De Minimis Exception Ends: What It Means for Fashion Brands

Written by Tirsa Parrish

On August 29, 2025, the U.S. closed the door globally on the de minimis exemption that allowed imports, sent by individuals or companies, under $800 to enter duty free and they were not subject to other trade agreements. After nearly a century, the duty free threshold for small packages is gone, affecting an estimated 90% of the cargo entering the U.S., according to customs.

The exception was put into place to save the time and money spent on collecting relatively small amounts by customs. But, what was intended as administrative efficiency became the foundation for entire business models. 

The timeline to remove this loophole was accelerated. Under the Biden Administration, de minimis was originally set to be phased out in July 2027, but it was moved up as part of broader trade policy changes. For China/Hong Kong specifically, this already started back in May 2025.

Immediate Supply Chain Disruptions

The impact was immediate and severe. About 4 million more packages per day are now subject to tariffs and duties that previously sailed through customs without inspection. Major postal services in Europe and Asia-Pacific regions suspended shipments to the U.S. prior due to the complexities of overnight compliance with new regulations. 

For shoppers, this means canceled orders and significant delays as global logistics systems scramble to adapt to the processing requirements that were implemented with virtually no transition period.

Fashion Fashion Giants Face Existential Threat

This policy strikes at the heart of Chinese e-commerce giants like SHEIN and Temu, which built business models around the loophole. SHEIN and Temu thrived by producing ultra-cheap products and selling directly to consumers, bypassing import fees on almost all their sales. Now, facing the same tariffs as every other import item, these companies could see 50% increases in their U.S. retail pricing.

For Shein specifically, which already lost the de minimis exemptions for China/Hong Kong shipments in May 2025, this represents the final closure of their duty-avoidance strategy.

Independent Brands Caught in the Crossfire

While the policy aims to undercut low-quality, high volume giants abusing the loophole, independent brands are retailers that face significant collateral damage. Many independent retailers have built businesses around curating global edits—emerging designers from Copenhagen, niche labels from Mexico City, vintage sourced from Japan. Their nimble model of ordering small more frequent batches now inherit substantial new costs and friction.

Consider SSENSE, the Canadian retailer built on curating international luxury and emerging designers for a large U.S. customer base. Their struggles under existing duty thresholds have already been substantial, and the end of de minimis only intensifies these challenges.

For international independent designers, from small Etsy makers to emerging designers creating seasonal collections, the U.S. market has always represented a major opportunity for growth, credibility, and scale. But with every shipment now facing duties and paperwork, even direct-to-consumer orders, the American market becomes significantly more complex and expensive to access.

Economic Impact on Consumers

The National Bureau of Economic Research Institute estimated that ending de minimis could cost U.S. consumers at least $10.9 billion annually, or $136 per family, according to a 2025 paper. Low-income and minority consumers will be disproportionately impacted as they rely more heavily on cheaper, imported purchases.

Most industries, including fashion, are no longer set-up for large scale production in the US. Building the needed infrastructure will take years and billions of dollars, meaning consumers should expect higher prices on low-cost goods. Many international postal services are still working to resume normal operations after temporarily suspending shipment to navigate the new customs requirements.

Image via sourcingjournal.com

Fashion Industry Transformation

Removing the exception creates a paradox within the fashion ecosystem. It’s positioned as a corrective measure against counterfeits and below-market goods from China, but the collateral damage falls heavily on companies that were never abusing the policy. Independent brands get swept into the same regulatory net as mass-volume players.

For tradeshows and showrooms—the critical bridges between international talent and U.S. retailers—the change raises fundamental questions about their future viability. Added costs and logistical hurdles risk slowing the international energy and innovation that defines these platforms, making it harder for new voices to break into the U.S. market.

Long-Term Industry Implications

For US brands importing production in bulk, like the Gap, aren’t seeing new costs here. Their duties, while now higher, were already factored into their business models. This gives domestic manufactures a more level playing field against artificially cheap imports and addresses fair labor practice concerns that were being skirted under the de minimis exception.

The key question moving forward is how the ecosystem adapts. Success will depend not just on design innovation, but on how every part of the supply chain, from sourcing to sales channels, recalibrates to this new reality.

Potential adaptations include strategic nearshoring, regional fulfillment hubs, or new trade agreements. However, the brutal implementation timeline gave companies little runway to adapt to these fundamental changes.

Looking Ahead

Over the next few weeks and months, this sudden shift will prove defining for the fashion industry. Smaller retailers and other industries will definitely face challenges, but the policy aims to deliver wins against mega-companies exploiting trade loopholes and address broader issues including the drug trade.

The question now is whether innovation will emerge in response—and whether the fashion industry can sustain its international energy and cross-boarder collaboration while navigating this new regulatory landscape. For small independent brands and retailers, pricing, merchandising, and supply chain strategies will matter as much as creative direction in the post-de minimis economy.

Are you ready for the post-de minimis economy? How is your brand or business adapting to these supply chain changes?