De minimis’ end to trigger air cargo turbulence

The de minimis exemption, a long-standing policy allowing tariff-free entry of low-value goods into the United States, was a cornerstone of the cross-border e-commerce model. Under this rule, packages valued under $800 could enter the US without duties or taxes. For Chinese retailers such as Shein and Temu, this facilitated direct-to-consumer sales at scale. However, a regulatory shift implemented on May 2, 2025, abruptly revoked the exemption for packages originating from China and Hong Kong. The implications for the air cargo industry have been both immediate and substantial.

E-commerce had become the backbone of trans-Pacific air freight. With a single policy change, the US government has disrupted not only how consumers receive their goods but also how global air cargo markets operate. The fallout extends beyond parcels. It is redrawing trade lanes and forcing carriers to recalibrate long-held strategies.

A swift decline in capacity and commerce

Within weeks of the exemption’s removal, trans-Pacific air cargo capacity from China to the US contracted by nearly 30 percent. This drop is tied directly to the sharp decline in low-value e-commerce shipments, which previously represented more than half of all airfreight tonnage between the two countries. Cargo aircraft that once moved volumes of small parcels daily are now underutilized, grounded, or being reassigned to more profitable routes.

Retailers heavily reliant on the de minimis exemption face new costs and logistical burdens. Shein and Temu, which had bypassed US tariffs using this loophole, must now navigate a patchwork of regulatory compliance, added customs processing, and newly imposed tariffs that can reach up to 145 percent. Even with a recently negotiated reprieve that lowers some tariffs to around 30 percent, the cost structures and fulfillment timelines of these firms are now in flux.

This regulatory pivot also affects freight forwarders and logistics providers. Many small and mid-sized operators in Asia, whose business models were tied to the e-commerce boom, report reduced order volumes and canceled bookings.

Redrawing cargo routes and priorities

The ripple effect has prompted leading carriers to reassess route networks. Cathay Pacific and Singapore Airlines have both announced service changes in response to falling demand on China-US routes. Cathay is shifting capacity toward Latin American corridors, where demand for pharmaceutical and agricultural cargo remains strong. Singapore Airlines is optimizing its freighter network by increasing frequency on Southeast Asian and Australian routes.

These pivots are not just short-term operational changes. The redirection of assets reflects a strategic rebalancing in light of evolving demand centers. Air cargo carriers are now investing in analytics and partnerships to forecast emerging markets less susceptible to political volatility. What was once a heavily China-dependent model is broadening, as operators seek insulation from bilateral trade shocks.

Temporary tariff relief

A temporary agreement between the US and China has provided partial relief. Tariffs on certain low-cost goods from Shein and Temu have been reduced from the 145 percent maximum to rates as low as 30 percent. However, this shift may offer only a limited cushion for affected companies. The structural impact of the de minimis repeal remains, including the need for full customs documentation, stricter compliance checks, and slower last-mile delivery.

Retailers are responding with a dual strategy. Some are attempting to move supply chains to intermediary countries, rerouting shipments through Southeast Asia to regain eligibility for the exemption. Others are absorbing costs to preserve market share in the short term, betting on long-term policy reversals or consumer loyalty.

Sources:
Air Cargo News
Reuters