The US government cancelled the de minimis exemption for low-value imports from China

On May 2, 2025, the provision prescribed in Executive Order No. 14256 of April 2, 2025 which cancels the de minimis exemption for low-value imports from China to the United States, and which was granted with respect to products valued at less than USD 800, came into effect.

The formal reason for cancelling the exemption is that illicit substances are being imported into the United States, particularly synthetic opioids (mainly fentanyl), concealed in the contents of duty-free packages.

Although imports of Chinese fentanyl into the United States are indeed a serious problem, it is difficult to accept that this is the main reason behind the decision. It might simply be another aspect of the trade war between China and the United States, the end of which is not in sight.

The customs duty exemption for low-value products (under USD 800) prompted the emergence of a long list of B2C businesses in China (direct sales from Chinese businesses to customers in the United States). Popular B2C websites, such as Ali Express and Shein, are based on this model. However, it is now unclear what their business model will be going forward, considering the cancellation of the de minimis exemption.

At this stage, there are no known plans to cancel the de minimis exemption on imports from the rest of the world to the United States. Therefore, one possible outcome might be that businesses will move product manufacturing from China to other countries in Southeast Asia where labor costs are similar (such as Vietnam) – assuming that no significant change occurs in American consumption patterns, or in the volume of products being manufactured in the United States.

Another possibility is that foreign manufacturers that are concerned about the unpredictable US tariff regime will opt to move their manufacturing operations to the United States, despite the higher manufacturing costs.

We note that the US de minimis exemption is the highest in the world. In Israel, customs and VAT exemptions are granted for low-value product imports (less than USD 75), and a VAT exemption is granted for product imports valued at up to USD 500, provided that the product is allowed to be imported into Israel. If an import license or permit is required for particular types of products, then they are required for products regardless of their value.