looking into bonded warehouses, duty drawbacks, and supplier negotiations. “There are billions of dollars in duty recovery going unclaimed,” he noted. Working with your providers to access of under-utilized resources can provide more control – and savings.
Step #6: Avoid traps
The new strictness around compliance means it’s extra important to avoid shortcuts that used to go unnoticed. Under-declaring values, using vague product descriptions, or relying on “handshake” classifications can now lead to serious consequences.
Authorities are watching closely for transshipment (when goods are rerouted through other countries to avoid tariffs) and undervaluation schemes. As James cautioned, if a supplier offers to issue a “discounted invoice” to reduce duties, that’s not a favor – it’s a liability.
Adam added that customs enforcement is getting smarter: “CBP and the DOJ have become much more sophisticated in how they track transshipment. You can’t claim ignorance anymore.”
“If a vendor ever tries to give you a reduced invoice to say, ‘Hey, we did you a favor,’ they are not doing you a favor, and they could be compromising your business transactions.
– James Stewart, Business Development Manager, Clearit”
Turning compliance into an advantage
The end of de minimis has been disruptive, but businesses that adapt can come out stronger.
By consolidating shipments, aligning with reliable 3PL and brokerage partners, and becoming vigilant about compliance, small importers can use these requirements to help grow – if a little painfully – more stable, scalable businesses.
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