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How U.S. Tariffs Are Transforming Dropshipping: Essential Insights for Retailers
By Chelsea Hall
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
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, and eBay (Amazon coming soon)
⚡ 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 product CSVs, an intuitive dashboard, 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.
Frequently Asked Questions (FAQs)
1: Are the new U.S. tariffs on all Chinese products?
As of May 2, 2025, all goods imported from China and Hong Kong, regardless of value, are subject to duties. The previous $800 de minimis exemption no longer applies to these countries.
2: Can I still use AliExpress for dropshipping in the U.S.?
Technically, yes, but costs and delivery times will increase significantly, making it less viable. Many retailers are now moving to U.S.-based alternatives.
3: What is the best alternative to AliExpress for dropshipping?
U.S.-based platforms like TopDawg offer faster, tariff-free shipping, real-time inventory, and better customer experience.
4: Will TopDawg products be affected by the new tariffs?
No. TopDawg sources exclusively from suppliers with warehouses in the United States, so there are no customs duties or international shipping fees for the retailer. However, if a supplier’s inventory is originally sourced from overseas (such as China), global supply chain costs may influence pricing over time, depending on market conditions. That said, all products ship domestically, ensuring faster delivery and zero surprise fees at checkout.
5: How do I switch to a U.S.-based supplier model?
Create a free account on TopDawg, browse the product catalog, and start importing U.S.-based products to your store in just a few clicks.
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.
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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. wholesale 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.