On February 4, 2025, the United States Postal Service announced that to comply with new tariffs and the repeal of the de minimis exemption, it would be suspending international package acceptance of all parcels inbound from Hong Kong and mainland China. The suspension lasted for less than a day, but raised widespread concerns about the potentially catastrophic impact of these changes on the fashion industry.
What are tariffs?
Simply put, a tariff is basically a fee that Country A levies on imports from Country B. The goal is to raise the price of imported goods from Country B to ensure that Country A’s more expensive domestic goods remain competitive. In short, tariffs are a somewhat heavy-handed form of market manipulation (economists call it protectionism) that pass costs down to the consumer.
During his first term as president, Donald Trump implemented tariffs on a wide range of goods, leading to a trade war between the United States and most of its trade partners. His successor, Joe Biden, utilized tax credits (the carrot to tariffs’ stick) to encourage renewable-energy companies to resume operations in the United States or its allies. Now that Trump is in office again, tariff-heavy trade policy can be expected for the foreseeable future.
Like most economic policies, protectionism isn’t inherently good or bad. Unlike many political and economic issues, it enjoys worldwide support from both left-wing and right-wing populists. In the United States, both Democratic and Republican administrations have used protectionist policies to shore up America’s often shaky domestic industrial sector, albeit to varying degrees of success.
What is the de minimis loophole? Is the de minimis exemption a tariff?
De minimis is a Latin expression meaning “pertaining to minimal things.” As the name suggests, the de minimis exemption pertains to individual packages of minimal value. Originally intended to exempt returning travelers from paying import duties on souvenirs (similar but not identical to the duty-free section in an airport), this exemption allows packages below a set value to enter the United States without any tariffs, fees, or taxes.
Back in 2016, Congress raised the limit from $200 to $800, opening the door to a tremendous expansion in imports qualifying for the de minimis exemption. When compared to the billions of dollars of goods that the United States imports each year, an individual $800 package is a drop in the bucket. However, enough such miniscule drops can and do have a meaningful impact.
What are the de minimis and fast fashion tariffs effects?
With international shipping having never been cheaper, and the post-pandemic rise of direct-to-consumer ecommerce companies such as AliExpress, Temu, and Shein, the amount of goods being imported that qualify for the de minimis exemption has exploded. Before the recent suspension, nearly seven hundred million such packages were entering the United States each day, more than 30% of which came from Temu and Shein alone.
Why so? Basic economics. It’s much cheaper for companies to produce goods in China than the United States for reasons as wide-ranging as labor practices and monetary policy. The de minimis exemption takes it one step further by allowing these ecommerce companies, online storefronts, and dropshippers to skirt import duties that their traditional competition still have to pay. These are not small numbers, either; in 2022, GAP paid some $700 million in import duties.
Since the price of these import duties is usually passed down to the consumer, this is one reason that ecommerce companies can slash their prices well below what traditional companies can afford to compete with, making up any potential losses with an increased volume of sales. One such company, David’s Bridal, even had to file for bankruptcy in part due to the competition caused by this loophole.
What are the de minimis impacts? Is it unethical?
Not necessarily. The United States has a free-market economy, and in a free market, there’s nothing illegal, nefarious, or even immoral about using loopholes in trade policies to make money (though there are some safety concerns associated with clothing imported under de minimis). The main effect of de minimis has to do with stuff. Where that stuff is made, what materials it’s made from, and most crucially of all, how much of it is being purchased.
Fashion is an extremely resource-intensive industry, responsible for around a tenth of global greenhouse gas emissions. In 2022, polyester production alone consumed 20 billion (not a typo) barrels of oil, three times as much as the United States. The other main option, cotton, has the benefit of being a natural fiber, but has a long and sordid history of human rights concerns and environmental catastrophes associated with its production. At a critical point for decarbonization, the increased consumption of such emissions-intensive products is not only counterintuitive, but catastrophic.
Aside from high environmental costs, fast fashion is notorious for murky supply chains and exploitative labor conditions from field to finished product. Shein and Temu in particular have come under fire for utilizing cotton produced in China’s Xinjiang Uygur Autonomous Region (also known as East Turkestan) by Muslim minorities under conditions that can be charitably described as forced labor. While the United States has banned the import of Xinjiang cotton due to these severe human rights concerns, the de minimis exemption impedes enforcement of these import restrictions.
In short, the de minimis exemption is directly responsible for the manufacture and consumption of billions of articles of ethically and environmentally harmful clothing, a significant fraction of which is never even worn before being thrown away and deposited in a landfill. Removing this loophole will force ecommerce and fast-fashion companies to pay their fair share of import costs and obey import restrictions, hopefully resulting in a market where more ethical and sustainable alternatives are a more competitive option.
How can you make a difference?
If you’re concerned about the impact the fast fashion industry is having on the environment, you’re not alone, but you don’t have to wait for policy to change to make a change! Reducing your consumption is the single best — and cheapest, and easiest — way that you as an individual consumer can reduce your impact.
When you do need to shop for clothing, be sure to prioritize purchasing from ethical and sustainable brands by looking for certifications such as GOTS, OEKO-TEX, and Fair Trade. These certifications guarantee that clothes are produced under ethical conditions and have lower environmental impact.
Not sure how to do that? Eco-Stylist has you covered. Our lineup of sustainable brands, vetted by our team of sustainability analysts to ensure their compliance with our stringent transparency, labor rights, environmental, and DEI criteria, is a great place to start.
With a master’s in greenhouse gas management, Ben is passionate about ensuring that companies are held to the highest sustainability standards. He loves hiking, writing, and dogs.
1 thought on “What is the De Minimis Exemption and How Do New US Tariffs Impact Fast Fashion?”
Excellent article!