How Small Brands Are Handling the End of De Minimis

Shortly after Nicki Patel, a California-based hospitality executive, ordered a dress from New Delhi-based House of Masaba for a friend’s Indian wedding, she received a warning from the brand on WhatsApp that she would be hit with an import duty if she continued with the transaction.

She thought to herself, “How bad could it be?” and confirmed the order. Then a $260 bill from shipping service DHL landed in her inbox, over two-thirds of the price of the outfit itself, $375. It nearly doubled the total cost of getting the outfit for her.

“I was backed into a corner to pay it,” she said. “Even if I had made a different decision, I felt as if I would have gotten hit with an import duty anyways, no matter what I bought or where I bought from.”

For anyone who has shopped online in the past month, Patel’s scenario is a familiar (or, at least much-feared) one. On Aug. 29, the de minimis loophole, which allowed packages under $800 to enter the US without duties, officially ended.

Much of the conversation around the exemption’s end has centred around fast fashion brands like Shein and Temu. But, as evidenced by Patel’s story, it’s hardly the only category affected. Canadian luxury e-tailer Ssense, a key channel for emerging designers, cited the closure as a hurdle in its bankruptcy filing in September. Athleticwear giant Lululemon, which fulfils two-thirds of its e-commerce orders in Canada, cut its revenue expectations for the year in part due to the shift.

Also caught up in the impact are a number of small international labels that have had to make decisions about how to handle the new duty and communicate their decisions to American shoppers, and if US sales expectations or growth plans need to be adjusted accordingly.

Pablo Villasenín Sánchez, director of business development at Spanish footwear label Miista, compares the shift to the changes that followed Brexit in 2020, saying, “It was a big momentary shock, so the business had to readapt and be more open-minded with the operational set-up.”

For American consumers, who are not used to dealing with extra fees, it’s added hesitation at a moment when they are already tightening their purse strings, treading cautiously in an uncertain market and searching for discounts and value. The introduction of the new duty in the US has created confusion among shoppers, who trade questions, experiences and horror stories on social media. Even FedEx seems to be confused: In September, 9,000 Quince customers were erroneously presented with a duty bill for packages Quince had already paid duties on. (Quince “stepped in to proactively refund consumers directly out of pocket to expedite resolution,” said head of brand Antonieta Moreland in an email.)

“There’s just a lack of knowledge of what’s going on out there. I don’t get it, but things are moving so quickly how could there be literature out there as to what to expect,” said Patel.

As for shopping online now? “It’ll give me pause,” she said.

How Brands Are Coping

The worst thing a brand can do is surprise its shopper with an extra fee, so the simplest solution is to include the duty in the price at checkout, whether paid by the brand or baked into the final price, with a note that duties are taken care of — the “delivery duty paid” model, said Matthew Merrilees, North American CEO of Global-e, a platform that helps brands sell across borders online.

“The shopper knows the second they begin the journey, they can continue shopping, knowing you’ve looked after them,” said Merrilees.

Many are handling the costs, with retailers including Asos, Shein and Quince all announcing they’d be doing just that (though that often means raising prices). For smaller brands with less cash on their balance sheet, the choice is more difficult.

Villasenín said Miista will pay the duty, like it does in other regions, because it’s a key market worth the impact it will have on margins — though the brand is looking for ways to streamline logistics elsewhere to lessen the blow. So will Sweden-based loafer label Morjas, which sent a letter to shoppers about its decision to absorb duties in August, admitting that it will “significantly impact” margins.

When baking the cost into an item’s price upfront, the burden doesn’t just have to be borne by the US shopper, but overall tax impact can be worked into global prices, said Merrilees. Brands are also pulling other levers — such as introducing standard shipping or consolidating orders to lower costs — to improve profitability.

Still, these approaches extend delivery timelines, which have already proved to be a headache for consumers accustomed to fast, free shipping, said Hattie Tennant, co-founder of London-based intimates and swimwear brand Fruity Booty. The brand is warning customers of potentially longer shipping times right when they place an order.

Waiting It Out

Others are taking it day by day, or making other changes to lessen the cost of their duties.

Because whether or not an item gets slapped with a duty depends on its country of origin, brands are evaluating the back end of their supply chain, said Merrilees. Those that did not have a presence in the US are establishing that by setting up a legal entity, making themselves rather than the consumer the importer of record. Often, then, they work with an external fulfilment centre, to streamline logistics. British womenswear brand Aligne, for instance, is opening up a US warehouse in the coming months. This year, Sweden-based cashmere label Lisa Yang started dispatching all of its customer deliveries from a US warehouse through a third-party logistics operator. Starting in 2026, Australian womenswear brand Shona Joy is investing even more in US-based third-party logistics to be able to offer faster shipping.

For now, rather than eating the cost, Fruity Booty — still in the process of getting its first US-specific e-commerce site up — is opting to see how customers react to paying the fee themselves on delivery. Once the site goes live, the brand will have shoppers pay duties upfront. The brand isn’t big enough to invest in more robust fulfilment facilities, and doesn’t want to have to raise prices, said Tennant. Still, these decisions have had an impact: There’s been a 20 percent drop in US orders since the elimination of de minimis.

Pastiche, an Uruguay-based streetwear brand, had just started to slowly enter the US with small orders through select retailers. This year, it was looking to make a bigger push, but both tariffs and the end of de minimis have made it hard to predict what margins will look like, said founder Florencia Ottonello.

“We started investing in the US before all these things started happening, so I thought, ‘Okay, there are two things we can do: Stop everything and lose the money I already spent, or just cross my fingers and see what happens,’” she said.

Depending on how US demand holds up amid change, brands are re-evaluating how much emphasis to put on US expansion in the year ahead. Should US consumption dip significantly, or things get more complicated, British shirting startup With Nothing Underneath, which had just started putting on pop-ups in the US, has a plan to emphasise Europe instead. (The US currently makes up just 12 percent of the business.) Sales dipped slightly when de minimis first came into effect, but recovered in a couple of weeks, said Laura Hilton, chief operating officer.

“I’m sitting down and re-forecasting the year to not be so heavily reliant on America,” said Fruity Booty’s Tennant, adding the brand will emphasise Europe, Japan and South Korea this year. “It feels unstable, we want to have a back-up plan.”

While independent brands are forced to deal with new headaches, the long-term impact of the de minimis loophole closing could ultimately be a positive. The lion’s share of the pain is on brands with the most volume, said Villasenín.

“This could potentially reduce the hyper-competitiveness of fast fashion,” he said. “It has been a long time coming, and in the long term it could even be beneficial in the way the supply chain of quality goods becomes a little more resilient versus fast fashion.”