The European Union and the United States sought to promote the free movement of goods by exempting small packages of negligible value from customs duties. Both powers now recognise the limits of this approach and want to remedy them.
In an effort to facilitate trade, several years ago the United States and the European Union established a value threshold below which packages imported directly by consumers into their territory were exempt from customs duties. In the United States, this de minimis exemption applies to packages of which the value does not exceed $800, while in the European Union, the ceiling is set at €150. But the dizzying growth in the number of shipments, particularly under the influence of Chinese e-commerce platforms, is now pushing the United States and the EU to review their strategy.
Since his return to power and the resumption of the trade war between the United States and China, Donald Trump has brought the issue of de minimis threshold to the forefront. This is also being debated in Europe, as the European Union is particularly concerned by this aspect of its relationship with China: in 2024, European countries received almost twice as many small packages as the United States.
The exemptions have a significant impact on direct-to-consumer, or “B2C”, e-commerce. The business models of Chinese companies like Shein or Temu, or American companies like Amazon, depend at least partially on it. From April 2, the day the US tariffs were announced, Amazon has reportedly cancelled the delivery of goods from China. Temu, for its part, explained that it was moving from a direct-to-consumer sales model to a model based on intermediate storage locations in the United States…before backtracking following the Sino-American negotiations of May 12th which allowed the reinstatement of the de minimis exemptions. On the European side, the elimination of tariff exemptions for packages under 150 euros is on the agenda of the European customs reform which is due to come into force in 2028.
- Asymmetrical B2C e-commerce: Chinese domination and a difficult-to-access Chinese market
In the field of B2C e-commerce, 2019 marked a turning point. Until then, China imported more than it exported. Since then, even though Beijing's imports continue to increase (marginally), China exports more than it imports. And it is exporting more and more. The Chinese government also considers cross-border e-commerce as one of the new driving forces of Chinese foreign trade. It represented 2.67 billion RMB in 2024 (330 million euros), an increase of 10.8% compared to the previous year.
Table 1: Evolution of Chinese e-commerce imports and exports of goods in billions of RMB (2020-2024) - Source : Chinese customs data. Specific data for 2024 are not available. Table by Camille Brugier for Upply.
According to a report from the Chinese branch of EY based on figures from Chinese customs from 1st half of 2024 [currently unavailable for consultation], Chinese exports in the context of cross-border e-commerce are mainly targeting the United States (34.2% of their total value) and European countries, in particular the United Kingdom (8.1%), Germany (8.1%) and France (4.5%). A presentation by the Chinese Ministry of Commerce giving e-commerce figures for the 1st quarter of 2024 also indicates that Chinese e-commerce imports come from developed countries (United States: 8.8%; Japan: 8.5%; France: 5.7% and Germany: 5.5%). China's main imports are cosmetics, grains, oils and food products, as well as clothing and footwear.
The Chinese government has taken various measures to promote e-commerce exports of goods in which China has a comparative advantage, to ensure the production and delivery capacities of these products, but also to promote trade with countries associated with the Silk Road project. Data on China’s global imports show a gradual replacement of Western countries by a rise in the power of ASEAN countries. This trend could accelerate and extend to e-commerce (data on this specific segment is not available), given the tensions encountered with the EU and the United States.
This aggressive expansion strategy has produced tangible effects. In Europe, 91% of imports of small packages exempt from customs duties in 2024 came from China. According to European customs data, the total volume of these packages more than doubled between 2023 and 2024, going from 1.9 to 4.17 billion units. Every day, 12 million “small packages” arrive from China into the European space.
This large volume poses a problem in many respects. First, the customs services of the Member States of the European Union do not have the means to handle such a volume and thus avoid the entry of counterfeit items or items that do not comply with European regulations, particularly environmental regulations. For Brussels, these low-cost items represent potentially unfair competition not only against European companies producing in Europe in compliance with current regulations, but also against foreign companies transporting goods to Europe by container and therefore paying customs duties. For example, a T-shirt (or other textile product), which is among the most imported products into the EU by "small package", is subject to a customs duty of 12% when imported by container, whereas it is exempt from any customs duty when sent by post (if its value does not exceed 150 euros).
In the United States, the number of packages exempt from customs duties has increased sharply, without reaching the level observed in the EU. In 2024, the United States imported nearly 1.4 billion small packages, almost three times less than the European Union. This difference is all the more significant since the United States accepts tariff exemption for packages worth up to $800, while the European limit is set at €150. Moreover, China's dominance is less marked since approximately 60% of imports into the United States under the de minimis regime come from China, compared to 91% in the EU.
Table 2: Evolution of the number of small packages imported into the United States over the period 2020-2024 (in millions) - Source : US Customs and Border Protection, Table by Camille Brugier for Upply.
The de minimis issue cannot be understood without taking into account the fact that, for both the United States and the European Union, this "loophole" exploited by China adds to a long list of Chinese practices in the manufacturing sector that do not respect the spirit of free trade.
There is no denying that the Chinese export of products benefits from a favourable situation, partly explained by the massive subsidies to the Chinese manufacturing system granted under the Made in China 2025 plan and successive five-year plans. Combined with the Chinese economic policy known as "dual circulation" initiated in 2021, which calls for limiting imports from Western countries while maintaining the pace of exports, the gradual decline in imports from Western countries appears to be a conscious choice orchestrated by Beijing.
Added to this is a restrictive Chinese customs policy towards European and American products arriving directly to Chinese consumers. On paper, the Chinese system allows for de minimis packages. This is because China categorises cross-border e-commerce purchases as “personal goods,” which are subject to individual annual quotas. As long as a single cross-border transaction does not exceed €636 (5,000 RMB) and the total purchases do not exceed €3,307 per year per individual, transactions are exempt from customs duties and are subject to the payment of 70% consumption tax and value-added tax. Above that amount, customs duties apply and 100% of both taxes must be paid. However, European and American products are having difficulty reaching Chinese consumers directly. A non-tariff barrier is the cause of this asymmetry. As noted by the EU SME Helpdesk, which supports European companies in exporting, sending goods directly to Chinese consumers is strongly discouraged. In fact, the products often get blocked at customs, which makes them de facto uncompetitive compared to Chinese products, which are delivered very quickly. This non-tariff barrier of customs inspection remains and prevents the smooth movement of "small packages" within the Chinese market.
Ultimately, the de minimis situation crystallises various American and European frustrations with China: limited access to the Chinese market, export subsidy plans, an assumed Chinese policy of reducing imports from the EU and the United States, the submersion of Western customs services by the avalanche of small packages from China, and the failure to comply with environmental and safety standards. The US and the EU want to redress the balance and legislate on these low-value packages.
- The planned measures
The announcements of measures on small packages have multiplied in recent months. Many of them have been nipped in the bud, while others have come to the surface again at regular intervals.
Across the Atlantic, the question of the tariff exemption permitted by the de minimis system preceded Donald Trump's return to power. In early 2024, a Republican congressman proposed legislation to "End China's De minimis abuse". A few months later, the Biden administration announced that it wanted to eliminate this “loophole” by demanding a law from Congress to this effect. At the end of January 2025, a report from Congress proposed several courses of action to limit the number of small packages imported into the United States.
Today, the abolition of de minimis is a card used by Donald Trump in the game of bilateral negotiations with China. In February 2025, the impending removal of exemptions was announced by the Oval Office, officially for the role played by these low-value packages in the massive arrival of opioids on American territory. Thus, the "Liberation Day" tariff measures were accompanied by a removal of the de minimis exemption, to which a tax has been added, the value of which is equivalent to 30% of the value of the package. A few days later, the White House announced that it was increasing tariffs on low-value packages, increasing the tax from 30% to 120% of the value contained in the package. From the joint US-China press conference in Geneva of May 12, 2025 between Donald Trump and Xi Jinping, this tax was temporarily reduced to 54% of the price of the content, during the negotiation period. This tariff saga is likely to continue into the summer, and it is probable that this card will continue to be used by Washington repeatedly as a means of exerting pressure on Beijing in the volatile trade negotiations that characterise Donald Trump's new term.
On the European side, two options, long- and short-term, are on the table. The European customs reform in progress, and applicable by 2028, provides for the removal of customs duty exemption for low-value packages. It would therefore only be a matter of time before this issue is addressed by the EU. However, some Member States are pre-empting this, given the exponential growth of small packages exempt from customs duties. Following the warnings from certain professional groups who are talking about an invasion, the French government has for example announced that it wants to impose “handling fees” on small packages from 2026[1]. In May 2025, The European Commission also announced that it wants to introduce a fee of 2 euros per small package in order to cover the additional customs costs required to manage this influx.
Faced with these European and American measures, Chinese companies are already considering alternative solutions. The most obvious: rather than sending shipments directly to the consumer, they could use warehouses located in the country. This model, favoured by Temu as a backup plan in the United States, is very similar to the model used by Amazon. The company can therefore arrange for maritime or air freight consolidation before delivering to consumers from its warehouses. The end of tariff exemptions on small packages does not therefore signal the disappearance of e-commerce platforms that are already under criticism for unfair competition or non-compliance with health or environmental standards. However, circumventing these laws should be made more difficult. Moreover, the critical size reached by Chinese platforms makes them major clients for Western logistics companies, and they do not hesitate to play this card as well. In April 2025, DHL Group announced the signing of a memorandum of understanding with Temu in order to "deepen their cooperation."
Conclusion
The European Union and the United States wanted to promote the free movement of goods and limit customs costs associated with checking small packages whose contents were of negligible value. The two trading powers now see the limits of this approach and want to remedy them. On the American side, tariff exemptions on small packages are being used by the Trump administration as a negotiating tool with China. On the European side, pending a reform planned for 2028, temporary measures have been announced to limit the impact of the de minimis system. A collateral victim of this complex equation is air freight, the preferred vector for the delivery of small B2C packages. It has already been affected in the United States by the change in tariff policy. This could also be the case in Europe, if the Commission decides to adopt stricter measures on the subject.
[1] This announcement was intended to put pressure on Brussels since France, being in a customs union within the EU, is not able to decree this type of measure alone.
