Trump Tariffs India 2025: How Exporters & Ecommerce Sellers Can Adapt

Imagine: A skilled artisan in Jaipur selling beautiful, handcrafted goods on Amazon Global to a New York resident. For years, this business model has been working fine due to the de minimis. De minimis was an umbrella exemption for low-value goods, worth under $800, to enter the US duty-free. It was simple and profitable for Indian exporters, thanks to the low entry costs. 

But that stability is now on shaky grounds. On August 29th, 2025, the United States officially removed the de minimis exemption for India.. 

Lifting the exemption rule means low-value parcels will face a high amount of tariffs and paperwork. The move has been so sudden that India Post, the government-run postal service, and a lifeline for many small Indian exporters, has suspended most parcels to the US. Reason? They were not prepared to handle the new compliance requirements.

This blog will explore the deeper nuances of the de minimis exemption, why its removal has rocked Indian exporters, and provide a roadmap for adapting to this rule and surviving in the new trade environment.

What Was the 'De Minimis' Exemption? (And Why It Was a Game-Changer)

The term de minimis is Latin for “too small to matter”

In the U.S., small-value imports are cleared under the de minimis exemption (Section 321 of the Tariff Act). This allows goods below a certain value to enter without duties or full customs paperwork, often processed under Entry Type 86.

The exemption was introduced in 1938 with a limit of just $1. For many years, the value stayed low until it was raised to $200 in the early 1990s. In 2016, the threshold was increased again to $800 per person per day, making it easier for exporters and e-commerce sellers to ship low-value parcels into the U.S.

By comparison, most other countries set much lower limits.  Canada at about C$40, the European Union at €150, and many others, including China, even lower. The U.S. threshold has therefore been on the higher side internationally.

How This Fueled Indian E-commerce Exports

The jump in the U.S. de minimis limit to $800 in 2016 opened new doors for Indian exporters, especially small and medium businesses.

Why the $800 Exemption Was Removed

The U.S. government withdrew the de minimis exemption to tighten import controls, boost tariff revenue, and address security concerns.

Package volumes under the rule surged from 139 million in FY2015 to nearly 1.36 billion in FY2024, overwhelming customs systems. Officials argued that the loophole made it easier for high-risk items,  including fentanyl precursors, to enter the country in untracked parcels. Fentanyl has been a major driver of the opioid crisis, linked to hundreds of thousands of deaths in the U.S.

A Reuters investigation (“Fentanyl Express”) showed how simple it was to buy precursor chemicals online. Reporters spent about $3,600 to acquire enough raw material to manufacture at least 3 million fentanyl pills — often disguised in shipments labelled innocuously as “Adapter” or “Pigment Ink.”

While most of the problem traces back to Chinese suppliers, the blanket policy change has affected exporters worldwide, including those in India.

Who Is Most Affected?

The removal of the $800 de minimis exemption, coupled with steep new U.S. tariffs, has sent shockwaves through India’s export community. The brunt of the impact is falling on small and micro exporters, the very businesses that had relied on low-value, duty-free shipments to build direct-to-consumer sales in the U.S.

Industry analysts warn that India’s shipment volumes to the U.S. could fall by 15–25%, while landed costs are expected to rise by 8–15%. Exporters now face two tough choices: absorb these costs and see margins shrink, or pass them on to U.S. buyers and risk losing competitiveness.

On top of losing duty-free entry, Indian goods are also being hit with an additional 50% tariff across several categories. That has turned sectors once thriving under U.S. demand into some of the hardest hit:

For many of these sectors,  especially garments, jewellery, and shrimp, the U.S. has long been the single largest market. Now, Indian exporters are being forced to rethink pricing, margins, and in some cases, the very viability of their U.S. business.

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Logistical and Compliance Challenges

With the suspension of India Post’s de minimis channel, exporters are now facing a compliance gap. Shipping companies must collect tariffs upfront, itemize duties against each product, and remit payments to U.S. authorities. This shift demands significant tech and infrastructure upgrades — but the rollout has been rushed, with limited clarity from U.S. regulators.

Previously, most small parcels entered under Entry Type 86, a simplified process for low-value shipments. That system has now been replaced by Entry Type 11, which requires:

Errors carry higher risks: misclassifying a shipment,  once treated leniently, is now considered a punishable compliance offence.

The Most Vulnerable Sectors and Clusters

The impact is sharpest on small and mid-sized exporters dealing in India’s hallmark: high-variety, low-volume goods. These businesses dominate categories like textiles, handicrafts, jewellery, and niche components, which together form a significant share of India’s exports to the U.S.

Export hubs in Gujarat, Tamil Nadu, and Karnataka, which power much of India’s U.S.-bound trade, now face slower orders, tighter compliance costs, and the risk of losing competitiveness in their most important market.

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A Roadmap for Resilience: How Exporters Can Adapt

The removal of the $800 de minimis exemption is a major disruption for Indian exporters. But it’s also forcing businesses to rethink strategy and build resilience. Here’s how exporters can adapt in practical, actionable ways:

1. Diversify Markets

For years, the U.S. was the most attractive destination for Indian SMEs — large, profitable, and easy to access. Now, exporters must reduce over-dependence by expanding into other markets:

2. Cut Costs Smartly

Higher tariffs demand tighter operations. Exporters can preserve margins by:

3. Rethink Logistics

With Entry Type 86 gone, compliance is heavier. Exporters should:

Finding Strength in Disruption

The loss of de minimis is a clear setback, but it could make India’s exporters stronger in the long run:

At Skydo, we’re here to stand with exporters through this transition. By simplifying global payments with live forex rates (no hidden markups), instant FIRA and (eBRC generation for Amazon exporters), 24-48 hours settlement and India-based support, we’re helping Indian businesses stay compliant, protect margins, and continue scaling globally.