In May 2025, the U.S. revoked the $800 de minimis exemption for all Chinese and Hong Kong-made goods. It was a seismic shift that instantly upended the cross-border playbook for global ecommerce brands. Shipments that once entered the U.S. duty-free now face full customs clearance, layered tariffs, and intense regulatory scrutiny. For many brands—especially those relying on Chinese manufacturing—this policy change is more than an operational headache. It’s a bottom-line threat.
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And with peak season fast approaching, these challenges are colliding with the most critical sales window of the year. Brands that haven’t adjusted their import strategy may find themselves facing delays, margin pressure, and compliance risks at the worst possible time.
But while the rules have changed, the opportunity hasn’t. The U.S. remains the world’s most coveted consumer market. Brands that adapt quickly and compliantly can not only stay in the game—they can outperform competitors who stall or shortcut.
What Changed: From “De Minimis” to Maximum Exposure
Until recently, ecommerce brands could ship low-value parcels (under $800) from overseas to U.S. customers without duties or complex paperwork. That’s over—at least for goods made in China and Hong Kong. Now, every shipment must be fully declared and cleared, with tariffs ranging from 30% to over 70% in some cases.
Compounding the challenge: the U.S. has introduced multiple layers of tariffs on Chinese goods, including Section 301 duties implemented in 2018, new “Fentanyl” tariffs under the IEEPA, and reciprocal tariffs that may soon become permanent. What’s more, the end of de minimis for all countries is coming. The “one big beautiful bill” which was signed into law on July 4th, will phase out de minimis entirely by 2027 though many expect de minimis to be eliminated by the end of 2025.
Impact on Ecommerce Brands
The immediate consequences are threefold:
- Rising Landed Costs: Tariffs can erase margins entirely, forcing brands to raise prices, eat losses, or rethink product mixes.
- Operational Friction: Every parcel will require full documentation, a U.S. Importer of Record (IOR), and precise HTS codes. Compliance errors can result in audits, seizures, or even False Claims Act lawsuits.
- Legal Exposure: U.S. Customs is aggressively auditing entries, and misdeclarations—intentional or not—can lead to heavy penalties.
The “label-and-ship” era of cross-border ecommerce is over. Brands that want to stay in the U.S. must evolve.
Strategic Models to Navigate the New Trade Landscape
At Passport, we’ve mapped out three proven import strategies that smart ecommerce brands are leveraging to turn disruption into opportunity.
1. Direct-to-Consumer (DTC)
Still viable for brands with high margins, small SKU counts, or non-China sourcing. But for those shipping China-made goods, this model now comes with high duty exposure and fragile unit economics.
Best for: Test-market brands, regulated products (e.g., cosmetics), or sellers with limited SKUs looking to avoid inventory commitments.
2. In-Country Enablement
This increasingly popular model involves bulk-shipping goods into the U.S., storing them domestically, and fulfilling orders locally. It shifts the customs valuation basis from retail price to wholesale or manufacturing cost—significantly reducing duties. It also unlocks faster delivery, simpler returns, and access to marketplaces like Amazon and Walmart.
Best for: Mid-sized to enterprise brands seeking scalability, tariff mitigation, and better customer experience.
Recent research by Passport and Drive Research found that 94% of ecommerce leaders plan to scale in-country fulfillment in the next five years—a clear sign of where the industry is heading.
3. B2B2C (U.S. Subsidiary Model)
This structure creates a U.S. entity to serve as the importer and distributor, purchasing inventory from the parent company at a compliant transfer price. While it offers tariff savings, it requires complex tax and legal compliance and is best suited for mature brands with $10M+ in revenue.
Best for: Operationally sophisticated brands with internal tax, legal, and trade teams.
How to Choose the Right Model
Key considerations include:
- Tariff exposure: Products with high duty rates (e.g., apparel, electronics, footwear) may benefit most from in-country or B2B2C models.
- Sales volume: Brands shipping 1,000+ orders/month or with high return rates gain the most from in-country fulfillment.
- Compliance readiness: Acting as IOR and managing customs and tax responsibilities requires internal processes or a reliable partner.
- Customer experience goals: Fast shipping, smooth returns, and marketplace access are easier to deliver from U.S.-based inventory.
The Compliance Imperative
In this new enforcement era, compliance is a competitive advantage. CBP (U.S. Customs & Border Protection) is cracking down on valuation fraud, improper classifications, and origin misstatements. Importers must exercise “reasonable care” or risk serious consequences—from triple damages under the False Claims Act to potential criminal charges.
Brands should work with licensed brokers, maintain airtight documentation, and avoid risky schemes that promise low duties with little transparency. Even if a supplier or vendor files the paperwork, the brand can still be held liable.
Steps to Take Now
If you’re feeling the pressure of tariff reform, here are six immediate actions to protect your U.S. growth:
- Run a landed cost analysis: Calculate true per-SKU costs under new tariffs and customs procedures.
- Revisit your pricing strategy: Consider AOV increases, duty-inclusive checkout, or temporary surcharges.
- Evaluate your import model: Is DTC still viable? Should you explore In-Country Enablement or B2B2C?
- Invest in compliance: Partner with trade experts and treat customs and tax compliance as a competitive advantage.
- Improve fulfillment and returns workflows: Especially if you shift to domestic inventory.
- Communicate with customers: Transparency around shipping changes, duties, or pricing reinforces trust.
Final Thought: Adapt to Win
The end of de minimis for China is just the beginning. U.S. trade policy is shifting toward stricter enforcement and higher import costs across the board. But brands that respond strategically ahead of peak season—rethinking fulfillment, tightening compliance, and delivering great customer experiences—will gain market share while others scramble.
The U.S. market isn’t closed. It’s just changed. And with the right playbook, your brand can still win.
At Passport, we’re helping ecommerce brands do exactly that. As a leading global ecommerce solutions provider, we support brands with compliant cross-border shipping, in-country enablement, and hands-on trade and tax guidance. Our latest product release expands support for UK-based merchants and adds new in-country fulfillment capabilities in the U.S. and Mexico—designed to help brands mitigate tariffs, accelerate delivery, and grow sustainably in key markets.
If your team is rethinking international strategy in light of trade reform, now’s the time to explore new infrastructure. With the right partners in place, tariff turmoil can become a catalyst for stronger, more scalable global operations.
Author Bio
Thomas Taggart is a cross-border commerce leader with more than 20 years of experience in international shipping and regulatory affairs. As the Head of Global Trade, Thomas helps ecommerce brands go global by simplifying international trade, tax, and product compliance issues. Prior to Passport, he brought international shipping solutions to market through multiple roles in UPS’s product development organization.