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Navigating the De Minimis Exception: Impact on Fashion, Trade, and Labor Standards

By Tirsa Parrish•Last Updated: July 18, 2026

Update:

The de minimis exemption is suspended for all countries. A February 2026 executive order reaffirmed the suspension after a Supreme Court ruling on unrelated tariff authority raised questions about its future, and Customs and Border Patrol has since made the suspension indefinite through formal federal regulation. All shipments, regardless of value or origin, are now subject to duties, taxes, and full customs entry.

Discover the far-reaching effects the de minimis law had on the fashion industry, international trade, and labor standards. Learn how loopholes impacted fast fashion and posed challenges for regulation enforcement.

Embarking on international travel is a universal aspiration driven by the allure of diverse cultures, tantalizing cuisine, and the promise of a more expansive worldview. Exploring local markets and shops abroad isn't just about acquiring items; your purchases carry the memories of your global journey.

For many, a trip abroad isn't complete until you go to the duty-free shop on the way through the airport. These retail outlets offer products that are exempt from local or national taxes because they are sold to travelers who will not pay duties and taxes on them in their destination countries.

When travelers returned to the United States they were given a form to declare purchases to pay duties and taxes on the value. However, if the total amount was less than $800 then there were no fees.

From $200 to $800: A Paradigm Shift

The de minimis exception, Section 321 of the Tariff Act 1930, allowed imports valued at less than $800 to enter the United States without duties or a formal entry. This is true for companies and individuals. In other words, as long as the value of the imported goods was under $800, the shipment could avoid other US customs regulations. Each person could bring in one package in a 24-hour period and take advantage of this exception.

For travelers, this meant great deals could be had in the duty-free shop. For companies, de minimis entries offered savings on relatively small orders which was especially helpful in direct-to-customer orders placed online or e-commerce. Companies saw a spike in such orders. Customs and Border Protection (CBP) reported a 21% increase in de minimis entries from 2020 to 2021. This increase can be attributed to two changes in the United States market

An increase in the de minimis threshold in 2016 from $200 to $800
An increase in e-commerce sales

Information CBT receives to inform enforcement under de minimus. Secure imports, lower cost — Image via nftc.org

E-commerce Surge: Transforming Trade Dynamics

In 2016, Congress passed an amendment to the Tariff Act via the Trade Facilitation and Trade Enforcement Act (TFTEA). Among other changes, the TFTEA increased the de minimis threshold from $200 to $800, to reduce the burden on CBP for smaller imports.

This made the de minimis threshold for the United States one of the highest in the world! These changes were implemented with the intention that CBP would save more money and resources than would be gained through the tariffs on these goods.

Tariffs are taxes on imported goods, imposed by governments to regulate trade, protect domestic industries, and generate revenue. They can be specific (fixed charge per unit) or ad valorem (percentage of the product's value).

However, Congress did not foresee a drastic change in the marketplace as online shopping and e-commerce has become the globally preferred transaction method. The Covid-19 pandemic further increased the amount of e-commerce transactions and exacerbated the de minimis exception problems for industries, including fashion.

Bar graph showing top ecommerce stores in the U.S. fashion market by revenue. Top five are Shein, WalMart, Amazon.com, Macys.com, and Kohls.com — Image via ecommercedb.com

E-commerce Impact: Leveraging the De Minimis Exception

E-commerce played a substantial role in the use of the de minimis exception because these transactions create a preference for direct-to-consumer purchases. It is important to note that the de minimis exception was per package and not per order or per company.

Therefore, when a customer in the US ordered clothing from a foreign brand like Shein, the manufacturer shipped the clothing directly to that person. The average consumer is unlikely to pass the $800 limit on fast-fashion purchases in a single order, so Shein took advantage of the de minimis exception to avoid paying duties on their imports.

Duties are taxes or fees on goods crossing international borders. Collected by customs authorities, they regulate trade, protect domestic industries, and contribute to government revenue. Duties can be import taxes on incoming goods or export taxes on outgoing goods. One imported couture dress that costs $1200 will be subject to all tariffs, duties, and regulations because that dress cannot be divided between shipments.

When an American consumer bought over $800 worth of clothes (for example, 15 items at $30 each, 4 items at $50 each, and 2 items at $100 each for a total order of $850), Shein could simply ship the order in multiple packages, reducing the value of each parcel, and assure that the purchase still fell within the exception.

Shein and other foreign brands could ship thousands of orders per day to customers in the United States. As long as each of those packages was individually under $800, the importing company avoided all duties and tariffs.

The de minimis exceptions were beneficial to the market in general and reduced government costs as intended, however, they also created loopholes that allow Shein to avoid enormous cumulative duties and also evade labor standards that might be imposed if they exported their products for sale at brick-and-mortar stores, where the $800 threshold would not apply.

This tactic only worked because duties were assessed per package rather than per order. With the exemption suspended across the board, valuation no longer determines whether a shipment owes duties. Splitting an order into smaller packages doesn't create any exemption to fall into. Every package, regardless of size, is subject to the same customs entry and duty requirements now.

Fulfillment Center Strategies: Evading Tariffs and Exploiting De Minimis Exception

Brick-and-mortar stores stock their shelves with products ordered in large shipments and imported in bulk to local warehouses. This means thousands of dollars worth of merchandise at a time is kept in and distributed throughout the United States and de minimis only applied if the value of the shipment was over $800.

However, there were additional loopholes importers found to avoid the tariffs and duties. Fulfillment centers in Canada and Mexico could serve as middlemen for shipments intended for the United States. Large volumes could be shipped more cost-effectively to one of these warehouses where they were held and then separated into individual orders.

These fulfillment centers acted as interim warehouses for the importer. The individual orders were then shipped to the customer's home in the United States enabling the company to still benefit from the de minimis exception.

This workaround depended entirely on keeping each individual shipment under the $800 threshold. Since duty-free treatment was suspended for all countries regardless of a package's value, the fulfillment center strategy no longer offers any advantage. Splitting shipments through a Canadian or Mexican warehouse doesn't change what a company owes when it enters the United States.

Infographic of showing the cost of losing de minimis — Image via nftc.org

Fast Fashion, Low Tariffs: A Double-Edged Sword

Fashion is not the only industry impacted by the de minimis exception. While responsible fashion brands were willing to pay duties and be regulated to help ensure humane working conditions when they sold products to the United States, the bottom line meant corporate giants were going to use every loophole possible to not pay.

Also, packing and shipping providers like FedEx and UPS had a strong lobby to keep the loopholes. The more packages that fast-fashion companies shipped to stay under the $800 threshold meant a boost to the shipping company's profits.

Beyond Tariffs: Labor Standards and Ethical Concerns

The de minimis exception and the resulting loopholes were cause for concern for the fashion industry. While allowing fast-fashion brands like Shein to send packages to the US and evade duties owed, it also removed enforcement capabilities on forced labor.

When fast fashion brands use loopholes as in the de minimisexception, they do not pay the intended duties and tariffs on garments entering the United States. This helps them keep the retail pricing on their products low and feeds the fast fashion mindset of wear-and-discard.

Retailers want their consumers to buy as many products as possible. Indeed, the business model for fast fashion companies is based on minimal margins but with huge volume. The quicker consumers replace items in their wardrobes, the more money the retailers earn.

However, these discarded items generally end up in a landfill creating literal mountains of textile waste.

Section 301 Tariffs: Balancing Act in International Trade

Along with not paying the tariffs that are imposed on textile imports, using the de minimis exception meant the companies and their products are also not subject to other regulations that are meant for textile and garment imports.

Regulations in Section 307 focus on excluding imports made with forced labor, and this wass being evaded through the loop holes. China and other developing countries have had extensive negative press for poor and unsafe working conditions.

This is especially prevalent in clothing manufacturing. While working conditions in some factories do meet the international standards, circumventing the regulations is all too easily accomplished with direct-to-consumer shipping. The United States cannot enforce compliance with working conditions standards when brands took advantage of the exception

Section 301 tariffs, or so-called retaliatory tariffs, authorize the Office of the United States Trade Representative to:

Impose duties or other import restrictions
Withdraw or suspend trade agreement concessions
Enter into a binding agreement with the foreign government to either eliminate the conduct in question (or the burden to U.S. commerce) or compensate the United States with satisfactory trade benefits

Section 301 Tariffs: De Minimis Exception Exclusion

These tariffs are used to balance the amount of tariffs or duties on goods that US exporters have to pay to other countries with those that foreign brands pay to import into the United States.

For example, if Country A puts a 35% tariff on imported cotton garments the Section 301 allows the US to put that same 35% tariff on cotton garments imported from Country A. However, under the de minimis exception, Section 301 did not come into play as an external regulation.

Unseen Imports: CBP Challenges and Counterfeit Risks

An estimated 43% of imports that entered the United States under the de minimis exception were not in compliance with United States customs law in some manner. The billions of packages imported under the de minimis exception were not screened by CBP.

CBP also could not track these shipments. This further hampers CBP's efforts to identify and exclude suspicious imports, which may include counterfeit items.

Closing the loopholes. An open book on a wooden table and a gavel resting on a block — Image via healthindustryes.com.au

Reducing Fast Fashion and Counterfeits: From Proposed Legislation to Executive Action

Congress had been working toward a legislative fix for years before the exemption was ultimately suspended. Two bills, the De Minimis Reciprocity Act of 2023 and the Import Security and Fairness Act, aimed to address the abuse of trade laws by China and other nations. Alongside the SHIP IT Act, these bills sought to:

Exclude countries with a known history of violations from using the "trusted" de minimis channel
Only allow express carriers to facilitate de minimis imports into the US, to help better stop counterfeits
Require more information on every package entering the US
Use the revenue proceeds to establish a fund for reshoring industry from China

These bills drew bipartisan co-sponsors, reflecting broad appetite in Congress for closing the loophole. But the legislative process was overtaken by executive action. Starting in 2025, a series of executive orders suspended the de minimis exemption, first for shipments from China and Hong Kong, then for all countries regardless of origin.

Legislative fixes of this kind are inherently complicated, involving competing industry interests on all sides. The fashion industry largely favored ending the exemption over concerns about fast fashion and forced labor. The express delivery industry favored keeping it, given the volume of packages the $800 threshold generated for their business. That tension didn't disappear when the exemption ended. It shifted into questions about compliance costs and how quickly carriers could adapt to full formal entry requirements for every shipment.

How Tariffs Are Reshaping the U.S. Fashion Industry

De Minimis Exception Ends: What It Means for Fashion Brands

How De Minimis Reform Could End Fast Fashion's Duty-Free Ride