Dropshipping World: What Happens if Trump Cancels T86 for China Again?

President Trump's trade policy has significantly impacted the global market, and any future changes could further affect U.S. dropshipping merchants. While the T86 exemption has been temporarily reinstated, there is ongoing speculation that it could be removed again. If this policy change happens, it could impose a 10% tariff on Chinese imports, creating new challenges for dropshippers.

This article provides an overview of what the potential removal of the T86 exemption could mean for the industry and how dropshipping merchants can prepare for such a shift.

A Brief History of Trump Tariffs

Tariffs have been a consistent tool in President Trump’s trade policy, primarily aimed at promoting American-made goods. Over the years, tariffs have been used as a negotiation strategy. For instance, in January 2018, Trump imposed 30 to 50% tariffs on washing machines and solar panels, later expanding them to more countries, including Canada. These policies led to retaliatory tariffs and ultimately contributed to the China-U.S. trade war.

Initially, tariffs were mainly applied to high-end goods, leaving dropshippers—who focus on affordable consumer products—largely unaffected. However, should the T86 exemption be removed again, it would mark a significant shift, directly impacting smaller shipments and increasing costs.

The Future of the T86 Exemption: What Could Change?

Aspect	Old Policy	New Policy	Impact on Dropshippers
De Minimis Exemption	Imports below $800 were duty-free	No longer exempt; all imports are taxed	Higher costs for small packages
Tariff on Chinese Goods	Applied to high-end goods	10% tariff on all Chinese imports	Increased product costs
Entry Type 86 (T86)	Allowed quick customs clearance	Requires formal entry, more paperwork	Longer shipping times and delays
Customs Compliance	Basic product details needed	10-digit HTS code required, stricter checks	More administrative work

1. Possible Removal of the Duty-Free Small Package Exemption

The de minimis exemption allows imports under $800 to enter the U.S. duty-free, which has been beneficial for dropshipping merchants. If this exemption is removed, dropshippers will have to pay duties on all imports, increasing overall costs and affecting pricing strategies.

2. More Complex Customs Procedures

With the T86 exemption currently reinstated, small shipments benefit from faster customs clearance. However, if this exemption is removed, shipments will require formal entry, increasing paperwork and processing times. This could lead to longer shipping times and potential delivery delays.

3. Stricter Import Compliance Requirements

Stricter regulations could include requiring a 10-digit Harmonized Tariff Schedule (HTS) code for each shipment, making customs enforcement more rigorous. This would add complexity for dropshippers, requiring them to be more diligent with compliance documentation.

4. Impact on Chinese E-commerce Platforms

These changes primarily target Chinese e-commerce platforms like Shein and Temu, which have leveraged the de minimis exemption for low-cost shipping. If the exemption is removed, these companies may face higher tariffs and increased scrutiny at customs, leading to longer shipping times and increased prices.

How Can U.S. Dropshippers Prepare for Potential Policy Changes?

If the T86 exemption is removed in the future, dropshipping merchants should be proactive in adjusting their business strategies. Here’s what can be done:

1. Explore Alternative Fulfillment Options: Consider using domestic warehouses in the U.S. to avoid potential tariffs on small shipments. Partnering with a third-party logistics (3PL) provider can also help manage inventory and improve shipping speed.

2. Adjust Product Pricing and Business Models: Tariffs and duties could increase costs, so it's essential to reevaluate pricing strategies. Transparency with customers about price adjustments will help maintain trust.

3. Strengthen Logistics and Compliance: Ensure all customs paperwork is accurate and complete to prevent delays. Stay informed about changing regulations to ensure seamless operations.

4. Shift Towards a Hybrid Dropshipping Model: Instead of relying solely on Chinese suppliers, consider diversifying sourcing strategies. A mix of international and domestic suppliers can provide flexibility and mitigate risks associated with policy changes.

5. Focus on Brand Building: Rather than selling generic, high-competition products, developing a unique brand can help maintain customer loyalty and differentiate from competitors.

Countermeasures by Chinese Logistics Companies

Chinese shipping and logistics companies are already adjusting to potential trade restrictions by:

1. Establishing Local Warehouses in the U.S.: This allows for bulk shipments that bypass individual import duties, reducing delivery delays.

2. Optimizing Shipping Routes: More companies are turning to sea freight as an alternative to costly air freight.

3. Assisting Merchants with Compliance: Many logistics companies are offering guidance on customs paperwork to help businesses remain compliant with changing regulations.

Conclusion

While the T86 exemption remains in place for now, its future remains uncertain. If removed, it could significantly impact U.S. dropshipping merchants by increasing costs, complicating logistics, and extending shipping times.

To stay ahead, dropshippers should prepare for potential policy changes by exploring alternative fulfillment methods, adjusting pricing models, strengthening compliance, and shifting towards hybrid business models. Staying informed and proactive will be key to navigating the evolving trade landscape.

Our team has been closely monitoring these policy developments and is prepared to help businesses adapt. Contact us to learn more about our U.S. warehouse services and how we can support your dropshipping operations in this changing environment.