Trump Administration Ends Exemption on Low-Value Parcels, Postal Traffic to U.S. Drops 80%

What's Happening?

The Trump administration has ended a tariff exemption for low-cost imports, leading to a significant decrease in postal traffic to the United States. According to the Universal Postal Union (UPU), postal traffic into the U.S. has plunged by over 80% following the elimination of the 'de minimis exemption' for parcels valued at $800 or less. This exemption previously allowed lower-value goods to enter the U.S. without customs charges. The new rules, implemented on August 29, 2025, require transportation carriers or U.S. Customs and Border Protection-approved parties to collect and remit customs duties. As a result, 88 postal operators have suspended some or all services to the U.S. until a solution is found. The UPU has noted major operational disruptions, as airlines and carriers are unwilling or unable to collect these duties, and foreign postal operators have not established links with CBP-qualified companies.

Why It's Important?

The removal of the de minimis exemption is significant as it impacts international trade and postal services. The exemption, in place since 1938, was seen as a loophole exploited by foreign businesses to avoid tariffs and by criminals to smuggle drugs into the U.S. The change affects products from all countries, potentially increasing costs for U.S. consumers and businesses relying on imported goods. The new requirement for customs vetting and applicable tariff rates, ranging from 10% to 50%, could lead to higher prices and reduced availability of foreign products. This policy shift may benefit domestic producers by reducing competition from low-cost imports but could also strain international relations and disrupt global postal networks.

What's Next?

The UPU is working on measures to help postal operators calculate and collect duties, but the process may take time. The U.S. administration has stated that U.S. residents will not have to pay duties on incoming gifts valued up to $100 or personal souvenirs up to $200. However, foreign postal operators need to establish connections with CBP-qualified companies to resume services. The UPU has expressed concerns to U.S. Secretary of State Marco Rubio about the impact of the new rules, indicating potential diplomatic discussions or adjustments to the policy. Stakeholders, including international businesses and postal services, may lobby for changes or seek alternative solutions to mitigate disruptions.

Beyond the Headlines

The policy change highlights broader issues in international trade and customs enforcement. It raises questions about the balance between protecting domestic industries and maintaining open trade channels. The disruption in postal services could lead to long-term shifts in how international parcels are handled, potentially prompting innovations in customs technology and procedures. Additionally, the move may influence other countries to reconsider their own tariff exemptions and customs policies, leading to a ripple effect in global trade practices.