US reciprocal tariffs: Ecom players wait & watch as no-duty regime winds up

The de minimis system allowed products and merchandise under $800 to enter the US without any duty and with minimal inspection

consumer price index, e-Commerce — India’s de minimis threshold is ₹5,000 or $60, significantly lower than other countries, according to media reports.

Shivani Shinde Peerzada Abrar Mumbai/Bengaluru

5 min read Last Updated : Apr 04 2025 | 12:45 AM IST

India will have to figure out if President Donald Trump’s decision to end a system that allowed low-value imports from China and Hong Kong to enter the US duty free will affect its booming ecommerce with the US.

The White House, in a statement on Thursday (India) time, said, “Following the Secretary of Commerce’s notification that adequate systems are in place to collect tariff revenue, President Trump is ending duty-free de minimis treatment for covered goods from the People’s Republic of China and Hong Kong starting May 2, 2025 at 12:01 a.m. EDT.”

The de minimis system allowed products and merchandise under $800 to enter the US without any duty and with minimal inspection. Chinese ecommerce companies used it to send merchandise directly to customers in the US.

The number of shipments using this system have swelled in recent years to reach 1.4 billion in 2024, according to a report by Reuters. Of such systems, 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 ecommerce industry and small businesses.

India’s de minimis threshold is ₹5,000 or $60, significantly lower than other countries, according to media reports.

Paresh Parekh, partner and retail tax leader, EY India, said that Indian ecommerce and direct-to-consumer (D2C) sectors mostly sell or list products manufactured in India or imported from countries, including from China. Therefore, the US tariffs may only have an indirect impact.

“However, reportedly there could be a huge impact on US D2C ecommerce due to aspects like impact on consumption patterns and because of the US ending the de minimis system for low value imports from China, Hong Kong, etc,” Parekh told Business Standard. “The indirect and direct impact of this on Indian ecommerce needs to be analysed. It also needs to be seen whether the Indian government would like to change the Indian de minimis threshold which is presently already quite low.”

In the long term, some industry experts said that the imposition of Trump’s 27 per cent reciprocal tariffs could impact the ecommerce sector in India, primarily through increased costs and altered consumer behaviour.

For instance, the tariffs may increase the cost of Indian goods exported to the US. Reduced spending power could lead to decreased demand for imported goods. Ecommerce businesses relying on crossborder trade may face disruptions in supply chains due to increased tariffs and this may have an impact on their margins.

Parekh of EY said tariffs for imports into the US, and change in de-minimis rules for US imports may make goods costlier in the US and change consumption patterns.

“Indian D2C and ecommerce selling goods in India are either manufactured in India or imported from China, etc. So, while, due to the tariffs US consumers may face increased prices, unless sellers absorb margins, US tariffs should not directly impact prices for goods in India and Indian consumer behaviour is unlikely to shift drastically,” said Parekh.

India’s ecommerce exports were at $4-5 billion in FY23 and are expected to touch $200-300 billion by 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 in current export levels.

The Directorate General of Foreign Trade estimated that India’s ecommerce exports were at $2-5 billion in 2024.

Global ecommerce giants Amazon and Walmart have propelled this growth. Amazon said in December it plans to enable over $80 billion in cumulative ecommerce exports from India by 2030. This is four times more than its pledge of enabling $20 billion in ecommerce exports by 2025, reflecting what it says is the demand for “made-in-India” products.

According to Amazon, it had surpassed $8 billion in cumulative exports from India in 2023. It achieved $5 billion worth of exports in 2022.

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

“It’s too early to assess the impact of these tariffs on the Indian ecommerce sector, given that they’ve been implemented across multiple countries,” said Satish Meena, an adviser at Datum Intelligence, a market research firm specialising in consumer technology. “We should gain more clarity in the coming months. The impact may vary depending on the product categories, and if there are any effects, it could delay the timelines for the export targets set by ecommerce companies.”

Some industry executives noted that large ecommerce and retail companies source products from India, and these could become more expensive for the US consumers due to the tariffs.

“It appears that the global supply chain and trade dynamics could shift dramatically, and the trade relationships between countries may change if a major partner like the US behaves in this manner,” said an industry insider.