Trump to Close Major Loophole Linked to Drug Trafficking and Negative Impact on US Workers

End of Tax Exemptions for Low-Value Packages

The Trump administration has decided to terminate its longstanding tax exemptions for low-value packages, a move that officials claim will boost job creation, increase incomes, and even save lives.

As of early Friday, the tariff exemption for packages valued under $800, known as the “minimum” rule, will be abolished across all countries. This decision follows President Donald Trump’s executive order to eliminate exemptions specifically for China and Hong Kong.

During a press conference on Thursday, White House officials strongly defended their stance on this decision, emphasizing that it is aimed at curbing drug trafficking and safeguarding American workers.

“President Trump is closing the de minimis loophole, which, in turn, will restrict the inflow of drugs and other hazardous items,” they announced, also noting that this could lead to an additional $10 billion in tariff revenue for the Treasury and thousands of job opportunities.

Trade adviser Peter Navarro further stated, “Foreign postal services need to enhance their efforts to monitor and curb the use of international mail for smuggling and tariff evasion. We’re here to assist with that. Airlines like FedEx, DHL, and UPS play a role in expediting these processes. In today’s age of AI, having the right information can save lives.”

The de minimis exemptions, which allowed low-value packages to enter the U.S. tax-free, have been around for quite some time, originally established by Congress in 1938. Over the years, this threshold has increased, with the most recent adjustment in 2016 allowing products valued at under $800 to qualify.

Interestingly, reports indicate that over 92% of all cargo entering the U.S. falls within this exemption limit, according to Customs and Border Protection.

In April, Trump signed an order officially eliminating the de minimis exemptions for China and Hong Kong, citing concerns that shippers from these regions might be concealing illegal substances and disguising the actual contents of their shipments.

After another order in late July, it was announced that the exemptions would be fully terminated for all countries by August 29th. The July fact sheet labeled these exemptions as a “catastrophic loophole” that facilitated the infiltration of low-quality goods, circumvented tariffs, and contributed to the crisis of synthetic opioids in the market.

“This loophole was one of the most foolish decisions ever made,” Navarro emphasized. “When examining global practices, no other country approaches the $800 de minimis threshold. Many others sit at $5 or $10.”