The term "de minimis" originates from the Latin phrase de minimis non curat lex, which translates to "the law does not concern itself with trifles." In trade, this concept pertains to minimal value thresholds below which duties or subsidy regulations are not enforced. This approach simplifies compliance for low-value items and support schemes.
In 2025, former President Donald Trump enacted an executive order that altered the de minimis tax exemption regarding goods from China and Hong Kong. This directive specifically targeted low-cost shipments valued under $800, which are predominantly utilized by e-commerce platforms such as Shein and Temu. The purpose was to rectify trade imbalances and prevent the exploitation of postal exemptions.
Under the World Trade Organization (WTO) guidelines, countries can extend minimal domestic support that may distort trade, limited to a certain percentage of agricultural production. Developed nations adhere to a ceiling of 5%, while developing countries, including India, operate under a 10% limit. Subsidies within these thresholds are exempt from reduction commitments as dictated by global trade agreements.
Platforms like Temu and Shein capitalized on the $800 de minimis exemption by shipping millions of low-value packages to the US without incurring taxes. This strategy enabled them to significantly lower prices, capture market share swiftly, and evade customs duties, thus gaining a competitive advantage over domestic retailers.
Beginning May 2, 2024, the US will eliminate the de minimis provision for imports from China and Hong Kong. Consequently, small packages will be subject to tariffs—either 30% of the item’s value or a flat fee of $25, increasing to $50 after June 1. This shift is anticipated to raise prices and prolong shipping times.
The executive order initially targets only China and Hong Kong. However, the potential for a broader removal of the de minimis exemption for other countries hinges on the US's capability to inspect and process global packages effectively.
US lawmakers and business groups assert that the de minimis provision had transformed into a loophole for inexpensive Chinese goods, facilitating the entry of illicit items and counterfeits. Tightening this regulation is viewed as a means to protect domestic businesses and secure the integrity of the import system.
India employs the de minimis ceiling of 10% to offer subsidies for essential inputs like fertilizers and electricity without breaching WTO regulations. If India surpasses this threshold, particularly concerning food procurement, it invokes the Peace Clause to temporarily shield itself from WTO disputes.
The Peace Clause allows developing nations to exceed their de minimis subsidy limits for public food stockholding temporarily. India utilized this provision in 2020 and 2022 to protect its Minimum Support Price (MSP) procurement programs from legal challenges under WTO rules.
Logistics providers such as FedEx and UPS will now be required to report all small-package shipments, guaranteeing that duties are collected and remitted to US Customs. This change introduces an administrative burden, likely resulting in increased shipping costs and delivery delays, particularly for goods sourced from Chinese e-commerce platforms.
Q1. What does de minimis mean in trade?
Answer: De minimis refers to minor value thresholds in trade under which duties or regulations are not enforced. It simplifies compliance for low-value items.
Q2. How did Trump's order affect e-commerce?
Answer: Trump's 2025 order limited the de minimis tax exemption for imports from China and Hong Kong, targeting low-value shipments used by e-commerce platforms to prevent trade imbalances.
Q3. What is the WTO's stance on agricultural subsidies?
Answer: The WTO allows minimal domestic support for agriculture within capped percentages: 5% for developed and 10% for developing countries, exempting these from reduction commitments.
Q4. How does the Peace Clause work for India?
Answer: The Peace Clause permits India to temporarily exceed its de minimis subsidy limits for public food stockholding, protecting its procurement programs from WTO disputes.
Q5. What changes will logistics companies face?
Answer: Logistics companies like FedEx and UPS must now report small-package shipments and ensure duties are collected, increasing administrative duties and costs.
Question 1: What is the literal meaning of de minimis?
A) The law does not concern itself with trifles
B) Exemptions from taxes
C) Small trade values
D) Agricultural support limits
Correct Answer: A
Question 2: Which platforms exploited the de minimis rule significantly?
A) Amazon
B) eBay
C) Shein and Temu
D) Alibaba
Correct Answer: C
Question 3: What percentage is the de minimis ceiling for developing countries under WTO rules?
A) 5%
B) 10%
C) 15%
D) 20%
Correct Answer: B
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