A-Jie, who runs an independent e-commerce site, discovered in August that a batch of packages shipped to the U.S. were required to undergo formal customs clearance, adding more than a dozen dollars in fees per order and suddenly squeezing his profit margin.

Only then did it dawn on him: The era of duty-free small packages from the U.S. costing less than $800 had come to a complete end in 2026.

How exactly do you crunch the numbers? Where should sellers make adjustments? This article explains the cost structure and how to handle it.

01

How Did the Tax Exemption Disappear?

On August 29, 2025, the United States extended the de minimis exemption for low-value packages from China to the rest of the world; in February 2026, this exemption was officially eliminated for all countries.

On June 24, 2026, U.S. Customs and Border Protection (CBP) published an interim final rule in the Federal Register, indefinitely suspending duty-free treatment for goods valued at $800 or less entering the country through non-postal channels and requiring them to undergo either formal or informal entry procedures.

At the same time, the European Union will eliminate the duty-free threshold for items valued at less than 150 euros on July 1, 2026, and impose a uniform tariff of approximately 3 euros per item on low-value packages. The era of duty-free small packages worldwide has come to an end.

02

What are the components of the cost?

The first factor is the tariff itself. Goods originating in China are subject to a combination of concessionary tariffs (approximately 25% for most consumer goods under Section 301) and additional taxes related to Xinjiang (approximately 10%) in the United States; the combined tax rate typically hovers around 35%.

The second category is customs clearance and processing fees. Each order requires HTS classification, ACE declaration, and tax payment; for small packages, the combined customs clearance and processing fees may add $15–$25 per order.

The third area is compliance staffing. In the past, using Section 321 involved almost no paperwork, but now every package requires a complete customs declaration, which has increased both the time and costs for agents and in-house teams.

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03

Who Suffered the Most?

Direct-to-consumer (DTC) sellers are bearing the brunt of this: Their low-priced items, which used to cost just over ten dollars, relied on tax-free allowances to maintain their gross margins; now, with taxes and fees added to each order, their profits are easily wiped out.

Sellers using Amazon FBA who stock up in bulk have actually been less affected—they were already going through formal customs clearance anyway, and this move simply puts an end to the old practice of “test orders.”

The practice of cutting costs by underreporting the value of goods carries significantly increased risks, and the likelihood of being inspected or penalized has risen sharply.

04

Four Measures to Address the Situation

First, by stocking inventory in U.S. overseas warehouses and fulfilling orders locally, we can switch from direct mail of small packages to bulk imports, which spreads out the customs clearance costs per item and ensures more consistent delivery times.

Second, ensure accurate HTS classification. When necessary, reclassify items to a lower tax rate within compliance limits. Sellers with a large number of SKUs can often identify opportunities for tariff savings ranging from 15% to 30% by reviewing each item individually.

Third, diversify the supply chain by considering sourcing from countries such as Vietnam, India, and Mexico for price-sensitive product categories to avoid high cumulative tariffs.

Fourth, adjust pricing to accurately reflect the new tax burden in selling prices and cost accounting; stop relying on the risky practice of “underreporting prices to include taxes” to prop up profits.

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05

In the long run, it's a shake-up.

The end of tax-free shopping is not a short-term fluctuation, but rather a restructuring of the cross-border e-commerce model. The industry will consolidate around mature sellers who “have compliance capabilities, overseas warehouses, and pricing power.”

Small sellers shouldn’t panic, but they need to shift as quickly as possible from ’stocking up to move volume” to “calculating the cost of every order”—those who can crunch the numbers right will be the ones to survive this shakeout.

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