The cost of everyday goods in the U.S., from clothing to small home appliances, may soon rise sharply—and that’s on top of recent inflation, and in advance of Trump’s proposed tariffs. This September, the Biden administration announced plans to target imports by tightening the de minimis exemption, while Congress is considering further restrictions to the exemption during the lame duck session this month. While lawmakers hope that eliminating de minimis will promote fair trade and labor practices, a blunt and clumsy legislative hammer will have extreme consequences for American small businesses—many of which rely on streamlined access to goods and production through this policy and global trade in general.
The de minimis exemption allows imports to the U.S. valued at $800 or less to enter the country duty-free, and it’s a trade staple for the American small business. These businesses depend on affordable manufacturing and intermediate goods from the global marketplace to serve American customers at a competitive price. De minimis helps American entrepreneurs compete with larger retailers and brands, and also enables them to keep business models responsive to consumer demands. Proposed restrictions on de minimis will spike costs for small enterprises already stretched thin by inflation and rising operational expenses.
Advocates against de minimis argue that the exemption allows retailers such as Shein and Temu to flood the market with cheap goods while they conduct dubious labor practices, ruin the environment, and run American retailers and brands out of business. Others argue that fentanyl and counterfeit goods can pass more easily into the country via looser customs inspections with de minimis. There is certainly merit to the intention behind these arguments. The problem is that eliminating de minimis will also hurt thousands of American small businesses–ironically one of the very groups the change is intended to protect.
While there are many potential bills on de minimis swirling on Washington, certain bills–along with Biden’s own proposed rule change–target the apparel industry. But the American apparel industry relies heavily on de minimis and global trade broadly. American brands, retailers, and even individual craftspeople depend on global manufacturing and intermediate goods to provide garments to Americans at scale, cost, and quality.
Let’s take the example of a small American fashion brand that sells 1.3 million pairs of organic cotton socks a year. The company employs 60 people in design, sales, and marketing, but cannot afford to make its socks in the U.S. if they want to sell to a general consumer and source sustainable materials at the same time. They depend on low-cost, customizable options sourced from established and nimble manufacturing hubs abroad. In the absence of de minimis, the business would face higher import duties, additional bureaucratic hurdles, and fewer manufacturing options—which would reduce profit margins, increase lead time, and directly drive up the cost of the final product, making their socks less affordable to consumers and potentially putting the company out of business.
But, you may ask, what about American manufacturers? When the Biden Administration released its proposed rule change on de minimis this fall, it specifically mentioned a desire to strengthen American apparel manufacturing. But de minimis is a purely customs-based solution and will not reshore or significantly bolster American apparel manufacturing. Apparel and textile manufacturing requires extensive infrastructure, specialized skills, and benefits from supply chain integration—capabilities that have been rigorously developed in countries like China and Vietnam. The heavy initial costs of investment and slow accumulation of expertise would make it nearly impossible for countries like the U.S. to build a similar infrastructure at home, especially one that could meet the scale or affordability demands of American consumers.
Businesses are already bracing for President-elect Trump’s promise to implement wide-ranging tariffs—proposing 10% on all U.S. imports on the campaign trail and routinely declaring the potential for much higher (e.g., 25% tariffs on Mexican and Canadian goods, or further tariffs on Chinese goods). This would encompass not only the Sheins and Temus of the popular imagination, but economic necessities like groceries and materials for U.S.-based manufacturers. Restricting the de minimis exemption would only compound the punishment on American consumers and small businesses that depend on intermediate goods and manufacturing from overseas.
Small businesses are the backbone of the U.S. economy, accounting for nearly half of the country’s workforce and representing 43.5% of the country’s GDP in 2024. A survey conducted by Fedex found that 8 in 10 small business leaders would see a negative impact on their operations if de minimis were eliminated. The push against overseas imports hurts American consumers and businesses, punishes our trade partners, and mistakenly groups all foreign products together.
Ultimately, the simplicity of a single country written on an origin tag explains little about our complex modern world of sourcing. Efforts to protect American manufacturers and workers must be carefully calibrated to avoid unintended consequences to American small business and consumers. De minimis might seem like a straightforward means to punish bad actors, but it risks punishing too many good actors along the way.
As the American essayist H.L. Mencken once said, “For every complex problem, there is an answer that is clear, simple, and wrong.”