US Ends Duty-Free Exemptions on Small Packages, Raising Fears of Higher Prices

TDT | Washington

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The United States has ended tariff exemptions on small packages entering the country, a move that has sparked concern among small businesses and raised fears of consumer price hikes.

The policy, announced by President Donald Trump’s administration, ends duty-free treatment for parcels valued at $800 or less. Officials said the system was being exploited to evade tariffs and smuggle drugs.

Under the new rules, packages will now face normal tariffs based on their country of origin or a set duty ranging from $80 to $200 per item. Exceptions will still apply to certain personal items and gifts.

White House trade adviser Peter Navarro said the change closes a loophole that was being used to bring in “narcotics and other dangerous items,” while also increasing tariff revenues.

Postal Services Halt Shipments

The sudden change has created disruption worldwide. Postal services in countries such as France, Germany, Italy, India, Australia, Japan and the UK said they would stop accepting most US-bound packages.
The United Nations’ Universal Postal Union later confirmed that postal operators in 25 countries had suspended services to the US.

The UK’s Royal Mail, however, announced new services to allow British customers to continue sending goods to American buyers.

Small Businesses Hit Hard

For small retailers, the move is a major blow.
UK business owner Liz Nieburg, whose online store SocksFox relies on US buyers for 20% of sales, said she had stopped shipping orders while waiting for Royal Mail to adjust. “Our margins are too tight to absorb this. We’ll have no choice but to raise prices,” she said.

Experts warn that consumers will face delays as packages now need to clear customs. Prices may also increase if businesses pass on the extra costs.

“Small businesses will feel this the most, while large firms can absorb the shock,” said Cornell University professor Li Chen.

Some major online retailers such as Shein and Temu are also affected, though analysts believe they are less dependent on the US market.

US Businesses Adjust

American companies that rely on overseas manufacturing are also struggling.
Ken Huening, owner of California-based CoverSeal, said he has been forced to cut free shipping after tariffs hit his products made in China and Mexico.

“Textile and manufacturing isn’t available in the US right now,” he said. “By the time it comes back, many of us could already be out of business.”