US Moves to Close De Minimis Loophole as Part of Trade Enforcement Against Canada, Mexico and China

As part of trade enforcement measures imposed by the Trump administration, the U.S. has officially closed the so-called “de minimis loophole” for goods entering its borders. This long-standing trade provision dating back to 1938 previously allowed low-value goods to be shipped directly to American consumers without incurring import duties, customs declarations, or extensive inspections. The loophole became particularly apparent after the U.S. implemented the Forced Labor Prevention Act of 2022, as direct-to-consumer goods were exempted from customs scrutiny as well as the rebuttable presumption that the law established.

Prior administrations also made efforts to address the de minimis loophole. Under President Obama, the de minimis threshold was raised from $200 to $800. Former President Biden announced in September 2024 that the White House would prioritize addressing the loophole moving forward, leading to the U.S. Customs and Border Protection introducing a Notice of Intended Rule-Making called the Entry of Low-Value Shipments.

Over the weekend, President Trump signed executive orders imposing 25% tariffs on goods from Canada and Mexico, and a 10% tariff on goods from China. (Both Mexico and Canada's respective governments negotiated to delay tariffs by 30 days, while China's tariffs went into effect this week.) All three tariffs halt the de minimis trade exemption for goods from those countries.

What this means for forced labor enforcement 

The closing of the de minimis loophole will have a significant impact on the number of goods subject to detention or seizure under the Forced Labor Prevention Act. Since 2022, nearly $3.7B worth of goods have been detained. Detentions are expected to increase now that low value goods from China, Mexico and Canada will be subject to the rebuttable presumption, and businesses operating primarily in the DTC space are scrambling to establish the strict supply chain due diligence measures that many companies put in place in 2022. 

Fortunately, there is a precedent for successful implementation of these due diligence measures across industries, with a proactive approach that enables companies to take mitigation efforts before they receive a costly detention. To learn more about how Sourcemap can help your company prepare for strict U.S. customs enforcement measures, reach out to our team of experts or request a demo.