Minnesotans now directly paying tariffs on even small overseas orders

A tomato clock from Canada, K-pop albums from South Korea and Premier League soccer merchandise shipped through China all share something in common: Their Minnesota buyers are unexpectedly paying hundreds of dollars in tariffs.

On Aug. 29, President Donald Trump altered his tariffs policy by removing an import exemption on orders under $800. The elimination of the “de minimis” threshold on international shipments had been a shield for most consumers and small businesses.

The changes were swift and surprising for many people who might have only read or heard about Trump’s protectionist trade policies when first implemented last spring.

From UPS drivers asking for payments at doorsteps to FedEx emailing invoices ahead of delivery, Twin Cities shoppers and the stores that serve them are bracing for a financial pinch ahead of the busy holiday retail season.

Shops, from toy stores to cafés, were already stressed about consumers tightening their budgets this year and are now worried about keeping shelves stocked through December.

However, Tyler Schipper, an associate professor of economics at the University of St. Thomas, said the ultimate consequence is clear.

“Households still end up being the overall losers in this,” he said.

The change unleashed a tidal wave of cheap goods into the American market. In the 2015 fiscal year, about 139 million packages valued under $800 entered the country duty free. By fiscal year 2024, that number had skyrocketed to 1.36 billion, according to U.S. Customs and Border Protection (CBP).

In his executive order, Trump said suspending the de minimis rule would help lower the trade deficit and make it harder to import illegal drugs like fentanyl.

Schipper said the argument about security makes sense.

“Because these packages bypass the normal customs procedures, there are more safety concerns with them,” he said.

The exemption fueled the rise of ultra-discount online retail giants like Temu and Shein, which built entire business models on shipping low-cost items directly to American consumers. It also gave smaller global retailers, like overseas Etsy sellers, a foothold in the U.S. market — a “competitive advantage,” Schipper said.

The term de minimis comes from a longer Latin phrase that translates into “the law does not concern itself with trifles.” Its original intent was to spare consumers from tariffs and taxes on low-value items, but small businesses had learned to use it as a tool to import inventory.

Schipper has seen firsthand how the change can catch families off guard.

Earlier this year, his father ordered Brentford F.C. soccer gear directly from the U.K. website. When the UPS driver dropped off the 2-pound package at his parents’ Minnesota home, he asked Schipper’s mother for $150 in duties.

“She thought, ‘This has to be a scam,’” Schipper said.

It wasn’t. It was tariffs.

That left the Schippers facing what’s known as delivery duty unpaid, where carriers like UPS, FedEx or DHL collect tariffs upon delivery. It can surprise customers who don’t realize their online orders can come from anywhere around the world.

Jack Stillman, a 24-year-old Mitchell Hamline law student, spends his few free hours building models of characters from the “Gundam” sci-fi anime franchise. He is one of the people feeling the loss of the de minimis.

In recent months, Stillman’s once-affordable escape has become less so: A kit that used to cost $20 now totals $25. He stocked up on figures and supplies before Trump lifted the exemption, saving about $100. Now, he’s just buying less.

Joseph Ratliff V, who also collects Gundam kits, said the increased costs stretch to imported teas, clothing and snacks.

“You shouldn’t have to say, ‘I can’t have hobbies anymore because somebody decided they didn’t like another country,’” he said.

The extra tariffs costs, on top of already expensive international shipping, cut deep at the toy store.

“Because we’re such a small store, a lot of the orders that we place directly from overseas were under $800, or we would order smaller orders more frequently,” she said. “But now, that really has a big effect on our bottom line.”

Olson Gross and co-owner Tammy Tanaka Johnson stocked up in the month between Trump’s announcement of the executive order and when the exemption was removed.

Ultimately, they have only three options. They can raise prices for their loyal customers. They can absorb the higher costs and watch already thin profit margins vanish. Or they can have some products simply disappear from their shelves, including some sought-after blind-box figurines and popular toys, and hope it doesn’t disappoint shoppers.

“It’ll be felt over the holidays,” she said. “It’s going to be higher prices on some of those things. Maybe we make a little bit less profit on some of them. I don’t know — we have to figure that out.”

“We’re a very small operation,” she said. “We just don’t have the ability to do that like large companies.”

Other business owners are making similar adjustments, like Moona Moono owner Angie Lee. Her Asian-influenced cafe in the Uptown Minneapolis area sells goods from South Korea and Japan.

Lee learned last month the price of ceremonial-grade matcha — a key ingredient — was rising by 40%. To cope, her team has experimented with smaller cup sizes, lower-grade matcha and substituting domestic alternatives.

“As a small-business owner, as a member of the community, we’re trying to build and lift up through the creation of jobs, through the creation of community,” Lee said. “We’re not here to try to squeeze as much money out of each person.”

Beyond raising prices, Schipper said, some outfits that rely on imported goods might have to close. Those that offer primarily domestic inventory, however, might welcome the change.

Olson Gross said she believes Kinoko Kids can weather the storm.

“This is our passion. This is what we do,” she said. “So we’re going to keep at it for as long as we can.”