The De Minimis Exemption Is Dead — What Every Shopify Merchant Selling Cross-Border Needs to Do Before July

The de minimis exemption — the rule that let international shipments under $800 enter the US duty-free — is dead. It ended on August 29, 2025. One in five Shopify merchants relied on it to ship cross-border without customs costs. If you import goods or sell internationally, every package you ship now carries a customs bill that didn't exist a year ago.

And it's about to get worse. On July 1, 2026, the EU starts charging a flat customs duty on every low-value parcel entering Europe. Between the US and EU changes, the math on cross-border selling has fundamentally shifted. Merchants who don't adjust their pricing, shipping setup, and product data before July will watch their margins disappear. Worse, they'll get hit with customs delays and customer chargebacks from unexpected delivery fees.

What Changed With the De Minimis Exemption — And Why It Hits Shopify Merchants Now

The de minimis exemption used to let international shipments under $800 enter the US with zero duties. For dropshippers, print-on-demand sellers, and anyone sourcing from China or Southeast Asia, this was the foundation of the business model. That's gone.

Every international package entering the US now requires a customs entry and is subject to duties and taxes — regardless of value. A $20 phone case from Vietnam that used to clear customs for free can now face $80–$200 in duties under current tariff rates. A $200 electronics accessory might incur $12–$20 in duties plus $25–$50 in processing and brokerage charges. That's a 15–25% increase in landed cost on a product that used to have zero import fees.

On February 20, 2026, the Supreme Court added another layer of complexity. In a 6-3 ruling, the Court struck down all tariffs imposed under the International Emergency Economic Powers Act (IEEPA) — including the "Liberation Day" reciprocal tariffs from April 2025. Within hours, the administration signed a new 10% global tariff under Section 122 of the Trade Act of 1974, effective February 24. Section 122 limits tariffs to 150 days at a maximum rate of 15%. That means this rate will either expire, get extended under different legal authority, or get replaced entirely by late July 2026.

The bottom line: tariff rates are volatile. Your landed cost calculations from three months ago are already wrong.

The EU Is Coming for Your Low-Value Shipments on July 1

If you sell to European customers, mark July 1, 2026 on your calendar. The EU Council gave final approval in February 2026 to impose a flat €3 customs duty on every low-value parcel entering the EU. This replaces the current €150 de minimis threshold that let small shipments skip customs duties entirely.

The critical detail most merchants will miss: the €3 duty is charged per item based on tariff classification, not per parcel. If you ship a package containing three products from different tariff headings, that's €9 in duties — not €3. For merchants selling low-margin accessories or small items to EU customers, this changes the unit economics completely.

This applies to all goods sold by non-EU sellers registered under the Import One-Stop Shop (IOSS) for VAT. That covers an estimated 93% of all cross-border ecommerce imports into the EU. The duty is temporary — set to run from July 2026 to July 2028 — but it's a bridge to a permanent system where the EU plans to eliminate the €150 exemption entirely once their Customs Data Hub goes operational around 2028.

The volume driving this change is staggering: 4.6 billion small packages entered the EU in 2024, double the previous year. 91% came from China. The EU isn't going to reverse course.

Calculate Your Real Landed Cost (The Math Most Merchants Skip)

Landed cost is the total price of getting a product to your customer's door: product cost + shipping + duties + taxes + brokerage fees. It's the number that determines your real margin on every cross-border order. Most merchants only track the first two components — and that's where the margin leak starts.

Here's how to calculate it correctly:

1. Find your HS code. Every product has a Harmonized System code — a 6-digit classification that determines your duty rate. In Shopify, go to any product page and look for the "Harmonized System (HS) code" field. If it's empty, start typing a description and Shopify will suggest codes. For the US, you need a 10-digit HTS code (the HS code plus four country-specific digits). Look it up at the US International Trade Commission's HTS search tool or the Census Bureau's Schedule B search engine.
2. Look up the duty rate. With your HTS code, check the applicable duty rate on the USITC Harmonized Tariff Schedule. Rates vary wildly — the same "electronics accessory" could be 0% or 25% depending on how it's classified. Getting the right code isn't paperwork. It's the difference between paying nothing and paying a quarter of your product's value.
3. Add processing fees. Shipments under $2,500 require an informal customs entry. Above $2,500, you need a formal entry, which typically costs $150–$400 through a customs broker. Even informal entries now carry processing fees that didn't apply when de minimis was active.
4. Factor in the current Section 122 tariff. Add the 10% global tariff on top of any existing product-specific duties. This stacks — it's not "10% or the product duty rate." It's both.
5. Recalculate your margin. If your product costs $15, shipping is $5, and your new landed cost adds $4–$8 in duties and fees, you just went from a $20 cost basis to $24–$28. At a $39.99 retail price, your margin dropped from 50% to 30–40%.

Absorb the Cost or Pass It Through — Here's the Math for Each

You have two choices, and the right one depends on your price point and competitive position.

Absorb the duties: Build them into your retail price. This works if your competitors are also absorbing (they probably are) and your price elasticity allows a 10–20% increase. The advantage: clean checkout experience, no sticker shock at delivery. The risk: if your products are already at the top of market pricing, you compress your margin to near zero.

Pass through at checkout: Show duties and taxes as a line item during checkout. This works if you sell higher-value products where a $5–$15 duty line feels proportional. The advantage: your margin stays intact. The risk: unexpected checkout fees increase cart abandonment. Shopify's own data shows 48% of customers abandon carts over unexpected costs.

There's a middle option most merchants overlook: partial absorption. Raise your base price by half the expected duty amount, then show a smaller duty line at checkout. Customers see a modest fee rather than a jarring one. You split the cost impact instead of eating all of it. If you're already optimizing your checkout experience, adding transparent duty lines fits naturally into that flow.

Set Up Shopify's Built-In Duty Tools Before You Need Them

Shopify has tools for this — most merchants just haven't turned them on.

• Duty and tax collection at checkout: Go to Settings > Taxes and duties in your Shopify admin. Enable duty and import tax collection for international orders. Shopify calculates duties in real-time based on the HS codes on your products, the destination country, and current rates. There's a 0.5% transaction fee on orders with duties calculated, even if the duty amount is zero.
• Managed Markets: If you're a US-based merchant, Managed Markets guarantees the duty amount collected per order. Shopify covers the difference if duties are under-collected. It also auto-assigns HS codes to your products — useful if you have hundreds of SKUs and no time to classify each one manually.
• DDP shipping labels: US and Canadian merchants can buy Delivered Duty Paid labels through DHL Express and DHL eCommerce directly in Shopify. DDP means your customer pays the full amount at checkout and sees zero surprise charges at delivery. This is the single best way to prevent duty-related chargebacks.

Add a country of origin to every product in your catalog. Without it, Shopify can't calculate accurate duty rates. You'll either overcharge customers or eat the difference yourself.

The HS Code Lookup That Could Save You Thousands

Here's something most merchants don't realize: duty rates aren't fixed by product type. They're fixed by HS code classification. And many products can legitimately fall under multiple codes with very different rates.

A "leather phone case" classified under HS 4205 (articles of leather) faces a different duty rate than the same product classified under HS 3926 (articles of plastics) if the exterior is synthetic. A "kitchen gadget" might be 0% under one heading and 12% under another depending on its primary material and function.

Spend 30 minutes auditing your top 10 products by revenue. Look up alternative HS codes that could legitimately apply. If you find a lower-rate classification that accurately describes your product, you've just permanently reduced your duty costs on every future shipment. For a store shipping 500 international orders per month, even a 3% rate difference on a $30 average product value saves $5,400 per year.

What Should Shopify Merchants Do This Week About Cross-Border Tariffs?

Open your Shopify admin today and check these three things before July 1:

1. Assign HS codes to every product. Without them, duty calculations are wrong and your margins are a guess.
2. Enable duty collection at checkout. Go to Settings > Taxes and duties and turn on international duty collection so customers see the real cost upfront.
3. Recalculate your pricing. Run your top 10 products through the landed cost formula above. If your prices don't work with 10–25% higher costs, adjust them now.

After the EU duty kicks in on July 1, both sides of the Atlantic will charge fees that didn't exist 12 months ago. The merchants who adjust their pricing and setup now keep their margins. The ones who wait will wonder where their profit went.

If you sell internationally on Shopify and want to protect your checkout conversion while handling duties, EasySell helps you build order flows that keep customers moving through checkout — even when extra fees show up at the door.