On February 1, 2025, President Trump signed three executive orders imposing new tariffs on imports from Canada, Mexico, and China. These changes, particularly those affecting Chinese and Hong Kong imports, will have a significant impact on the cross-border e-commerce industry. Dropshipping merchants must now navigate higher costs, new customs procedures, and potential disruptions in fulfillment.
Here’s a breakdown of what’s happening and how you can adjust your strategy to maintain profitability.
Latest U.S. Tariff Updates
China and Hong Kong Tariffs (Effective February 4, 2025, 12:01 AM EST)
· All goods from China and Hong Kong are now subject to an additional 10% tariff. Since many Chinese products were already taxed at 10%-40%, the total tariff for some items will now reach up to 50%.
· The de minimis exemption has been suspended, meaning all shipments, regardless of value, must now pay applicable tariffs.
· Section 321 exemption no longer applies to Chinese or Hong Kong goods, and requests for de minimis entry and clearance will be denied.
· Chinese logistics providers and major e-commerce platforms, including Temu, are holding emergency meetings to assess the impact.
Canada and Mexico Tariffs (Currently Paused Until March)
· Initially, a 25% tariff was planned for all imports from Canada and Mexico.
· Canadian energy resources (oil, natural gas, and electricity) were set to receive a 10% tariff.
· As of February 3, 2025, these tariffs have been postponed for at least 30 days while negotiations continue.
Potential Tariffs on the EU and BRICS Nations
· The administration has threatened new tariffs on the EU and BRICS countries, targeting industries such as semiconductors, pharmaceuticals, oil, steel, aluminum, and copper.
Impact of Removing Section 321 De Minimis for China
Under Section 321, U.S. importers were previously allowed to bring in shipments valued at $800 or less duty-free, bypassing traditional customs clearance. The removal of this exemption for Chinese and Hong Kong imports will:
· Increase import costs, especially for small-value shipments that previously avoided tariffs.
· Lead to longer customs processing times, as all shipments must now go through standard clearance procedures.
· Raise operational expenses for platforms such as Shein, Temu, and Alibaba, which rely on low-cost, high-volume direct shipping.
For dropshipping merchants, this means higher costs and potential delays, requiring immediate adjustments in logistics and sourcing.
What Are T01 and T11?
With Section 321’s $800 duty-free exemption no longer available, shipments must now clear customs using T11 or T01 clearance methods:
· T11 (Informal Entry) – For shipments valued between $800 and $2,500.
No customs bond required, but products must be classified under the Harmonized Tariff Schedule (HTS) and subject to import duties and taxes.
· T01 (Formal Entry) – Required for shipments exceeding $2,500 or containing regulated goods.
A full customs declaration is required, including detailed product descriptions, valuation, and regulatory compliance documents.
A customs bond is mandatory, and processing times are typically longer than T11 or T86.
The comparison of T86, T11, and T01 customs clearance methods
| Customs Clearance Method | Applicable Scope | Advantages | Disadvantages | Applicable Countries | Main Applicable Products | Tax Payment | Other Features |
| T86 | Low-value e-commerce parcels | Fast clearance, low tax rate or tax-free | Only applicable to low-value goods, not suitable for bulk trade | United States | Low-value e-commerce goods such as clothing, small appliances, accessories, etc. | May be tax-free (depending on the declared value) | Suitable for B2C e-commerce, usually handled by courier companies for customs declaration |
| T11 | Low-value e-commerce parcels (specific countries) | Can be used in certain countries, relatively fast clearance | Limited applicable countries, not available worldwide | Mainly in Europe | Low-value goods such as clothing, electronic accessories, small appliances, etc. | May require tax payment (depending on the country's tax policy) | Generally used for B2C cross-border e-commerce, applicable in some countries |
| T01 | General trade, bulk goods | Wide applicability, suitable for both B2B and B2C | Longer clearance time, complex procedures, may require tax payment | Global | Medium to high-value products, bulk shipments such as home appliances, machinery, etc. | Tax payment required | Suitable for bulk imports and exports, companies usually need to provide detailed customs declaration documents |
Why Is the U.S. Raising Tariffs?
1. Protecting U.S. Businesses from Chinese E-Commerce Competition
Platforms like Shein and Temu leveraged Section 321’s duty-free exemption to ship low-cost products to U.S. customers at scale, undercutting American retailers. Removing this exemption is meant to level the playing field for domestic businesses.
2. Reducing the U.S.-China Trade Deficit
For years, the U.S. has maintained a significant trade deficit with China. By raising tariffs and eliminating duty-free loopholes, the U.S. aims to decrease Chinese imports and encourage local sourcing.
3. Strengthening Customs Enforcement Against Illicit Goods
A major concern surrounding Section 321 was its use in smuggling illegal substances, including fentanyl. The policy shift is designed to tighten regulations on small-package imports and increase oversight at the border.
How Should Dropshipping Merchants Respond to the New Tariff Policies?
1. Utilize Overseas Warehouses
Using U.S.-based fulfillment centers is now essential for keeping costs under control.
✅ We are actively leveraging our U.S. warehouse as a backup solution to help clients continue fulfilling orders without additional tariffs.
✅ Existing inventory in our U.S. warehouse can sustain customers’ stock needs for a period, ensuring a smoother transition.
✅ Bulk shipping into the U.S. significantly reduces per-unit customs clearance fees and maintains competitive pricing.
Beyond cost savings, U.S. warehouses eliminate customs clearance delays, enabling faster shipping times (as quick as 2 days). Bulk imports also lower shipping costs per unit, helping sellers stay competitive.
2. Adjust Product Selection
Dropshipping merchants should identify high-risk tariff categories and explore alternative product options.
According to the May 2024 tariff announcement, the following categories are particularly impacted:
· Steel and aluminum products → 25% tariff
· Semiconductors → 50% tariff
· Electric vehicles → 100% tariff
· EV lithium-ion batteries → 25% tariff
· Solar panels → 50% tariff
If you’re selling these products, now is the time to evaluate whether they remain profitable under the new tariff structure.
3. Consolidate Orders for Bulk Shipping
Since customs fees are applied per shipment, dropshipping merchants should:
· Plan orders strategically to place larger bulk shipments rather than multiple smaller ones.
· Coordinate with fulfillment providers to combine multiple sellers’ shipments for cost reduction.
Bulk shipments help lower customs fees and shipping costs, but merchants should ensure they’re stocking items with stable demand to avoid overstocking.
Final Thoughts: Adapt Now to Stay Competitive
The elimination of Section 321 exemptions for Chinese imports, combined with increased tariffs and stricter customs clearance requirements, marks a significant shift in the dropshipping landscape.
Key Takeaways:
✅ U.S. warehouses are now critical for avoiding tariff-related cost increases.
✅ Reevaluate product selection to focus on categories less affected by new tariffs.
✅ Consolidate orders to minimize customs fees and reduce per-unit costs.
The traditional low-cost, direct-from-China dropshipping model is becoming increasingly challenging. However, by adapting to new logistics strategies, optimizing product selection, and using smarter fulfillment methods, merchants can continue selling successfully in the U.S. market.
We are committed to helping our partners navigate these regulatory changes and providing optimized fulfillment solutions to maintain profitability. If you need support adjusting your supply chain, we’re here to help.