Trump scraps $800 import exemption, may dent India's e-commerce exports

India’s booming e-commerce export industry is bracing for a potential disruption after US President Donald Trump signed an executive order on Wednesday eliminating the long-standing duty-free exemption for low-value imports. 

The move may impact Indian online sellers and e-commerce companies, many of whom have built businesses around shipping small parcels — ranging from handcrafted jewellery to mobile accessories — directly to American consumers without facing tariffs. This threatens to raise costs and erode competitiveness for thousands of small exporters. 

The order, effective August 29, ends the so-called ‘de minimis’ (Latin for ‘about minimal things’) exemption that allowed packages valued under $800 to enter the US without duties and with minimal inspection. This may force e-commerce platforms to face significant challenges due to the elimination of simplified Customs procedures. 

“This erases a key cost advantage for Indian sellers, particularly those using direct-to-consumer e-commerce channels,” said Salman Waris, managing partner at TechLegis Advocates & Solicitors. “Businesses must adjust pricing or absorb additional tariff costs, likely making Indian goods less competitive in the US.”

 

Chinese e-commerce companies used the ‘de minimis’ system to send merchandise directly to customers in the US. 

 

The number of shipments using this system has swelled in recent years to reach 1.4 billion in 2024. Of such shipments, almost 60 per cent came from China. India is among 100 countries that used the system, and it is too early to understand the impact its elimination will have on the country’s e-commerce industry and small businesses.

 

“The quantum of ‘de minimis’ imports was estimated at around $128 billion in 2021 by the Coalition for a Prosperous America, and it may be even higher by now. Therefore, this can also have substantial consumer price effects in the US,” said Badri Narayanan Gopalakrishnan, Fellow and former trade head at NITI Aayog.

 

Gopalakrishnan is of the view that small exporters have had a reprieve in the form of ‘duty-free de minimis’ treatment. He said suspension of this may have a notable impact on their bottom line since they do not have the kind of market power or markup to absorb the costs of these duties, nor do they have the luxury of passing them on to consumers, given their small scale and stature.

 

Agneshwar Sen, trade policy leader at EY, said Chinese exporters — particularly Temu, Shein, etc. — used this provision to exponentially expand their small-value (less than $800) exports directly to US consumers. He said medium and small businesses and artisanal exporters from India, using online marketplaces like Amazon and Etsy, also benefited by accessing consumers in the US directly. “Ending this provision will impact small, low-value, including artisanal, exports to the US from across the world,” said Sen.

 

Brijesh Damodaran, managing partner at Auxano Capital, said the ‘de minimis’ rule enabled Indian small businesses and digital-first exporters to ship affordable products directly to US customers with minimal Customs friction and competitive pricing. He said the suspension will now raise the landed cost and administrative complexity for every small package sent to US consumers. “While positioned as a crackdown on abuse (counterfeits, opioids, and evasion), this will impact genuine exporters, who have less than 30 days to adapt,” said Damodaran.

 

Viswanath Pingali, professor in the Economics area at IIMA, said that small businesses, which used to escape scrutiny through the ‘de minimis’ principle, might face greater challenges. However, with active support from the government, these challenges can be overcome, including in the short run. “The Indian diaspora in the US, who are big consumers of such products and services, must be exploring options to guide Indian businesses.”

 

Sunil Kharbanda, cofounder and chief revenue officer at Trezix, a global trade platform, said the suspension of the ‘de minimis’ exemption is a defining moment for global exporters. “What was once a fast lane for low-value shipments is now a chokepoint demanding full compliance, documentation, and duty payments,” said Kharbanda.

 

Jaideep Kewalramani, head of the employability business and chief operating officer at TeamLease EdTech, was of the view that the impact will either come off the margins of the seller or be absorbed by the buyer. “Once Thanksgiving and Christmas kick in, the actual impact may be felt early next year.”

 

India’s e-commerce exports stood at $4–5 billion in 2022-23 and are expected to touch $200–300 billion by 2029-30 (FY30), according to a report by EY and Assocham. This is part of the Indian government’s $1 trillion overall merchandise export target by FY30, requiring a 50–60-fold increase from current export levels.

 

Global e-commerce giants Amazon and Walmart have propelled this growth. Amazon said in December it plans to enable over $80 billion in cumulative e-commerce exports from India by 2030.

 

US retail giant Walmart has said it surpassed $30 billion in cumulative sourcing from India over two decades. It is now targeting $10 billion in annual sourcing by 2027.

 

US shuts duty-free door: What it means for India

 

·         $800 exemption scrapped from August 29

 

·         Small Indian exporters lose tariff-free access

 

·         Costs to rise, margins to shrink, prices may spike

 

·         Direct-to-US sellers face new Customs red tape

 

·         Over 1.4 billion parcels used this route in 2024

 

·         India among 100 nations affected

 

·         Festival season sales likely to take a hit