Impact of De Minimis Exemption Elimination on Retailers

De Minimis Exemption Expiration

• 📌 The de minimis exemption, which allows goods valued under $800 to enter the US duty and tax-free, is expiring.
• 🎯 This change is expected to drastically increase distribution costs for Asia-based e-commerce players like Shein and Temu.

Retailer Impacts and Benefits

• 📈 Some US brands and retailers will benefit from new business opportunities arising from this change.
• ⚠️ Tapestry anticipates a 20-cent drag on earnings for fiscal 2026 due to the exemption's elimination.
• 📊 Barclays estimates that approximately 14% of Tapestry's total sales will transition from paying zero tariffs to a 30% tariff.
• 📉 Lululemon is also expected to be impacted by this change.

Shifting Supply Chain Strategies

• 🚚 Many US brands have been using warehouses in Mexico and Canada to leverage the de minimis exemption.
• 💰 These brands exploited a 30-40% cost arbitrage by shipping from Mexico and an additional 25% arbitrage from customs and duties.
• ✈️ This strategy allowed them to offer later shipping times and