The De Minimis Exemption

What is the “De Minimis” Exemption?

The "de minimis" exemption, a provision that has been around for nearly 100 years, has allowed companies like Amazon, Temu, AliExpress, and Shein to avoid paying import duties on products worth less than $800 sent to the U.S. from overseas. President Trump’s executive order titled “Imposing Duties to Address the Flow of Illicit Drugs Across our Northern Border” has removed this provision, which is likely to increase prices for products shipped from other countries. Low-cost products from China that are sold through e-commerce platforms or through drop shippers (like online influencers) will need to pay import duties on all products, as well as tariffs if coming from China, for now at least.

Impact on CRE

We expect supply chain services companies like fulfillment and logistics providers (3PL and last mile specifically) to be most directly impacted, particularly those that have high concentrations with companies like Temu, Shein, AliExpress, TikTok, and others. While these companies will still be able ship to the U.S., prices are likely to increase for end consumers, which could result in softer revenue for effected shipping companies. If tariffs linger or the trade war escalates, TRA expects these headwinds to increase on the industry.

Support for Industrial Owners

The removal of the de minimis provision and the imposition of 10% import tariffs from China are relatively new, so immediate impact is likely limited. Over time, end customer pricing is expected to rise at some fraction of the new import tariffs and duties. If tariffs remain at 10%, TRA does not believe this will have a material dampening effect on U.S. consumer demand, but if the U.S. hikes tariffs, we expect to see increased tenant credit stress in the evolving logistics sector. Communicate with tenants early to gauge the potential impact if they have concentrations with Chinese companies like the ones listed above.