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U.S. Ends Duty-Free Imports
Context:
The United States eliminated the de minimis duty-free import exemption (up to $800 per person per day) effective August 29, 2025, impacting global postal and courier trade flows.
De Minimis Regulation
- Origin: Rooted in Section 321 of the U.S. Tariff Act of 1930.
- Purpose: Initially allowed American tourists to send souvenirs without paying taxes.
- Later Role: Became a trade facilitation measure to reduce administrative costs.
- In 2016, the U.S. raised the threshold from $200 to $800, significantly expanding coverage.
Impact of the Regulation (Before Reversal)
- Encouraged low-value e-commerce imports, mainly from China (over 50% share).
- Daily imports: 4 million parcels processed.
- Growth: From 134 million parcels in 2015 to 36 billion parcels in 2024.
Current Change (2025)
- Duty-free exemption abolished for all countries (China first targeted in May 2025).
- Goods like textiles, toys, cosmetics, and electronics will now face tariffs based on country of origin.
- S. rationale: Curb trade deficit, intellectual property theft, counterfeit products, and protect domestic businesses.
Global Parallels
- EU: Proposed €2 handling fee (direct imports) and €0.5 (via warehouses).
- EU also scrapped the €150 duty-free threshold in 2023 to protect consumers and businesses.
- Broader Trend: Both U.S. and EU measures reflect a weakening of multilateral trade order (WTO system) and rise of protectionism.
Implications for India
- India’s exports (like textiles, toys, handicrafts, small electronics) could face increased tariffs in the U.S. market.
- Small and medium exporters relying on e-commerce platforms may be disproportionately affected.
- Calls for diversification of export destinations and strengthening FTAs
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