How do the new tariff duty options work?

Carriers must choose one duty method each month for all small-parcel shipments from China and Hong Kong:\r\n\r\nA flat fee (up to $200 per item), or\r\n\r\nA 120% ad valorem duty based on item value.\r\nRetailers and customers cannot choose the method, creating unpredictable landed costs.

Who is most affected by the new U.S. tariff rules?

The most impacted groups include:\r\n\r\nDropshippers sourcing from China-based platforms.\r\n\r\nRetailers using AliExpress plugins or intermediaries.\r\n\r\nEnd consumers facing unexpected duty charges and long delays.\r\nU.S.-based retailers using domestic fulfillment are largely unaffected.

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How U.S. Tariffs Are Transforming Dropshipping: Essential Insights for Retailers

Q: What should dropshippers do right now to adapt?

Retailers should:\r\n\r\nBegin migrating SKUs to U.S.-based suppliers.\r\n\r\nRework pricing models for domestic fulfillment.\r\n\r\nCommunicate clearly with customers about shipping expectations.\r\n\r\nUse automation and integrations to scale efficiently.\r\nThis proactive shift reduces risk and protects margins.

By Darren DeFeo | Updated on December 18, 2025

How U.S. Tariffs Are Transforming Dropshipping: Essential Insights for Retailers

How U.S. Tariffs Are Changing Dropshipping Forever:

What Retailers Must Know About AliExpress, Temu, and TopDawg

In 2025, eCommerce and dropshipping are undergoing significant disruptions due to new U.S. government tariffs on small parcel shipments from China and Hong Kong. These changes, effective May 2, 2025, include:

1. Elimination of the De Minimis Exemption:

The U.S. has ended the de minimis exemption for goods imported from China and Hong Kong. Previously, this allowed duty-free entry for shipments valued at $800 or less.

2. New Duty Rates for Postal Shipments:

From May 2 to May 31, 2025: Shipments are subject to either a 120% ad valorem duty or a flat fee of $100 per item, whichever is higher.

Starting June 1, 2025: Carriers must choose one of two duty collection methods for all small parcel shipments from China and Hong Kong:
– a flat fee of $200 per item, or
– a 120% ad valorem duty based on the item’s value.

Once a method is selected, it must be applied consistently to all shipments for the entire month. The importer or customer has no control over which method is used, and whichever method is selected will determine the final cost — even if the alternative would have resulted in a higher or lower fee.

3. Carrier Responsibilities:

Carriers transporting these postal items must collect and remit the appropriate duties to U.S. Customs and Border Protection (CBP). They are required to apply the same duty collection method (either ad valorem or flat fee) to all shipments they deliver and may change their chosen method monthly with prior notice to CBP.

4. Stricter Enforcement Measures:

There is increased enforcement of origin labeling and customs inspections to ensure compliance with the new regulations.

These policy changes are part of a broader effort to address concerns over illicit goods and to ensure fair trade practices. They significantly impact eCommerce operations, particularly for businesses relying on low-cost imports from China and Hong Kong.

For eCommerce retailers who depend on platforms like AliExpress, Temu, AliDrop, and similar China-based suppliers, this could be a breaking point. The additional cost, combined with long shipping times and stricter customs inspections, will make the traditional China-to-U.S. dropshipping model nearly unsustainable.

🔎 Expert Insight: What Will Carriers Choose?

One overlooked piece of this tariff enforcement is how carriers will respond. Each month, they must choose to apply either a flat fee (e.g., $200 per shipment) or a 120% ad valorem duty across all small parcel shipments from China and Hong Kong. This choice could dramatically affect shipping costs — especially for lower-value goods.

➡️ Budget-focused carriers like USPS may choose the 120% method to soften the impact for low-cost products.

➡️ Express carriers like FedEx or DHL may lean toward the flat fee to limit liability on high-value items.

⚠️ The problem? Retailers and consumers have no control over which method is chosen, and the result may be wildly inconsistent pricing.

This uncertainty makes U.S.-based fulfillment models — like TopDawg’s — even more attractive. No guesswork. No hidden costs. No customs surprises.

Understanding the New Tariffs on Chinese Imports

Let’s break down what’s changing and why it matters for anyone running or starting a dropshipping business in 2025.

What Was the De Minimis Rule?

Previously, packages valued under $800 entering the U.S. were exempt from customs duties. This allowed companies like AliExpress and Temu to ship low-cost products without triggering taxes or scrutiny.

What Has Changed?

As of May 2, 2025, the U.S. government has eliminated the de minimis exemption for goods imported from China and Hong Kong.

This means:

1. All parcels, regardless of value, are now subject to import duties

2. From May 2 to May 31, the duty is $100 per item or 120% of the item’s value, whichever is greater

3. On June 1, 2025, the duty increases to $200 per item or 120% ad valorem

This move follows a formal declaration by the Secretary of Commerce that systems are now in place to properly collect duties on such shipments.

Why Is This Happening?

The goal of these tariffs is to protect American manufacturers and domestic eCommerce by discouraging reliance on cheap, overseas goods. The U.S. government is responding to concerns over:

1. Unfair pricing from state-subsidized Chinese companies

2. Environmental standards

3. National security implications of foreign eCommerce dominance

Who Is Affected Most?

1. AliExpress & Temu Sellers

Dropshippers using these platforms are the most impacted.

Their business model relies on:

a. Low-cost, low-margin goods

b. Direct-from-China fulfillment

c. Minimal regulation

These businesses will now face:

a. Hefty import costs

b. Slower delivery due to customs delays

c. Increased refund requests from frustrated customers

2. U.S. Retailers Using AliDrop or DSers

If you’re using plugins to source products from AliExpress to Shopify, WooCommerce, or Wordpress, you’ll see:

a. Declining product competitiveness

b. Margin compression

c. Increased cart abandonment rates

3. End Consumers

Buyers who once paid $2 for earbuds with free shipping may now face:

a. $100–$200+ duty fees

b. 3 to 6 week delivery windows

c. Poor tracking visibility

Why U.S.-Based Dropshipping Is the Future

With these changes, U.S.-based dropshipping platforms like TopDawg are becoming the clear choice for retailers who want to:

1. Avoid tariffs

2. Offer faster delivery

3. Keep customers happy

4. Build a sustainable brand

🚀 Ready to Future-Proof Your Dropshipping Business?

Work with a trusted U.S.-based dropshipping supplier and avoid the uncertainty of overseas tariffs and shipping delays.

👉 Start Free with TopDawg and gain instant access to 500,000+ wholesale products, fast U.S. shipping, and seamless store integrations.

What Makes TopDawg Different?

✅ 100% U.S.-based suppliers (no tariffs or customs delays)

🚚 Fast shipping via UPS, USPS, and FedEx

📅 Real-time inventory and pricing updates

⚙️ Automated integrations with Shopify, Walmart, eBay, and Amazon.

⚡ 20,000+ retailers and 3,000+ suppliers

TopDawg's Strategic Advantages

1. Zero import risks

2. Transparent pricing

3. Better product reliability

4. Branded packing slips to help retailers stand out

What Retailers Should Do Now

If you're currently sourcing from Chinese suppliers, now is the time to pivot. Here's how:

1. Migrate Your Product Catalog

Start moving your SKUs to U.S.-based options. TopDawg makes this easy with access to a U.S.-based product catalog, intuitive dashboard tools, and real-time syncing.

2. Re-evaluate Your Pricing Strategy

New tariffs mean your old pricing model no longer works. Focus on higher-margin, domestic products.

3. Communicate with Your Customers

Set new expectations about shipping times, returns, and availability. Customers will appreciate transparency.

4. Leverage Platforms Like TopDawg

Use automation, analytics, and integrations to simplify operations and scale.

Conclusion: The Future of Dropshipping is Local

The upcoming tariff enforcement is a wake-up call for retailers who depend on global suppliers. While it may feel disruptive, it also signals the beginning of a more stable, scalable, and sustainable eCommerce model.

Platforms like TopDawg are built to thrive in this environment. By leveraging domestic suppliers, fast shipping, and automation, TopDawg gives retailers a serious competitive edge.

Don’t wait until your margins disappear or your customers complain. Now is the time to switch to a U.S.-based dropshipping platform and future-proof your business.

Top 10 USA-Based Dropshipping Suppliers (Why TopDawg Leads the Pack)

Top Dropshipping Products to Sell in 2025

Topdawg's Product Catalog: Connecting Retailers with Quality Dropshipping Products

Optimizing Dropshipping Operations for Success: Essential Strategies to Streamline Your Business

Effective Marketing Strategies – Top 10 Tips for Dropshipping Success

The Future of Dropshipping: 7 Key Trends Retailers Need to Know

Success Stories: Retailers Who Thrived with Dropshipping

Benefits of Using a Wholesale Dropshipping Platform

Interested in Starting a Dropshipping Business?

If you're considering starting a dropshipping business, be sure to check out TopDawg’s “Ultimate Guide to Launching a Successful Dropshipping Business.” This comprehensive guide is designed to equip new dropshippers with the knowledge and tools needed to effectively start and grow their businesses. By covering various e-commerce platforms and highlighting the importance of selecting a reliable dropshipping partner like TopDawg, the guide provides a strong foundation for launching a successful dropshipping venture and building a profitable online store.

Starting your online retail journey can pave the way for a successful business. At TopDawg, we support your growth by connecting you with a growing network of U.S.-based dropshipping suppliers and a wide range of dropshipping products. Additionally, we provide strong store integrations, streamlined order automation, and efficient shipping tools, all aimed at improving your profit margins.

🖋️ About the Author

Darren DeFeo is the CEO of TopDawg, a U.S.-based dropshipping platform helping thousands of retailers streamline their eCommerce operations. With over 20 years of experience in eCommerce operations and innovation, Darren is passionate about helping entrepreneurs build sustainable, scalable online businesses.

When he’s not driving growth at TopDawg, Darren focuses on establishing strong partnerships that keep retailers ahead of trends, especially in a rapidly shifting global trade environment.

🔗 Connect with Darren on LinkedIn

Frequently Asked Questions

In 2025, the U.S. eliminated the de minimis exemption for goods imported from China and Hong Kong and introduced steep new duties on small parcel shipments. As of June 1, 2025, imports are subject to either a $200 flat fee per item or a 120% ad valorem duty, dramatically increasing costs for overseas dropshipping.

The de minimis rule previously allowed shipments valued under $800 to enter the U.S. duty-free. Its removal means all parcels from China and Hong Kong are now taxed, regardless of value—breaking the low-cost economics that powered platforms like AliExpress and Temu.

Carriers must choose one duty method each month for all small-parcel shipments from China and Hong Kong: A flat fee (up to $200 per item), or A 120% ad valorem duty based on item value. Retailers and customers cannot choose the method, creating unpredictable landed costs.

AliExpress- and Temu-based dropshipping relies on low-margin products shipped directly from China. New tariffs add massive fees, cause customs delays, and increase refunds and chargebacks—making the traditional China-to-U.S. dropshipping model increasingly unsustainable.

Carriers such as USPS, FedEx, and DHL must select a duty method monthly and apply it uniformly. Depending on the carrier’s choice, identical products may incur very different fees, creating pricing instability for retailers.

The most impacted groups include: Dropshippers sourcing from China-based platforms. Retailers using AliExpress plugins or intermediaries. End consumers facing unexpected duty charges and long delays. U.S.-based retailers using domestic fulfillment are largely unaffected.

U.S.-based dropshipping avoids import duties, customs delays, and tariff uncertainty. Retailers benefit from faster 2–5 day delivery, stable pricing, easier returns, and better customer satisfaction—making domestic sourcing the safest long-term strategy.

TopDawg connects retailers exclusively with U.S.-based suppliers, eliminating import duties and customs inspections. The platform offers real-time inventory syncing, automated fulfillment, transparent pricing, and fast domestic shipping—removing the uncertainty caused by overseas tariffs.

While U.S. wholesale prices may be higher per unit, retailers often see higher net profitability due to faster shipping, better conversion rates, fewer refunds, and the elimination of tariff fees, customs delays, and chargebacks.

Retailers should: Begin migrating SKUs to U.S.-based suppliers. Rework pricing models for domestic fulfillment. Communicate clearly with customers about shipping expectations. Use automation and integrations to scale efficiently. This proactive shift reduces risk and protects margins.

These measures reflect a broader policy shift toward stricter trade enforcement and domestic manufacturing support. Retailers should plan for these tariffs to remain in place and structure their businesses around stable, compliant supply chains.

Overseas dropshipping is no longer viable for most serious retailers in 2025. Rising duties, unpredictable fees, and long delivery windows make it difficult to compete with U.S.-based sellers who offer faster, more reliable fulfillment.

The future of dropshipping is local, automated, and resilient. Retailers that rely on U.S.-based suppliers, transparent pricing, and fast fulfillment will outperform those tied to overseas shipping models affected by tariffs and trade enforcement.