Stay in the loop
Subscribe to receive the latest email news and updates from Shippit
What's happened
Last updated: August 4th, 2025
In May 2025, the United States removed the US$800 duty-free de minimis threshold for goods originating from China and Hong Kong. Following a new Executive Order, issued on July 30, 2025, they are now suspending the de minimis threshold for all countries.
From August 29, 2025:
- Non-postal: Goods valued at $800 or less will now be subject to applicable duties when shipped via non-postal networks.
- For a transitional period of 6 months, goods shipped through the international postal system will be assessed duties using either ad valorem duty (based on effective tariff rates) or specific duty ($80-$200 per item, depending on country of origin).
For the latest, our cross-border shipping partner Zonos also offers a summary of newly announced and pending tariffs that affect retailers, along with their current status.
Elimination of de minimis for all shipments
Previously, the US de minimis threshold of US$800 allowed low-value goods to enter duty-free. With its removal, all goods are now subject to duties and taxes and formal customs clearance. As with previous tariff updates, our carrier partners are flagging upcoming delays as US Customs and Border Protection adjusts to the additional workload.
Some retailers are responding to the increasing costs by partnering with a US-based 3PL or fulfilment provider to bulk-ship goods to the US and then distribute domestically. While this does not eliminate duties and taxes, they would be calculated based on the product’s cost price rather than the retail price, potentially reducing overall costs.
However, holding stock in the US requires long-term planning and greater operational investment, from customs setup to forecasting, and sales tax compliance. The transition can take 3–6 months, or longer, to fully implement.
When does it make sense to set up US distribution?
Setting up a U.S. distribution centre or 3PL is a big decision, but you can model the trade-off using a simple cost formula. In short, the breakeven point is based on current or forecasted volume, when the total cost of local fulfilment becomes lower than shipping from Australia.
When shipping directly from Australia, your total cost per unit includes:
- Duties based on the retail price
- International shipping costs
- Local fulfilment and operational costs
In contrast, US fulfilment involves:
- Bulk shipping duties based on wholesale cost
- Costs of bulk shipping to the US
- Domestic US delivery costs
- US handling costs
- Fixed setup and running costs for warehousing and 3PL services
Next steps for retailers:
- Evaluate the impact of duties and taxes on your pricing and expansion strategy.
- Decide whether to ship DDU (Delivery Duty Unpaid)/ DAP (Delivered At Place)or DDP (Delivery Duty Paid) based on customer expectations and cost considerations.
- Explore alternative fulfilment strategies such as shifting manufacturing locations or using a US-based 3PL.
What retailers need to consider now
In the short term, retailers need to decide how they will handle and communicate additional duties and taxes to consumers. Cost is a consideration, but so is the customer experience. According to Avalara, 2 in 3 shoppers will reconsider future purchases with a brand when hit with unexpected customs duties charges upon delivery.
Switching to a carrier that supports Delivery Duty Paid (DDP) shipping protects your delivery experience by pre-paying duties and taxes. This expedites customs clearance and eliminates unexpected fees that could lead to upset customers, refunds, and returns.
- Continue shipping Delivery Duty Unpaid (DDU): This means customers will bear the cost of duties and taxes upon delivery. While this may maintain lower upfront costs for retailers, it risks refunds, returns, and customer dissatisfaction as U.S. consumers adjust to the new fees.
- Shift to Delivery Duty Paid (DDP): Retailers can pre-pay duties and taxes so that shipments clear customs in transit and reach consumers seamlessly. This ensures a smoother delivery experience but requires strategic adjustments. Merchants can either display duty and tax calculations at checkout or absorb the costs within product pricing or shipping charges. In the short-term, a weak Australian dollar may also soften pricing changes and increase international competitiveness for Australian retailers.
Even as cost pressures mount, reducing friction at checkout is key. Whether through clear messaging, all-inclusive pricing, or U.S. based fulfilment strategies, retailers that move quickly to adapt will protect both their margins and their customer experience.
Leading eCommerce players like Shein are already acting to minimise customer friction, with a checkout banner stating: “Tariffs are included in the price you pay. You’ll never have to pay extra at delivery.”
Customs clearance and duty and tax calculations
From a compliance standpoint, retailers must continue to provide country of origin and incoterm details, as these remain critical for customs clearance and duty calculations.
In order to get an accurate calculation of duties and taxes you will need to store product categories or Harmonised System (HS) codes in your product catalogue or eCommerce store. This is because HS codes are used to help customs identify the type of items contained within a shipment. Every item should have an HS Code, and the exact code for a specific item will be based on several factors, including material composition, physical state (solid, liquid, and gas), use, and whether it is a finished or unfinished item.
1. Accurate customs classification
In order to get an accurate calculation of duties and taxes you will need to store product categories or Harmonised System (HS) codes in your product catalogue or eCommerce store. This is because HS codes are used to help customs identify the type of items contained within a shipment. Every item should have an HS Code, and the exact code for a specific item will be based on several factors including material composition, physical state (solid, liquid, and gas), use, and whether it is a finished or unfinished item.
Where can I find HS Codes?
It is best to visit your local government website to find the correct HS Codes for your items. Here are some common country links:
- New Zealand - Tariff Finder
- United Kingdom - Trade Tariff Lookup
- United States - Schedule B Search Engine
With the de minimis removal, retailers will also need to ensure they pass on information about the Country of origin for all shipments, and not just the Shipping origin. Carriers have also started ensuring that they have the information on the manufacturer's name and address or the Manufacturer's Identification Code (MID), to comply with U.S. Customs and Border Protection requirements.
Shipping origin: Refers to where the goods are shipped from. This is the location of the warehouse, supplier, or fulfilment centre. Used mostly by carriers and logistics systems for routing and transit purposes.
Country of origin: Refers to where the product was manufactured, produced, or substantially transformed. Important for customs, tariffs, trade agreements, and labelling.
2. Automated duty and taxes calculation
Once you have the right information on the product you're shipping, you can use digital tools to accurately calculate the duties and taxes a package will incur, well before it reaches customs. Not only does this reduce bill shock, it also arms you with the information you need to make strategic pricing adjustments and gives you the option to pre-pay duties and taxes, or surface them at checkout for customers (rather than at the point of customs clearance). Using digital tools for duty calculations can also ensure you are always up-to-date with the latest tariff changes.
At Shippit, we partner with tools like Zonos, which allow us to provide a complete breakdown of duties, taxes, and fees based on your product classification. Retailers can pass on their HS codes and product details to the Shippit platform to get an accurate calculation of the sum of duties, taxes, and additional fees from customs, brokers, or the shipping carrier. What's even better is that this service comes with a Landed Cost Guarantee, which ensures you and your customers never pay more than the initial charge.
3. Automated shipping decisions
In order to scale your international expansion, granular and agile control over your international delivery options is key, so you can adapt to new regions and trade policy changes.
A delivery platform like Shippit offers out-of-the-box rules that can automate tax-related shipping decisions, reducing manual effort, errors, and compliance risks. Here are some tactical examples of how you can leverage our automated delivery allocation:
Automate tax handling by destination
- If you are shipping to the U.S., you can auto-apply DDP for all orders that are being delivered to the U.S., in preparation for the elimination of de minimis.
- For deliveries to other regions, set up an automatic selection of DDP (delivery duty paid) for high-value orders to prevent unexpected customs charges for customers.
Route shipments based on tax efficiency
- You can automatically direct orders to a specific delivery provider that offers the best tax and duty rates.
