How duty free threshold cuts reshaped fashion cross border trade

The United States eliminated its $800 de minimis exemption for China imports on 2 May 2025 and for all other countries on 29 August 2025. The EU de minimis exemption ended on 1 July 2026. The UK will remove its £135 threshold by March 2029. These regulatory shifts have forced fashion brands and platforms relying on direct to consumer cross border shipments to restructure operations, absorb new costs or raise prices.

What was the de minimis threshold and why did it matter?

The de minimis principle in customs law refers to a threshold below which governments agree not to collect import duties. The US threshold was set at $800, one of the most generous de minimis limits in the world. For the EU, the threshold was €150, allowing parcels valued at that level or below to enter without customs duties, though VAT still applied. The UK de minimis threshold for customs duties was £135 for most goods.

In fiscal year 2024 alone, 1.36 billion low value packages cleared US customs under this exemption. In 2025 alone, close to 5.9 billion low value parcels entered the EU directly from third country sellers. The volumes created both competitive pressure on domestic retailers and concerns about customs enforcement capacity.

Which markets changed duty free thresholds and when?

Three major markets have eliminated or are phasing out duty free treatment for low value imports:

• United States: President Trump eliminated the de minimis exemption for imports from China and Hong Kong through an executive order signed on 2 April 2025, which took effect on 2 May 2025. An executive order signed on 30 July 2025 suspended duty free de minimis treatment for low value shipments valued at no more than $800, with these shipments subject to all applicable duties starting 29 August 2025. On 24 June 2026, Customs and Border Protection issued interim final rules indefinitely suspending the $800 de minimis duty exemption for all modes of importation.
• European Union: The European Council agreed to abolish the €150 exemption on 13 November 2025, with final legislative approval on 11 February 2026. Starting 1 July 2026, the €150 de minimis exemption is gone, and parcels that used to enter the EU duty free now face a flat €3 customs duty during the interim period, with full standard tariffs expected around 2028.
• United Kingdom: The Autumn Budget 2025 announced plans to remove the customs duty relief on low value imports, with the removal of the £135 threshold taking effect by March 2029.

What happened to Shein and Temu after the US changes?

Since the US ended the de minimis exemption for Chinese imports on 2 May 2025, Temu's US audience dropped as much as 62 per cent and Shein's 47 per cent, and as of April 2026 both remained roughly 30 per cent below their pre tariff baselines. Both retailers warned customers in April 2025 that changes in global trade rules and tariffs would push prices up, and the increases were steep at the item level, with one widely reported Shein bathing suit set jumping 91 per cent in a single day.

Temu was forced to change its business model in the US and stop shipping products to American consumers from Chinese factories, and the end of de minimis as well as new tariffs on Chinese imports also forced Temu to raise prices, reign in its aggressive online advertising push and adjust which goods were available to American shoppers. Predict panel data shows Target, Walmart and Amazon absorbing the most displaced shoppers, while ASOS and Forever 21 over index hardest for this audience.

In the first three months of 2026, getting orders to customers took nearly 48 cents of every dollar Shein brought in, up from about 43 cents a year earlier, leaving Shein about 5 cents less of every dollar for everything else it pays for.

How are European fashion brands adapting to the EU changes?

Consumer transaction data shows Temu's EU growth accelerating to above 60 per cent through the first three weeks of May 2026, with Shein up roughly 20 per cent, which is demand climbing into the fee rather than retreating from it. The platforms are localising fulfilment faster than the rule can bite, with a late May certification of European and US warehouses for Shein semi managed sellers and Temu running a continental warehouse network that already handles the bulk of its EU orders.

Importers and carriers will need to submit standardised electronic shipment data before goods enter the EU, including precise product descriptions, seller and buyer information, consignee details and HS classification codes. A temporary €3 customs duty applies per item on qualifying low value consignments sold in distance sales to EU consumers, expected to run until 1 July 2028, and is charged on businesses rather than collected from consumers at the door.

What are the cost impacts on fashion retailers?

Well established brands like Lululemon are also feeling the squeeze, with the Canada based activewear producer saying it will pay a $240 million tariff bill this year, which it expects to rise to $320 million in 2026, largely because many of the orders that it ships to customers in the US from Canada will now be subject to import taxes.

The removal of the de minimis exemption means European fashion brands now face significant cost increases on every US bound shipment of goods, with every parcel requiring tariffs and customs clearance regardless of size, disrupting the flow of e commerce imports that had been enabled by the exemption for lower value items below the previous $800 limit.

The flat duties also disproportionately affect low average order value products. The EU's €150 duty free threshold was removed on 1 July 2026, with a €3 duty per customs declaration line item, and by 1 November 2026 an additional €2 handling fee per customs declaration line item is expected to take effect, bringing the combined charge to €5 once fully implemented.

What should fashion supply chain executives prepare for?

Fashion retailers relying on cross border direct to consumer models face a choice between absorbing new costs, passing them through to customers or restructuring fulfilment networks. The regulatory changes effectively eliminate the cost advantage that enabled platforms to ship individual orders duty free from overseas warehouses.

Major adjustments include:

• Localised inventory: Shifting stock to warehouses inside the destination market to avoid per parcel customs charges.
• Consolidated shipments: Moving from individual parcel shipping to bulk imports that are then fulfilled domestically.
• Enhanced compliance: Investing in customs classification, product identifier data and carrier integration to meet new declaration requirements.
• Pricing strategy: Recalculating landed costs and adjusting customer pricing or absorbing margin pressure.

The US eliminated its $800 threshold in August 2025, the EU will remove its €150 exemption from July 2026, and the UK has confirmed its £135 threshold will be gone by March 2029. The coordinated timing suggests fashion brands should expect sustained enforcement pressure rather than policy reversal.

Researched and drafted with AI support, reviewed and released by the editorial team.

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