Issue 3: Your E-commerce Packages from China and Hong Kong Are About to Get Costlier
U.S. cracks down on low-value imports; e-commerce businesses must rethink compliance as duty-free shipment rules undergo dramatic legal and policy reforms.
The United States is tightening the rules on small, low-value imports and tech companies and online retailers need to pay attention. A new Customs and Border Protection (CBP) guidance issued on 2 April 2025 outlines how Executive Order 14256 (and its amendments) will change the game for “de minimis” shipments (packages under $800).
Below, we break down what this means, why it’s happening, and how tech and e-commerce businesses should prepare in practical ways.
Why Low-Value Shipments Are Under Scrutiny
For years, the U.S. has allowed imports valued at $800 or less to enter without duties or extensive customs paperwork under the so-called de minimis rule (19 U.S.C. §1321). This threshold has been a boon for cross-border e-commerce, letting overseas sellers ship directly to U.S. customers with minimal friction.
However, it also created a loophole that illicit actors have exploited. U.S. officials found that Chinese suppliers were sending synthetic opioid ingredients and other contraband in many small-value parcels to avoid detection. These inconspicuous shipments – often just a few hundred dollars’ worth of goods or less – play a significant role in the ongoing synthetic opioid crisis in the United States.
To combat this, the President issued Executive Order 14256 on April 2, 2025, building on earlier orders targeting the synthetic opioid supply chain. The order squarely addresses low-value imports tied to fentanyl and other synthetic opioids. In plain terms, it closes the de minimis loophole for certain shipments originating from the People’s Republic of China (PRC) and Hong Kong.
Specifically, any goods from China or Hong Kong that fall within categories linked to the opioid supply chain can no longer piggyback on the $800 duty-free exemption. The White House explicitly directed that “duty-free de minimis” shall no longer be available for such products from the PRC (including Hong Kong).
This crackdown is unprecedented in the U.S., it’s the first time America has selectively yanked the de minimis privilege for a specific country and sector. It comes after mounting criticism that the de minimis regime gave an unfair advantage to Chinese e-commerce exporters and enabled a flood of uninspected packages.
Critics pointed out that minimal documentation and inspection on de minimis parcels made it easy for counterfeit or unsafe goods to slip through. The opioid crisis provided the impetus to act swiftly. Illicit drug networks have been hiding precursor chemicals, fake pills, and lab equipment in small parcels, relying on the high volume of duty-free packages to avoid scrutiny.
Notably, the government attempted a fast implementation of these restrictions in early February 2025 and the consequences were immediate. With little warning, tens of thousands of Chinese parcels were suddenly deemed ineligible for de minimis entry.
This caused chaos in logistics: the U.S. Postal Service even briefly halted inbound mail from China due to the confusion on how to process and collect duties on those packages. Realising the disruption, officials paused the rollout to set up proper systems. Executive Order 14256 now relaunched this policy with a one-month lead time (effective 2 May 2025) and clearer guidance, giving businesses and shippers a chance to prepare.
CBP’s New Guidance: How De Minimis Processing Will Change
CBP’s April 2 guidance details exactly how processing low-value shipments from China and Hong Kong is changing under the new rules. Here are the key points:
No More Duty-Free Entry: Effective May 2, 2025, packages from China or Hong Kong that contain items identified as part of the synthetic opioid supply chain are not eligible for the de minimis exemption. It doesn’t matter if the shipment’s value is $800, $80 or $8 – the usual duty-free treatment no longer applies. These goods now must be entered under a formal customs entry (or an informal entry, where appropriate) and will be subject to all applicable duties, taxes, and fees..
Formal Entries Required: Importers or their brokers will have to file an entry declaration in CBP’s Automated Commercial Environment (ACE) for each affected shipment. Simply manifesting the package as a Section 321 de minimis shipment is off the table – CBP has reprogrammed its systems to reject any attempt to clear these goods under the old low-value shortcut. Other than bona fide postal mail (more on that below), no paper entry forms or manual processing will be accepted; everything must go through the electronic system. This is essentially forcing digital compliance and data reporting for shipments that used to fly under the radar.
Additional Tariffs and Fees: Importantly, these shipments aren’t just losing their duty-free status; they’re being hit with hefty tariffs designed to disincentivise this trade. Under the executive order’s provisions, designated “opioid-related” imports from China now face a steep additional tariff (originally 30%, later raised to 90% and beyond by subsequent amendments) on top of any normal duties. In addition, if sent via international mail, each package carries a special flat fee. Initially, this postal duty was set at $25 per parcel. That increases to $50 per item as of June 1, 2025. (In other words, even a very low-value package will incur at least $50 in duty if mailed, regardless of its contents’ value.) For express carriers and cargo shipments, the percentage tariff (e.g. 90% or more) will generally be the main cost driver.
Which Shipments Are Covered: The CBP guidance refers to products described in Section 2(a) of a prior order (EO 14195), essentially, items that can be used in making or distributing synthetic opioids. This includes certain precursor chemicals, reagents, pill presses and tablet machines, and related materials associated with illicit fentanyl production. All such items originating from the PRC or Hong Kong are now flagged. Even if a package contains a mix of goods, the presence of any covered item would likely trigger the restrictions. Both commercial express shipments and personal mail parcels are subject to the rule. The inclusion of international postal packages is significant; historically it’s been challenging to police mail shipments, but now even those will be liable for duty and formal processing.
Postal Shipments Handling: Recognising that mail operates differently from private couriers, CBP has issued separate guidance for international mail carriers (like USPS). Mail from China containing these goods must go through a more rigorous process: the postal operator will collect the required duties from the recipient before delivery, using new systems to calculate the tariff and the per-item fee. In fact, CBP temporarily suspended some of its own regulations to facilitate this, for example, normally low-value mail can be cleared with simplified forms prepared by CBP, but now formal entry will be required for any China-origin mail shipment above $800. The bottom line: whether an e-commerce order arrives via FedEx or regular mail, it will no longer slip through cheaply or anonymously if it falls under the targeted categories.
CBP’s automation systems (ACE) have been updated accordingly. If a shipper or broker tries to declare an incoming package from China as a Section 321 de minimis entry, they’ll receive error messages and the entry will be rejected.
For example, air cargo manifests will return specific error codes (like “COUNTRY OF ORIGIN CODE INVALID” or “ENTRY LINE IGNORED”) for shipments that can’t use de minimis clearance. Those errors basically tell the filer: this package isn’t eligible for the low-value shortcut; you must file a proper entry and comply with EO 14256.
All these changes took effect for goods arriving on or after May 2, 2025. The trade community had a few weeks’ notice to adjust, unlike the overnight shock back in February. Still, it’s a massive shift, CBP is fundamentally overhauling how a huge swath of e-commerce shipments get processed. For tech companies and online retailers, especially those directly or indirectly importing from China, there are major implications.
Impact on Tech and E-Commerce Businesses
Tech companies and e-commerce platforms are directly in the crosshairs of these new rules. Many electronics makers, online marketplaces, and startups rely on Chinese supply chains and have grown accustomed to quick, duty-free shipping of samples, components, or products directly to customers.
The de minimis provision was often baked into business models, for example, a gadget maker might drop-ship orders from a Shenzhen factory straight to U.S. buyers, saving on warehousing and duties, as long as each order stayed under $800. Likewise, online marketplaces (from giants like Amazon to smaller niche platforms) have been flooded with low-cost goods from Chinese merchants taking advantage of easy de minimis entry.
Those practices now face new costs and friction. If the items in question fall under the “opioid supply chain” list, they can no longer enter the U.S. as informal, duty-free shipments.
Even if your tech product itself isn’t a controlled substance, you could be affected if it’s classified under a broad category targeted by the order. For instance, certain chemical components or lab equipment used in biotech or hardware R&D might be on the list, a surprise to a startup ordering a $500 batch of materials from a Chinese lab supplier. Suddenly, that shipment would be stopped unless a formal customs entry is filed and a large tariff paid. Firms that never dealt with customs brokers or tariffs on small orders before must quickly get up to speed on import compliance.
E-commerce marketplaces need to react as well. Many platforms host Chinese third-party sellers who ship goods directly to U.S. customers. Under the new regime, platforms could see delivery delays, higher costs, or even legal liability if sellers don’t follow the rules.
At minimum, marketplaces should update their seller policies to require compliance with U.S. import laws including accurate product descriptions and harmonised tariff codes for any goods shipped to America.
Some big players are already responding: Chinese fast-fashion retailer Shein, for example, has been proactively working with CBP and opening U.S. distribution centres to handle orders domestically. This way, they can bulk-import merchandise (paying duties properly) and then ship to U.S. customers from warehouses inside the country, rather than mailing millions of individual parcels from China.
Shein’s approach highlight the importance of adapting supply chains to the new rules. Another popular shopping app, Temu, has reportedly started routing more products from U.S. warehouses for faster delivery, a strategy that also sidesteps the de minimis crackdown by keeping last-mile shipments domestic.
Smaller e-commerce operators and direct-to-consumer startups will need to follow suit on a scale appropriate to their size.
If your business depends on countless small packages from Chinese vendors, this law could significantly increase costs and complicate logistics. Beyond the added tariffs (which can be enormous; imagine paying a 90% duty on your inventory’s value), there’s the administrative burden. You might go from a world of virtually zero customs paperwork to having to file a formal entry for every incoming package.
That’s a big change.
Companies that built their model on easy de minimis shipping are now urgently rethinking their approach. Some may explore shifting sourcing to other countries not under the same restriction; others may invest in U.S. warehousing to import in bulk; and some might pull back on U.S. sales if compliance becomes too costly.
Practical Steps to Take Now to Ensure Compliance
For tech and e-commerce companies, the message is clear: don’t wait, start adjusting your compliance system and supply chain strategy immediately. Here are some practical steps and early observations that we have produced for you to manage these new requirements effectively:
1. Audit Your Imports
Begin with a thorough review of what your company is importing from China or Hong Kong. Identify any products, components, or materials that could fall under the synthetic opioid supply chain category.
Pay special attention to chemicals, lab equipment, pharmaceutical ingredients, or manufacturing tools. If you’re unsure whether an item is covered, consult a trade compliance expert or the Harmonized Tariff Schedule classification for that product.
2. Budget for Tariffs and Fees
If you do import covered items, factor in the new costs. On low-value shipments that were previously duty-free, you will now incur significant tariffs (potentially over 90%) and per-shipment fees. This could dramatically affect profit margins.
Adjust your pricing or procurement strategy accordingly. Some businesses are likely to raise consumer prices or seek alternative suppliers to offset these tariffs. Others might find it cheaper to import larger shipments less frequently (even if over $800) rather than many small ones, to optimise the duty impact.
3. Set Up Formal Entry Processes
Ensure you have a mechanism to file customs entries for low-value shipments. If you’ve never done formal entries for small packages, you’ll likely need a licensed customs broker or in-house trade specialist. CBP now requires electronic entries in ACE for these goods, so get the necessary software or broker services in place.
Make sure to obtain required importer numbers, bonds, or permits if you will be the importer of record. For frequent importers, consider using the “Type 11” informal entry in ACE (which is allowed for shipments under $2,500) as a streamlined way to file; CBP has adapted this entry type to handle the new requirements. Carriers like UPS/FedEx can sometimes file these on your behalf, but you need to provide them complete and accurate data.
4. Improve Classification and Data Accuracy
With formal entries comes the responsibility to accurately classify your goods and provide detailed documentation. Mis-declaration of a product to sneak it through as de minimis is now a serious compliance risk, not only will CBP reject the entry, but false documentation can incur penalties.
Develop a robust system for assigning the correct 10-digit HTS code to each product and flagging any China-origin items that require special handling. Automation tools may help here: consider investing in software that can integrate your e-commerce platform or inventory system with customs filing requirements, auto-populating forms with the needed data. Experiences have shown that missing or incorrect data will lead to clearance delays or holds, so double-check everything before shipping.
5. Work With Your Suppliers and Carriers
Communicate with your Chinese suppliers about these new U.S. rules. They should be aware that they can’t simply slap a low value on the invoice and expect duty-free delivery anymore for certain products. Encourage them to provide complete paperwork and possibly consolidate shipments.
Likewise, talk to your logistics providers: freight forwarders, express couriers and postal consolidators about how they are handling the change. Many carriers are updating their systems to comply (for example, the postal service has new procedures to collect the $25–$50 per package fees).
Make sure your packages won’t get stuck due to a carrier not having the right bond or process in place. If you fulfil orders via a marketplace platform, coordinate with them to ensure compliance responsibilities are clear (some platforms might step in to manage import duties on behalf of sellers).
6. Consider Strategic Supply Chain Shifts
In the medium term, it may make sense to redesign your fulfilment model. For instance, using a U.S.-based warehouse or third-party fulfilment centre can drastically reduce the number of direct international shipments and thus avoid each sale triggering a separate customs entry.
You’ll import in bulk (paying duties once on a larger shipment), then distribute domestically for online orders. This approach requires upfront investment in inventory and logistics, but it spreads the customs compliance cost over many sales instead of attaching it to every parcel.
Some companies are also diversifying sourcing away from China for sensitive items, shifting procurement to other countries or domestic suppliers where possible. While China’s manufacturing might be hard to replace for certain tech products, a diversified supply chain can mitigate the regulatory risks of any one country.
For years, the legal framework lagged behind the explosive growth of online shopping and direct-from-factory shipping. Now governments are catching up, using law and policy tools to inject oversight into digital supply chains that were once notoriously opaque.
This blurring of lines between trade compliance and digital operations means that businesses must work closely with their logistics and IT teams. Data privacy and customs compliance intersects, for example, ensuring that the personal data transmitted for customs filings (like customers’ names and addresses, or product descriptions) is handled in accordance with privacy laws while still meeting CBP’s demands for granular data.
Companies will need to build compliance checkpoints into their e-commerce platforms and maybe even into the user experience (think about an online seller warning a customer that a product will incur import fees at checkout).
Digital trade is coming under the same level of regulatory oversight as conventional trade, and companies of all sizes will need to upgrade their practices accordingly. The good news is that, with smart planning and the right tools, compliance can be managed and it can even become a competitive advantage (customers and partners will appreciate a smooth, transparent import process with no legal surprises). The key is to start adapting now.
For now, though, one thing is certain: the era of frictionless, duty-free online imports is fading, and a more regulated digital trade environment has arrived in the US.