How Swap Helps Ecommerce Brands Navigate De Minimis Exemption

The New China Tariffs Explained

With the recent tariff increases under President Trump’s trade policies, ecommerce brands that manufacture in China and sell into the U.S. are facing higher costs, operational complexities, and reduced margins.

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The new China tariffs mean that:

• 145% increase in US duties on Chinese imports (including an initial 20% that had previously been imposed)
• Loss of duty-free exemptions on lower-value shipments (under $800)
• Packages will be subject to a $100 tax per parcel beginning on May 2, and a $200 tax per parcel beginning on June 1.

These tariffs are currently in place for China, however, as reported from The Wall Street Journal, the expectation is that China tariffs will be reduced to between 50% and 65%.

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Talks are currently ongoing between these two nations amidst the global market volatility that has happened since additional tariffs were announced.

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For brands exporting directly to American consumers, this means increased landed costs, pricing challenges, and potential disruptions in logistics.

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Ecommerce brands that manufacture in China and sell into the U.S. are facing higher costs, operational complexities, and reduced margins, especially in cross border ecommerce, where additional duties and shipping fees can further erode profit margins.

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What Is the De Minimis Exemption?

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The De Minimis exemption is a U.S. trade law that allows certain goods to enter the country without being subject to tariffs, as their value is below a specific threshold.

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This De Minimis loophole excluded China based companies from paying tariffs on small packages shipped to the U.S. worth less than $800. 

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From May 2, 2025 this exemption is set to expire, which means all imports from China, regardless of value, will be subject to duties & taxes.

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These new changes will heavily impact Chinese product and postal delivery methods, potentially leading to slower delivery times and more rising costs for ecommerce brands & consumers alike. 

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In fact, De Minimis exemption is expected to be revoked entirely for all countries once the U.S. implements a more comprehensive tax collection system. 

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For now, this new policy applies only to goods originating from China.

How Will the De Minimis Loophole Impact Ecommerce Brands

The ending of the De Minimis loophole indicates a significant shift in the ecommerce industry with pre-existing tariffs ranging from 7.5% to 100%! 

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Below are some of the key causes for concern with the expiration of the De Minimis loophole:

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Duties & Tax Costs

Ecommerce brands that have previously benefited from low value exemptions are likely to face rising tariff costs, making it difficult to optimise duty and tax savings.

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A key solution to overcoming this struggle is to proceed with a DDP (Delivery Duty Paid) solution where merchants take full responsibility for duties & taxes, and customers do not face any additional costs when they receive their purchase.

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This transparency can build stronger relationships with your customers and eliminate the risks of unexpected fees. 

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Higher Shipping Fees

Brands must re-evaluate their fulfillment strategies or face higher costs per shipment.

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This includes a reassessment of their warehouse inventory to tariff friendly zones to avoid additional tariffs and taxes. 

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Shipping products from China to the U.S. will lead to additional costs that are either absorbed by the brand or passed onto customers. 

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Ecommerce brands can use an all in one ecommerce platform that can manage these challenges efficiently, providing integration solutions with 3PLs and shipping providers.

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Compliance Risks

Brands will undergo stringent measures on all goods from China. There will be more documentation to provide to verify goods and avoid border delays.

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Imported goods without correct labelling will be rejected by costumes leading to fines and affecting delivery timelines which impacts the end customer. 

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Brands must stay compliant to avoid fines, and can easily manage their US sales tax obligations through seamless integration

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To mitigate the impact of rising tariffs and increasing shipping costs, Clear by Swap Global helps brands reduce their exposure to Trump’s tariffs through B2B2C movement. 

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Duties are now assessed on their fair market value, not the final retail price which provides significant cost savings to provide customers with a better experience.

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How Swap Global Can Help Ecommerce Brands with the De Minimis Exemption

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Duty & Tax Optimization to Reduce Tariff Costs

Swap Global enables brands to strategically route shipments and leverage Free Trade Agreements (FTAs) to reduce duty costs where possible.

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Reclassification of Products helps brands correctly classify products under HTS codes with lower tariff rates.

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Swap Global integrates with U.S. duty drawback programs, helping brands reclaim duties on returned or re-exported goods.

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Reducing Shipping Costs

For brands manufacturing in China, Swap Global optimizes fulfillment locations to bypass excessive tariffs.

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Brands can ship bulk inventory to U.S. warehouses instead of sending individual orders to avoid high per-shipment costs.

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Orders can be automatically routed from warehouses in tariff-friendly zones to avoid penalties.

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Landed Cost Transparency

With new tariffs increasing final checkout prices, brands must clearly communicate duty costs.

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Swap Global integrates real-time landed cost calculators into checkout flows:

• Automatic duty & tax calculations are based on the shipping destination.
• Pre-paid duties options are available for customers to avoid surprise fees on delivery.
• Transparent cost breakdowns that build trust & reduce basket abandonment.

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Compliance & Risk Management

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U.S. customs enforcement will increase audits on China imported goods to ensure tariff compliance. 

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Swap Global ensures brands:

• Use correct trade documentation to avoid border delays.
• Meet country-of-origin labeling requirements to prevent goods from being rejected at customs.
• Stay compliant with evolving trade regulations to avoid unexpected fines.

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The recent increase in U.S. tariffs on Chinese imports, along with the expiration of the De Minimis exemption in May 2025, will significantly affect ecommerce brands that manufacture in China and sell to U.S. consumers.

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These changes will result in higher duties, shipping fees, and increased compliance requirements, leading to higher costs and potential disruptions in logistics.

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Book a demo with Swap Commerce to mitigate your tariff exposure and keep your brand ahead of the changes.