Impact of US De Minimis Rule on India-US Trade
The United States ended its century-old De Minimis exemption on 29 August 2025. This rule allowed shipments valued under $800 per person per day to enter the US without duty or tax. The change has disrupted postal and e-commerce trade between India and the US. India Post suspended most mail services to the US from 25 August 2025. The new regulations require stricter customs checks and duties on all shipments, affecting businesses and consumers alike.
What Is the De Minimis Exemption?
The De Minimis exemption allowed low-value shipments to enter the US duty-free. It applied to goods valued below $800 per person per day. This rule simplified customs for small parcels and boosted cross-border e-commerce. The US Customs and Border Protection (CBP) processed over 1.36 billion such shipments in fiscal year 2024. The exemption helped reduce compliance costs for exporters and facilitated faster delivery.
Reasons for Withdrawal of the Exemption
The US government withdrew the exemption to increase tariff collections and tighten import controls. The move aims to curb undervaluation and misdeclaration of goods. It also addresses security concerns and enhances revenue from international trade. The decision was announced by President Donald Trump on 30 July 2025 and took effect from 29 August 2025.
Impact on India Post and Postal Customers
India Post halted booking and transmission of most parcels to the US except documents and gifts under $100. US-bound carriers could not carry postal shipments without clear duty collection and data exchange mechanisms. This suspension affects millions of Indians sending gifts and goods to relatives in the US. In places like Coimbatore, nearly 15% of parcels were US-bound, denoting the scale of disruption.
Effects on Indian MSMEs and E-commerce
Indian micro, small, and medium enterprises (MSMEs) face major challenges. Many export electronics, pharmaceuticals, textiles, and jewellery to the US. These sectors account for over 60% of India’s exports to the US. The removal of the exemption means all shipments attract duties. The simpler Entry Type 86 customs process is replaced by the complex Entry Type 11 system. This requires detailed product codes and valuation data. Increased documentation raises compliance costs and risk of delays.
Challenges
Exporters must now absorb or pass on higher costs. Absorbing duties cuts profit margins. Passing costs to consumers may reduce demand. Exporters need to rethink pricing, shipping, and compliance strategies. The change also offers a chance to upgrade trade practices. Adopting modern compliance systems can build resilience and competitiveness in global markets.
Future Outlook
The Department of Post is monitoring the situation and working to restore services. Industry stakeholders seek clearer duty collection frameworks and data sharing protocols. The evolving US customs rules will shape India-US trade dynamics. Businesses must adapt quickly to maintain market access and growth.
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