De Minimis Devastation and Furniture Security

(Not So) Fun Fact: Despite many officials and headlines calling the de minimis trade rule a “loophole,” this policy has been in place since the 1930s and is specifically designed for the duty-free importation of low-value goods, primarily benefiting low-income consumers.

Destroying De Minimis Delivers Disorder

What’s Happening: President Trump’s executive order suspending the trade rule commonly known as de minimis takes effect tomorrow. As of August 29, U.S. businesses and consumers will no longer be allowed to import products valued under $800 free from fees and duties. Alongside new tariffs, these packages will now be subject to greater scrutiny from Customs and Border Protection (CBP) and will have to enter the country via a formal rather than informal entry process (See Figure 1 for details). The president’s move preemptively eliminates de minimis, which was set to end on July 1, 2027, as part of the One Big Beautiful Bill Act passed by Congress and removes a trade rule on the books since the 1930s. This is not the first time the Trump Administration has attempted to crack down on low-value shipments. De minimis was terminated for China in February and temporarily suspended for Canada and Mexico in order to combat the flow of illicit drugs. In response to the impending end of de minimis, dozens of mail operators, postal services, and companies have announced that they will suspend shipping to the United States due to the sheer amount of uncertainty surrounding how packages will be handled and the cost of tariffs.

Why It Matters: The termination of de minimis marks yet another costly protectionist action by the administration, with a total net welfare loss amounting to roughly $72 billion over the next decade. According to past American Action Forum research, the full elimination of de minimis will impact hundreds of millions of shipments valued at tens of billions of dollars and will likely result in additional annual costs of $8 billion to $30 billion. This previous estimate includes additional CBP personnel required to screen packages, tariffs, and various fees that are often more burdensome than any tariff revenue collected. Given the heightened level of tariffs in 2025, the Shipment predicts that the cost estimate is at the higher end of this range and amounts to a 14–55 percent import tax. While this new policy may appear to be a small drop in the trade bucket, U.S. households use de minimis for an average of eight packages worth more than $400 annually. De minimis also primarily assists low-income consumers and small businesses, both of which will face the bulk of the added cost and administrative burden.

As the new executive order lays out, carriers will have two tariff options for the next six months. The first is that they pay a tariff rate equal to the International Emergency Economic Powers Act (IEEPA) rate of the country of origin. The second is a flat tariff of $80 if the country of origin has an IEEPA tariff rate under 16 percent, $160 if the tariff is between 16–25 percent, or $200 if the tariff is above 25 percent. The flat-fee method will be phased out by February 2026. The flat-fee method will likely only be feasible if carriers plan on consistently transporting packages with a value close to $800. The average de minimis package value in 2023 was around $51, meaning an $80 fee is equivalent to a 157 percent tariff; this demonstrates the impracticality of the flat-fee approach to the majority of low-value packages.

Looking Ahead: Certain European carriers such as the Royal Mail in the United Kingdom plan to resume sending U.S. packages once an entirely new service is established. The Royal Mail will launch the “US Postal Delivered Duties Paid” service that will add in additional handling fees for low-value parcels, demonstrating that selling to the United States will become more costly for foreigners. For the foreseeable future, only international postal shipments will be exempt from tariffs, which will likely add stress to certain postage carriers as companies scramble to minimize costs. CBP will also experience a massive workload surge beginning Friday as they must begin thoroughly inspecting and checking the compliance of an additional 4 million packages daily. It is possible that other countries may respond by lowering their own de minimis threshold, but if the same facts hold true for other countries, it will likely be more costly and chaotic to do so.

Figure 1: Comparing Types of Import Entries (2024)

Source: The Value of De Minimis Imports; National Foreign Trade Council; GHY International; NNR Global Logistics

Future Furniture Tariffs

What’s Happening: President Trump announced last Friday that an investigation into furniture imports should be completed within 50 days. It was reported on Monday that tariffs would be implemented under Section 232, a trade authority used for national security purposes. While a specific tariff rate has yet to be determined, the stated purpose of a furniture tariff is to revitalize the industry in North Carolina, South Carolina, and across the United States. This proposal comes a few months after the administration launched a Section 232 investigation into lumber and timber imports – an investigation that may yield  a tariff by the end of the year.

Why It Matters: A tariff on furniture products will likely come from the already far along Section 232 investigation on timber and lumber in the form of wooden furniture derivatives. This is similar to the recent expansion of steel and aluminum tariffs to encompass an additional 407 derivative products that have steel and aluminum content. In 2024, there was approximately $27.7 billion worth of furniture-related imports, although it is unclear how extensive the tariff inclusion process may be for derivatives. In any case, a furniture tariff will add potentially billions of dollars in added costs to already rising furniture prices. The prices paid by consumers for living room, kitchen, and dining room furniture rose 7.6 percent year over year in July. This price increase is likely contributing to the sharp decline and continued falling momentum in consumers’ discretionary spending on furniture and home furnishings this year. A tariff on imported furniture may protect domestic industries by partially eliminating foreign competition, but it will not solve falling consumer demand or rising input costs for U.S. producers. It is also possible that this tariff will only be applied to wooden furniture products, meaning numerous plastic pieces of furniture may be left unscathed. This would simply shift demand toward cheaper plastic alternatives and leave a major hole that fails to protect domestic producers as was intended, leaving consumers with higher prices and manufacturers with fewer customers.

Looking Ahead: The United States may implement a furniture tariff alongside other wooden import tariffs by the middle of October. While it is unclear if national security concerns apply to couches and recliners, this has not stopped the Trump Administration from imposing tariffs up to this point. If past tariff policy is any indication, it is possible that timber, lumber, and furniture will be slapped with a 25-percent tariff rate that will eventually work its way through the U.S. economy and further damage consumer demand. Perhaps there will eventually be a strategic armchair reserve to defend comfortability.