So long, farewell, super cheap tariff-free shopping

Summary

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The Indicator from Planet Money

Episode: So long, farewell, super cheap tariff-free shopping
Date: September 3, 2025
Hosts: Darian Woods & Waylon Wong

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Overview

This episode explores the abrupt end of the “de minimis” exemption in the U.S.—a policy that allowed small packages (under $800 in value) to enter the country tariff-free and with minimal customs inspections. The hosts break down why the policy was scrapped, the resulting chaos for small businesses and consumers, and who stands to win or lose from these changes.

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Key Discussion Points & Insights

1. What Was “De Minimis” and Why Did It Matter?

• Definition: The “de minimis” exemption enabled packages valued under $800 to enter the U.S. without tariffs or intense customs scrutiny (02:47).
• Rationale: Collecting tariffs on such small shipments wasn't worth the effort ("trifles") (02:55).
• Impact: Sparked a boom in direct-to-consumer shipping from overseas, fueling growth for platforms like Temu and Shein (03:19).

Quote:
"To have customs inspectors collecting tariffs from everyday Americans and inspecting every book and every pair of socks is more effort than it's worth."
— Waylon Wong [02:59]

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2. The End of the Exemption—and Its Fallout

• Trigger: President Trump’s executive order ended the exemption for China in May and globally on August 29th, 2025, with only 30 days’ notice (04:57 & 05:12).
• Immediate Effects:
  • International post offices (e.g., Australia Post) suspended shipments to the U.S. [07:24].
  • Small business owners, like Australian jewelry maker Jess Van Den, lost access to their American customers.
• Jess Van Den’s Reaction:
  • Feared unfair surprise charges for buyers (minimum $80 duty, often exceeding the item’s value).
  • Halted sales to U.S. customers to avoid backlash and confusion.

Quote:
"I can't just keep sending my stuff and my customers not know that they're suddenly going to be whacked with an $80 fee... Nobody would be happy about that."
— Jess Van Den [05:50]

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3. Why Did the U.S. Scrap De Minimis?

• Law Enforcement: Authorities struggled to control illicit goods (like fentanyl and unregulated supplements) slipping through under the threshold (04:06).
• Domestic Brands’ Complaints: U.S. businesses paying tariffs felt disadvantaged compared to direct shippers exploiting de minimis (03:45).
• Political Consensus: Both parties, in recent years, agreed there were too many loopholes undermining consumer safety and fair competition (04:37).

Quote:
"It's not just a brand new idea that came. I think what's creating some of the challenges right now is how fast it was implemented."
— Derek Lossing [04:57]

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4. Chaos and Complication at the Border

• Confusion: The executive order mandated an $80 minimum duty for six months—creating uncertainty about final costs (05:12).
• Tariff Payment Nightmare: For small, direct-to-consumer shipments, getting each American recipient to pay tariffs is hugely impractical (06:34).

Quote:
"Trying to get, you know, hundreds of recipients like yourself to pay $2.60 to a customs broker for the duty that they owe would be extremely difficult."
— Derek Lossing [06:53]

• IT Challenges: Many foreign postal systems simply lack the infrastructure for this type of customs processing (07:40).

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5. Winners and Losers

Losers:

• Small International Sellers: Forced to halt U.S. sales or risk losing customers to unexpected fees.
• American Consumers: Particularly low-income Americans face relatively larger losses, around $40/person/year in the poorest zip codes (08:24).
• Frequent Users of Overseas Marketplaces: Etsy, Temu, Shein shoppers now face higher costs, delays, or discontinued service.

Winners:

• American Retailers: Tariffs level the playing field against overseas competitors, benefiting “Main Street” and larger retailers alike (09:15).
• U.S. Jobs: Logistics, fulfillment, and retail sectors indirectly benefit from restored market share.

Quote:
"There's a lot of small businesses on Main Street America. They can't compete with the prices that people are buying things from Temu historically, right?"
— Derek Lossing [09:15]

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6. Hopes for the Future

• Jess Van Den hopes for a resolution that allows for “everyone to keep trading” and laments rising economic nationalism.
• For now, American jewelry makers and domestic businesses may benefit from less global competition (10:14).

Quote:
"I really hope there is a resolution that means that everybody can keep trading with each other, because the world just seems to be getting more insular and it's a real shame."
— Jess Van Den [10:04]

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Notable Quotes & Timestamps

| Timestamp | Speaker | Quote | |-----------|-------------------|----------------------------------------------------------------------------------------------------------| | 02:59 | Waylon Wong | "To have customs inspectors collecting tariffs from everyday Americans... is more effort than it's worth."| | 03:19 | Darian Woods | "And that's how we got Temu?" | | 04:57 | Derek Lossing | "It's not just a brand new idea that came... what's creating some of the challenges is how fast it was implemented."| | 05:50 | Jess Van Den | "I can't just keep sending my stuff and my customers not know that they're suddenly going to be whacked with an $80 fee..." | | 06:53 | Derek Lossing | "Trying to get... hundreds of recipients... to pay $2.60... would be extremely difficult." | | 09:15 | Derek Lossing | "There's a lot of small businesses on Main Street America. They can't compete..." | | 10:04 | Jess Van Den | "I really hope there is a resolution that means that everybody can keep trading with each other..." |

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Additional Insights

• The end of de minimis marks a significant shift in cross-border e-commerce, especially for small sellers and consumers who benefit from low-cost, frictionless international trade.
• The abrupt policy change has overwhelmed businesses, postal services, and consumers alike, with unclear procedures and widespread service suspensions.
• While the move addresses law enforcement and domestic economic concerns, it also underscores the complexity of balancing global commerce with national interests.

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Useful Timestamps for Key Segments

• Intro & Jess’s Business: 00:01–01:10
• De Minimis Explanation: 02:47–03:19
• Surge in Package Volume: 03:35–03:45
• Brand & Law Enforcement Pressure: 03:45–04:37
• Policy Change Details: 04:57–05:50
• Tariff Payment Complications: 06:06–07:11
• Postal System Chaos: 07:24–07:50
• Winners & Losers: 08:11–09:45
• Closing & Future Hopes: 10:00–10:14

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Transcript

[Darian Woods]

Npr Jess Van Den makes sterling silver jewellery in Australia.

[Jess Van Den]

These are the longleaf earrings. They have the leaf shape on the front, so it's like a leaf with a stem behind it.

[Waylon Wong]

Jess has a business selling her longleaf earrings and her other jewelry on Etsy. It's called Ethereal and she's been doing that since 2008.

[Jess Van Den]

Oh, it makes us a couple of thousand dollars a month, so that's important to our livelihood.

[Darian Woods]

About 30 to 40% of her customers are American. But about a month ago, that changed. Jess woke up one morning and was scrolling through social media.

[Jess Van Den]

Somebody was like, about the de minimis exemption ending and there's going to be tariffs. And I'm like, what?

[Waylon Wong]

The de minimis exemption meant that until now, packages valued less than $800 could come into the US without tariffs or much inspection. It was like a tariff loophole. But in late July, President Trump signed order to get rid of it on August 29th.

[Jess Van Den]

I looked into it and promptly freaked out, like, oh my God.

[Darian Woods]

Since that executive order in July, post offices from Australia to Austria suspended shipping to the US and businesses like Jess Van Den's are now simply saying no to American customers. This is the indicator from Planet Money. I'm Darian Woods.

[Waylon Wong]

And I'm Waylon Wong. Today on the show the end of De Minimis, we explain why this carve out for small packages ended on Friday, how it's causing such mayhem and who will be the winners and losers from this abrupt policy swerve?

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[Darian Woods]

A lot of countries have a de minimis exemption for goods coming into the country. In Latin, de minimis basically means trifles.

[Waylon Wong]

Ooh. Are you a classics professor?

[Darian Woods]

I'm somebody who looked it up.

[Waylon Wong]

Was this in the odyssey to have customs inspectors collecting tariffs from everyday Americans and inspecting every book and every pair of socks is more effort than it's worth. So up until now, the US government told everyone, if it's worth less than $800, you can shuffle it through the mail tariff and duty free.

[Darian Woods]

And that's how we got temu?

[Waylon Wong]

Basically, yes. And Shein, you can see that when tariff started rising under the first Trump administration, suddenly it became a lot more attractive to send parcels from China one by one rather than ship in bulk to a warehouse in the US so.

[Darian Woods]

There are around 140 million packages sent into the US in 2015. Last year there's more than 1.3 billion. Just exponential growth.

[Waylon Wong]

This flood of posted goods started to concern certain people in the American economy. Established brands who have to pay tariffs find it hard to compete with Temu and Shein and then law enforcement, like the government's efforts to stem the flow of drugs into the country. Derek Lossing is the founder and CEO of Cirrus Global Advisors, a logistics consultancy.

[Derek Lossing]

What's driving a lot of this, right, is the US has found fentanyl and other illegal substances, whether it's medications or even makeups that are not approved by the FDA or nutritional supplements. Right. A lot of this stuff comes into the US and is not regulated.

[Darian Woods]

Fentanyl was sent into the US directly in packages from China pre2020. But now the vast majority of fentanyl in the US comes from Mexico at the southwest border, smuggled in vehicles.

[Waylon Wong]

It is worth pointing out though that both Democrats and Republicans have concerns over the de minimis exemption. Last year, the Biden administration said the tsunami of packages was making it harder to enforce American laws like consumer safety rules. The Biden administration also tried to clamp down on certain products using the de minimis exemption, like clothes from China.

[Derek Lossing]

So it's not just a brand new idea that came. I think what's creating some of the challenges right now is how fast it was implemented. Right. So China and Hong Kong got shut off with 30 days notice. Now rest of world got shut off with 30 day notice.

[Darian Woods]

De minimis for China ended in May, the rest of the world last Friday. And that 30 day notice was what got the Australian jewelry maker Jess Van Den so frantic. And the big issue wasn't really that she'd have to pay a tariff. Australia's US tariff rate is 10% manageable. It was that it was really unclear what exactly was going to happen at the border. The executive order said that goods from most countries, including Australia, would need to have a minimum duty of at least $80 paid at the border for the next six months. That's more than the full price of many of her rings and earrings.

[Jess Van Den]

I just thought, I can't do that. Like, I can't just keep sending my stuff and my customers not know that they're suddenly going to be whacked with an $80 fee potentially on top of what they've paid. Like who? Who would be happy about that? Nobody would. Nobody would be happy about that.

[Waylon Wong]

It's worth pausing here to talk about who actually pays the tariff. We've talked about how importing businesses pay tariffs. A big shipment on a freight container, say, has a customs broker. They work with the American recipient to pay the tariff on the border. An everyday American ordered something directly from a seller overseas. You are the importer, so you are on the hook for duties and tariffs. The goods only get released from the border once that money is paid.

[Darian Woods]

That's how it works in a lot of countries. But Derek Lossing, our logistics expert, says getting every recipient of every small parcel arriving in this country to pay up is going to be a nightmare, especially after the $80 minimum duty ends and it changes to whatever the import country's tariff is.

[Derek Lossing]

Just from a practical perspective, trying to get, you know, hundreds of recipients like yourself to pay $2.60 to a customs broker for the duty that they owe would be extremely difficult in this case. In practicality, it's going to be paid by kind of the shipping company, by.

[Waylon Wong]

The overseas postal service, in other words. So rather than be stung by thousands or millions of those owed duties and tariffs, postal services for a lot of shipments to the US decided to just pause them.

[Darian Woods]

Jess decision to stop any orders coming from the US was prescient. Last Tuesday, Australia Post joined all those other countries and announced it was temporarily suspending most parcels to the U.S. derek says a lot of this comes down to it. Systems and training.

[Derek Lossing]

Each post office around the world, whether that's Australia or Germany or uk just does not have the systems in place to collect all the right information.

[Waylon Wong]

It's been quite a mess. And we asked Customs and Border Protection whether it could have done anything more to avoid this.

[Darian Woods]

A CBP spokesperson said the agency is coordinating with carriers and trade partners to minimise disruption while securing revenue, strengthening border integrity and delivering long term benefits to our national and economic security.

[Waylon Wong]

And that brings us to the question of who exactly does benefit or lose out from the end of De Minimis. Clearly, Jess Van Den and her customers lose out. And anyone trying to buy from Etsy stores overseas or Temu or Shein.

[Darian Woods]

A couple of economists tried to quantify exactly how much money households saved by buying things online through De Minimis shippers like those online stores. Pablo Fahubam at UCLA is one of them. He says he found a strong connection between buying de minimis goods and how wealthy your neighborhood is. Those that spend the most as a share of total income are the poorest. That means low income zip codes will lose out on more, relatively speaking, from the end of De minimis for the poorest zip codes in the order of $40 per person per year. What we get. So it's not going to break the bank on its own? No, we don't think it's going to break the bank. I mean, it would be unfair to say this is going to break the bank.

[Waylon Wong]

There will also be winners from De minimis ending. Derek Lossing says that increase in prices will be good for American retailers.

[Derek Lossing]

Small business owners are. And large business owners are winners, right? So there's a lot of small businesses on Main Street America. They can't compete with the prices that people are buying things from. Temu historically, right? If you walk into your local hardware store and buy a tape measure, right, that went through U.S. customs, there was a duty, a tariff paid on that tape measure before it came in. A US Fulfillment job sent it to the store. A US Retailer put it on the shelf at the store. There's Americans that kind of work behind that.

[Darian Woods]

In the past, that difference in price would have been fairly small. But as American tariffs have shot up over the last decade, the sense that physical stores were playing on an uneven playing field just became too untenable for lawmakers.

[Waylon Wong]

As for Jess, she hopes to welcome American customers back one day.

[Jess Van Den]

I really hope there is a resolution that means that everybody can keep trading with each other because the world just seems to be getting more insular and it's a real shame.

[Darian Woods]

For now though, there's an opportunity for American jewelry makers. This episode was produced by Angel Carreras with engineering by Kwesi Lee. It was fact checked by Ciero Juarez and Cooper Katzwakim and edited by Thaddy Hirsch Cake and can edits the show and the indicator is a production of NPR.

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