New Tariffs & The End of Section 321: How eCommerce Brands Fulfilling From China Can Adapt

On April 2, 2025, President Donald Trump signed two significant executive orders that are poised to reshape U.S. trade policy: one imposing broad tariffs on imports, and another modifying the de minimis exemption under Section 321 of the Tariff Act of 1930.​

Executive Order 1: Implementation of Reciprocal Tariffs

Dubbed the "Liberation Day" tariffs, the first executive order introduces a 10% baseline tariff on imports from nearly all U.S. trading partners. This measure aims to address persistent trade deficits and encourage fairer trade practices. The tariffs are set to take effect in two phases:​

• April 5, 2025: The 10% baseline tariff will be applied to imports from all countries.​

• April 9, 2025: Additional reciprocal tariffs, varying by country, will be enforced. For instance, imports from China will face a 34% tariff, while those from the European Union will be subject to a 20% tariff. These measures are intended to counteract foreign trade barriers and bolster domestic manufacturing.

US Tariff Updates as of April 9th

1) 90-Day Tariff Pause

On April 9, 2025, President Trump announced a 90-day suspension of most new tariffs under his "reciprocal" trade policy, reducing the reciprocal tariff rate to 10%.

2) China Tariff Increase

However, he simultaneously increased tariffs on Chinese imports to 125%, citing China's lack of respect and retaliation at equivalent rates. Treasury Secretary Scott Bessent stated that countries refraining from retaliating would be rewarded, and that current negotiations would address broader trade issues, including non-tariff barriers.

Executive Order 2: Modification of the Section 321 De Minimis Exemption

The second executive order alters the de minimis exemption under Section 321, which previously allowed duty-free entry for shipments valued at $800 or less. Effective May 2, 2025, this exemption will no longer apply to products from China, including those from Hong Kong. This change aims to address concerns over undervalued imports and enhance compliance standards for e-commerce shipments.

Impact on eCommerce Brands Utilizing De Minimis for Duty-Free Fulfillment from China

Brands that have been leveraging the de minimis exemption to import goods from China duty-free will need to adjust their strategies in light of these policy changes. On May 2nd, your cost per order will skyrocket and the import process will take much longer than customers are willing to wait. Potential alternatives include:​

• Diversifying Supply Chains: Sourcing products from countries not affected or less affected by the new tariffs can help maintain cost-effectiveness.​ See the full list of tariffs here.

• Switching to Domestic Fulfillment: For brands currently fulfilling from China, switching to a US fulfillment center will allow you to import product in bulk and pay tariffs on the cost of the goods, rather than the retail price. This effectively lowers your overall duties paid. Additionally, you won't have to worry about customs delays so your shipping speeds will be faster, making happy customers.

• Reevaluating Product Pricing: Adjusting product prices to account for increased import costs may be necessary to preserve profit margins.​

• Exploring Trade Programs: Participating in trade programs (such as Free Trade Zones) that offer tariff relief or reductions for qualifying products could mitigate some of the financial impacts.​

• Consulting Trade Experts: Engaging with customs brokers or trade consultants can provide tailored strategies to navigate the evolving trade landscape effectively.​

These policy shifts underscore the importance for businesses to stay informed and agile, adapting to the changing trade environment to sustain their operations and competitiveness.

While the current administration has made that difficult with the volatility in policy, utilizing a US fulfillment center like OTW Shipping can help you minimize the impact of these changes, as well as plan for future shifts.

How to Switch to a US 3PL from China

So are you thinking it's time to move your fulfillment to the US? Let us help you figure out how much it will cost.

1. Speak to a customs broker about the new cost of duties on your orders if fulfilled from China versus sending your inventory in bulk to a US fulfillment center.

2. Send us a message and we can run a free analysis for you to help you understand what your cost per order would be to fulfill from the US.

3. Factor in any other overhead costs associated with the switch.

4. Compare your old and new costs and the impact faster fulfillment will have on your conversion rate and customer experience and make a decision.

   
   

With OTW Shipping, you get:

• Fast and accurate fulfillment – 99.99% order accuracy ensures customers get what they expect, on time.

• Optimized shipping – Multiple warehouse locations mean lower shipping costs and faster delivery.

• Real-time communication – A dedicated support team available through a Slack-like channel, so you always know what’s happening with your orders and can communicate quickly with customers.

• Scalable solutions – Whether you're expanding your eCommerce store or breaking into retail, our custom fulfillment plans grow with you.

Ship smarter with OTW Shipping and give your US customers a five-star experience from checkout to delivery that you can't get fulfilling from anywhere else.

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