The End of De Minimis
What It Means for Materials, Sustainability, and Consumers
If you’ve ever purchased something incredibly affordable online and had it delivered to your door in under two weeks, there’s a good chance it came from overseas ...and there’s a very good chance that you benefited from the de minimis rule, whether you realized it or not.
This provision in U.S. trade law allowed goods valued under $800 to enter the country duty-free and with minimal documentation. This use was originally intended to simplify small-scale imports, but it quickly became a core mechanism for fast fashion brands to ship low-cost goods directly to consumers without incurring tariffs.
As of May 2025, that exemption no longer applies to imports from China and Hong Kong. The U.S. government formally ended de minimis eligibility for these regions, citing concerns around trade imbalances and national security. While the policy shift may seem targeted, its implications are far-reaching, particularly for the fashion industry.
I’ll unpack what the de minimis rule was, why it became so influential, and what its rollback means for sourcing strategies, pricing structures, sustainability goals, and consumer behavior. I’ll also explore the implications from a fabric perspective, as shifts like these inevitably reverberate through the entire supply chain all the way down to the fiber.
What Was De Minimis and Why Did It Matter?
Like I mentioned in my opening, the de minimis rule allowed goods valued under $800 to enter the U.S. duty-free. While it was originally intended to simplify the import process for small-scale shipments, for example sending fabric swatches or garment samples to vendors without much thought; it became a critical component for fast fashion companies. Brands like Shein and Temu leveraged this rule to ship low-cost goods directly from manufacturers in China to consumers in the U.S., bypassing traditional distribution channels and avoiding tariffs.
In 2019, the de minimis threshold was raised from $200 to $800, significantly expanding the scope of duty-free imports. This change coincided with the rise of direct-to-consumer (DTC) fashion, drop shipping and influencer marketing, allowing companies to rapidly respond to trends and deliver affordable fashion directly to consumers.
However, this model created a competitive imbalance. U.S.-based brands, from big to small, were still subject to customs duties and traditional import processes. Meanwhile, overseas brands could flood the market with low-cost goods, launching hundreds of new SKUs weekly, and using de minimis to price their competition out of relevance.
How Brands Used It And Why It's Ending
Fast fashion giants built their business models around the de minimis rule. By shipping individual packages directly to consumers, these fast fashion giants operated more like “supply chain companies” to quote Professor Willy Shih, “they match demand from you with suppliers in China who then send the product directly to you,” he said in a Wired Tech Support video (one of my many loved youtube channels). And Professor Shih is right. These companies grew by supplying us what we wanted and quickly without having to internally design the product, commit to fabric or build/maintain/decline internal supply chains.
However, concerns grew over the fairness of this system. U.S. manufacturers and labor groups argued that it gave overseas sellers an unfair advantage. Additionally, there were national security concerns, including the risk of counterfeit goods and unregulated substances entering the country through these shipments. And the rise and love of DH Gate was a great example of that concern.
In response, the Trump administration ended the de minimis exemption for imports from China and Hong Kong going into effect May 2, 2025. Now, all shipments from these regions are subject to formal customs entry and applicable duties. This change disrupts the business models of companies that relied on the de minimis rule and forces them to reevaluate their sourcing and shipping strategies.
The Fabric Perspective: What De Minimis Meant for Material Strategy
From a fabric development standpoint, the de minimis rule influenced material choices and sourcing strategies. Synthetic fibers like polyester and nylon, which often carry higher duty rates compared to natural fibers like cotton or linen, became more attractive under de minimis because the duties were effectively waived for low-value shipments.
With the end of the de minimis exemption for China and Hong Kong, brands now face the full cost of importing synthetic garments. This shift may lead to a resurgence in natural fibers, as companies look to offset the increased costs. Additionally, brands may explore sourcing from countries with favorable trade agreements, such as those in Central America, to mitigate the impact of tariffs.
Fabric development may also shift focus from novelty fabrics to more basic, versatile materials that can be used across multiple styles and categories as a way of mitigating risks such as liability of unused fabrics. This change encourages more strategic and cost-conscious innovation in fabric choices.
Ripple Effects on Small Brands and Consumers
The end of the de minimis exemption has varying impacts across the industry. Large multinational retailers, with diversified sourcing and robust logistics networks, are better positioned to adapt. However, small and mid-sized DTC brands that relied on the de minimis model face significant challenges.
These smaller brands may struggle to absorb the additional costs associated with tariffs and customs processes. Meeting minimum order quantities in alternative sourcing regions and adjusting to new fulfillment models can be daunting without the economies of scale that larger companies leverage.
Consumers will also feel the effects. Price increases on previously affordable fashion staples, the disappearance of free shipping options, and longer delivery times may become the norm. As a result, consumers may turn to resale platforms like Poshmark, ThredUp, or Depop as more accessible alternatives.
The Sustainability Double-Edged Sword
On the surface, ending the de minimis exemption appears to be a win for sustainability. Slower shipping and reduced reliance on air freight can lower carbon emissions. Additionally, a shift toward more deliberate sourcing and production practices may encourage longer-lasting garments.
However, the increased costs associated with tariffs may lead brands to cut corners in other areas. Sustainability initiatives, such as using recycled materials or obtaining certifications, often come with higher costs. Under financial pressure, companies may deprioritize these efforts to maintain profitability.
Additionally, if brands shift production to countries with less stringent environmental regulations in search of lower costs, the net impact on sustainability could be negative. Therefore, while the policy change has the potential to encourage more sustainable practices, it also poses risks if not managed carefully.
A Call for Cross-Functional Literacy
The end of the de minimis exemption highlights the need for cross-functional collaboration within the fashion industry. Professionals across sourcing, logistics, merchandising, and sustainability must work together to navigate the complexities introduced by this policy change.
For those in fabric development like myself, it's essential to understand how changes in trade policy affect material costs and sourcing options. Similarly, sustainability teams need to be involved in discussions about cost management to ensure that environmental considerations remain a priority without sacrificing the rework and cost engineering teams are undergoing in the ever changing tariff war.
By fostering cross-functional literacy, the industry can develop more resilient and adaptable strategies that balance cost, efficiency, and sustainability.
What to Watch Next
The elimination of the de minimis exemption for China and Hong Kong marks a significant shift in the fashion industry's operating landscape. Brands must reevaluate their sourcing strategies, pricing models, and sustainability initiatives in response to increased tariffs and customs requirements.
Consumers will likely experience higher prices and longer delivery times, potentially leading to changes in purchasing behavior and a greater emphasis on resale and secondhand markets.
As the industry adapts, cross-functional collaboration and a commitment to transparency will be crucial. By working together and staying informed, we (retail professionals) can navigate these changes and build a more sustainable and equitable future for the industry.
🧵 Join the Conversation
Have you felt the impact of the de minimis rollback in your work or shopping habits? Are brands talking about it where you are? Drop your thoughts in the comments—I’d love to hear how these changes are showing up on your side of the industry.
🔜 Up Next
Next week, we’re digging into what all of this means for secondhand shopping. With prices rising on new goods, will the resale economy finally go mainstream?