On February 4, a brief period of uncertainty was alleviated as the USPS reinstated its shipping services for packages coming from China and Hong Kong to the United States. This decision comes even as future costs for these shipments may rise shortly.

This development followed a temporary suspension of shipments from China initiated by President Trump’s executive order on February 1. This order included a 10% tariff on goods from China, withdrawing the de minimis exemption that previously allowed low-value items to enter the U.S. without incurring fees. The USPS has stated it is crafting a strategy to introduce these fees without significantly disrupting package deliveries, and it will continue to accept these affected shipments for now.

Other courier services like UPS and FedEx have not yet detailed their strategies regarding the president’s directive, but they will undoubtedly need to devise a response. Fortunately, it appears that cherished care packages from overseas grandparents will continue to flow. However, uncertainty remains, as delays may occur while shipping companies adapt to the new fee structure, and price increases are anticipated.

The implications of a 10% tariff are relatively straightforward—imports from the affected country will incur an additional cost of 10%. However, the termination of the de minimis exemption poses a more complex challenge, particularly for budget-friendly online retail platforms such as Shein and Temu. It’s important to highlight that although these measures are set to take effect, their implementation has been placed on hold following an executive order announced on February 7.

The de minimis exemption, established in 1930, was designed to simplify the processing of low-value international shipments by waiving duties and fees when the cost of collection would exceed the revenue generated. This policy predominantly applies to packages valued under $800, facilitating seamless e-commerce transactions by allowing foreign vendors to ship smaller items directly to U.S. consumers without duties. A recent report from a U.S. Congressional committee, referenced by Reuters, indicates that nearly half of all exemptions have pertained to Chinese goods, with 30% of daily de minimis shipments originating from Temu and Shein.

With the anticipated removal of these exemptions, affected retailers will face customs fees on all importations in addition to the 10% tariff, potentially leading to price hikes and extended shipping timelines. U.S. companies that depend on Chinese warehouses, including platforms like Amazon Haul, may also feel the pinch.

The degree to which these additional costs will be passed on to consumers remains uncertain. In conversation with Reuters, ShipHero CEO Aaron Rubin emphasized that the shifts could equate to a 5% margin difference. Given that e-commerce typically operates on 10% to 15% margins, the impact could be significant.

Conversely, Sheng Lu, a fashion and apparel studies expert at the University of Delaware, indicated that these new regulations may only slightly increase prices per item. Despite sounding minor, such increments can heavily affect smaller Chinese enterprises that lack the capacity to absorb increased costs like their larger counterparts, such as Temu and Shein.

Importantly, the de minimis exemption isn’t being completely eliminated; President Trump’s initiative currently targets solely China. Initially, it was set to influence Canada and Mexico as well, but recent negotiations with those nations have granted them a 30-day reprieve. This situation could allow another country’s equivalent of Temu to emerge as a competitor, or lead to Chinese companies establishing international warehouses to mitigate their costs.

In summary, the full ramifications of these changes will take time to unfold. The 10% tariff against China is in motion, while the country can still benefit from the de minimis exemption until the Secretary of Commerce confirms that “adequate systems are in place to efficiently process and collect tariff revenues.”