As the United States ends its tariff exemption for small parcels on Friday, some retailers have already stopped selling to American customers. Others are seeking temporary workarounds, hoping for a potential reduction in the new tariff rate.

The elimination of “de minimis”—a rule that allowed duty-free treatment for e-commerce packages under $800 originating from China and Hong Kong—now subjects those goods to tariffs of up to 145% on most Chinese products. This measure follows a decision made by U.S. President Donald Trump last month, significantly disrupting global trade and prompting swift retaliation from Beijing.

British beauty retailer Space NK has paused all e-commerce orders and shipping to the U.S. “to avoid incorrect or additional costs being applied to our customers’ orders,” the company stated in a notice issued on Wednesday.

It’s not alone in this decision. Understance, a Vancouver-based company specializing in bras and underwear manufactured in China, informed its customers through an Instagram post that it would stop shipping to the United States due to the new tariffs. The brand said it would resume once there is clarity regarding future policies.

“We’re going from zero to 145%, which is really untenable for companies and for customers,” explained Cindy Allen, CEO of global trade consultancy Trade Force Multiplier. “I’ve seen a lot of small to medium-sized businesses just choose to exit the market altogether,” she added.

Import charges now vary by shipment method. The U.S. Postal Service applies a tariff of 120% of the item’s value, or $100 per package. U.S. Customs and Border Protection plans to increase that amount to $200 in June, according to its implementation guidance.

Price hikes underway

Retailers that intend to continue selling to the U.S. are adjusting their pricing strategies to offset the impact of the new tariffs.

Oh Polly, a British clothing brand, has increased its U.S. prices by 20% compared to its other markets. Managing Director Mike Branney said that additional increases might be necessary, depending on the evolution of the trade situation.

Shein, the fast-fashion behemoth headquartered in Singapore, addressed its American customers via a post on its U.S. Instagram account on Thursday. “Some products may be priced differently than before,” the brand acknowledged, “but most of our collections remain as affordable as ever.” Most of Shein’s clothing is manufactured in China, and the United States remains its largest market.

Temu, the international arm of Chinese e-commerce giant PDD Holdings, now prominently features products already stored in U.S. warehouses on its website. These items are labeled as “Local,” and a pop-up notification informs customers that these products have no import charges.

However, products that entered the country before the May 2 deadline will eventually be depleted. Both Shein and Temu have sharply reduced their U.S. digital advertising expenditures in recent weeks as they prepared for the shift—one that is expected to adversely affect their sales. Neither Shein nor Temu immediately responded to requests for comment.

Wider e-commerce fallout

The “de minimis” provision was originally introduced to facilitate international online shopping and encourage cross-border trade. However, it has drawn bipartisan criticism for inadvertently enabling the smuggling of fentanyl ingredients from China and contributing to a sharp increase in imports of low-cost clothing, toys, and furniture made in China—primarily through platforms like Shein, Temu, and Amazon Haul.

The provision has also been used to facilitate counterfeit merchandise. In 2024 alone, shipments qualifying under de minimis accounted for 97% of the intellectual property infringement-related cargo seizures conducted by U.S. Customs and Border Protection.

Now, with the exemption eliminated, retailers that manufacture in China must submit more detailed documentation to U.S. customs, identifying where every component of their product was made. This increased administrative burden, combined with the dramatic tariff hike, is discouraging small businesses from engaging with the U.S. market.

UPS CEO Carol Tomé emphasized that many of the company’s small to medium-sized business clients source 100% of their products from China—making them especially vulnerable to these policy changes.

To assist sellers in adapting, U.S.-based online marketplace Etsy recently issued a notice informing vendors that it would simplify the process for them to indicate the country of origin for their products. Tariffs are determined not by the country of dispatch but by where a product is manufactured.

Physical retailers may benefit

While the change has proven disruptive for e-commerce businesses, it may present new opportunities for retailers that are less dependent on online operations or Chinese manufacturing.

Primark, the British fast-fashion retailer that sells exclusively through physical stores in the U.S., said it could benefit from the change. The company does not currently offer online shopping in the American market.

“With prices going up from this part of the trade, I wonder if some Americans might start going back to shopping centers to find value there,” said George Weston, CEO of Associated British Foods, which owns Primark, in a statement to Reuters on Tuesday.

FashionNetwork.com with Reuters