For years, many Shopify brands, dropshippers, and direct-to-consumer (DTC) businesses built their fulfillment strategy around one simple rule: if a shipment was worth less than $800, it could often enter the United States duty-free under Section 321 of the Tariff Act.
That model is gone.
Since the suspension of de minimis treatment, invisible import costs are now showing up on every shipment. Duties, Merchandise Processing Fees (MPF), customs brokerage costs, Importer Security Filing (ISF) fees, and tariff overlays can dramatically change your landed cost and profit margin.
If you’re wondering whether your current fulfillment model still works, this guide breaks down exactly what changed, how much it may be costing your business, and the strategies successful DTC brands are using to protect margins.
Section 321 Is Gone — and It Changed DTC Unit Economics Overnight
For many e-commerce brands, Section 321 was more than a customs rule. It was the foundation of a business model that allowed low-cost international fulfillment without duties or formal customs entries.
The suspension of that program has fundamentally changed how imported e-commerce products enter the United States and how much they cost.
What Section 321 let DTC brands do (and why it mattered)
Section 321 of the Tariff Act of 1930 (19 U.S.C. §1321) allowed qualifying shipments valued at less than $800 to enter the U.S. without paying duties or taxes.
For Shopify brands, this meant:
- Shipping directly from overseas suppliers
- Testing products with minimal risk
- Avoiding customs duties on low-value orders
- Scaling without maintaining U.S. inventory
Many fast-growing DTC brands built their entire fulfillment strategy around this duty-free threshold.
What changed on August 29, 2025
The landscape changed dramatically after Executive Order 14324 suspended de minimis treatment for imports from all countries effective August 29, 2025.
China and Hong Kong shipments had already lost Section 321 eligibility earlier on May 2, 2025.
As a result:
- Duty-free treatment largely disappeared
- Entry Type 86 usage collapsed
- More shipments require customs processing
- Landed costs increased significantly
If you’re still learning the mechanics of the new process, our guide on how to clear a shipment after de minimis was suspended provides a detailed breakdown of the customs requirements.
Not all e-commerce businesses are affected equally.
The brands feeling the greatest impact are typically those that relied on frequent, low-value shipments entering the U.S. individually.
Direct-from-supplier fulfilment brands
Brands shipping products directly from overseas manufacturers to individual U.S. customers face the largest increase in per-order costs.
Every shipment now carries customs processing expenses that previously didn’t exist.
Dropshippers sourcing from overseas platforms
Many dropshipping businesses depended almost entirely on the $800 de minimis threshold.
Without it, margins can disappear quickly when duties and brokerage costs are applied to individual customer orders.
High-SKU brands testing products with small shipments
Brands that regularly launch new products often import small quantities before committing to inventory.
The increased fixed costs associated with customs entries make this approach considerably more expensive.
The Real Cost: What Every Parcel Now Pays
The biggest misconception among e-commerce sellers is that duties are the primary issue.
In reality, many small shipments suffer more from fixed customs costs than from duties themselves.
Understanding the full landed cost stack is critical.
The fixed cost stack: MPF, ISF, bond, and brokerage
Several fees can now apply to shipments that previously entered duty-free:
- Merchandise Processing Fee (MPF)
- Importer Security Filing (ISF) for ocean freight
- Customs brokerage fees
- Customs bond costs
- Entry filing expenses
Current FY2026 MPF rates include:
- Formal Entry: 0.3464% of value
- Minimum MPF: $33.58
- Maximum MPF: $651.50
- Informal Entry: $2.69 flat fee
Ocean shipments may also incur:
- Harbor Maintenance Fee (HMF): 0.125%
- ISF filing costs: approximately $25–75 per shipment
The duty stack: MFN plus Section 301, 232, and 122
Duty calculations have become more complex because many products are affected by multiple tariff layers.
A shipment may be subject to:
- MFN (Most Favored Nation) duty rates
- Section 301 tariffs
- Section 232 tariffs
- Section 122 tariffs
- Chapter 99 tariff overlays
This tariff stacking can push effective rates above 30% and, in some product categories, above 40%.
The exact rate depends on the product’s HTSUS classification and country of origin.
Why fixed costs hurt small parcels most
Duty is proportional to value, but brokerage, MPF, ISF, and customs processing costs are largely fixed.
A $50 parcel and a $300 parcel often carry similar entry costs.
On a $50 shipment, $15–25 in processing costs can equal or exceed the duty itself.
This is why direct-ship e-commerce models are under the most pressure and why bulk import strategies are becoming the new standard.
Worked Cost Examples by Product Category
The easiest way to understand the impact is to compare real-world examples.
The figures below are illustrative and may vary depending on HTS classification, origin, freight method, and tariff treatment.
A $50 Apparel Order from China
Before Section 321 Suspension
Duty: $0
MPF: $0
HMF: $0
Total Added Cost: $0
After Section 321 Suspension
Duty Stack:
16.5% MFN Duty
- 7.5% Section 301
- 10% Section 122
Effective Rate ≈ 34%
Duty Cost ≈ $17.00
MPF (Informal Entry): $2.69
HMF (Ocean Freight): ~$0.06
ISF and Brokerage Allocation:
Can exceed the duty itself when shipments move individually.
On a $50 order, the fixed customs costs often exceed the duty. Individual direct shipping is rarely economical compared to consolidated importing.
A $200 Electronics Order
Duty Stack:
0% MFN Duty (many electronics)
- 25% Section 301
- 10% Section 122
Effective Rate ≈ 35%
Duty Cost ≈ $70.00
MPF (Informal Entry): $2.69
HMF (Ocean Freight): ~$0.25
Additional Note:
Certain FCC-regulated electronics may require Formal Entry regardless of shipment value.
Formal Entry introduces:
- Minimum MPF of $33.58
- Customs bond requirements
- Additional brokerage expenses
Higher-value products absorb fixed costs more easily, but tariff stacking still creates substantial landed-cost increases.
Strategic Responses That Protect Your Margin
The brands adapting successfully are not simply absorbing these costs.
They are redesigning their import strategy.
Switch from direct-ship to bulk import and domestic fulfilment
Many successful Shopify brands are moving inventory into U.S. warehouses before customer orders are placed.
This approach:
- Reduces per-order customs costs
- Improves delivery times
- Creates more predictable landed costs
Consolidate shipments to spread the fixed entry cost
Instead of importing hundreds of individual parcels, brands are consolidating shipments into larger entries.
This spreads brokerage, MPF, ISF, and compliance costs across more units.
Audit your HTS classification to recover overpaid duty
Many businesses discover they are paying more duty than necessary because products are classified incorrectly.
A professional HTSUS review can often uncover meaningful savings.
Move to DDP pricing so customers see no surprise charges
Delivered Duty Paid (DDP) pricing allows duties and fees to be incorporated into the checkout experience.
This helps:
- Reduce cart abandonment
- Eliminate surprise delivery charges
- Improve customer satisfaction
Many brands also choose to get an instant clearance quote before restructuring their import model so they can accurately forecast future landed costs.
What to Do This Quarter: A DTC Action Plan
If your business relied on Section 321, now is the time to revisit your fulfillment model.
Start by:
- Reviewing your HTS classifications.
- Calculating actual landed costs by SKU.
- Identifying products most affected by tariff stacking.
- Comparing direct-ship costs against bulk import alternatives.
- Evaluating DDP checkout strategies.
- Consulting a licensed customs broker regarding entry structure and compliance requirements.
We recently worked with a DTC apparel company shipping approximately 8,000 monthly parcels directly from Asia. After moving to a consolidated bulk-import model with domestic fulfillment, the company reduced per-order customs costs significantly while improving delivery times and customer satisfaction.
For many brands, the question is no longer whether to change strategies, but how quickly.
Frequently Asked Questions
Is Section 321 gone permanently?
Section 321 treatment was suspended for all countries on August 29, 2025. In addition, the One Big Beautiful Bill Act establishes a permanent repeal effective July 1, 2027.
How much does it now cost to import a small parcel to the US?
Costs vary by product and origin, but importers may now face duties, MPF charges, brokerage fees, ISF costs for ocean freight, and tariff overlays that did not apply under Section 321.
Can I still ship under $800 duty-free from China?
No. China and Hong Kong lost Section 321 eligibility beginning May 2, 2025, and broader de minimis suspension measures subsequently expanded to all countries.
Should DTC brands switch to bulk importing?
For many brands, yes. Consolidated importing often spreads customs costs across more units and can significantly improve landed-cost economics.
Do I need a customs broker as a Shopify seller?
While not always legally required, a licensed customs broker can help with HTS classification, duty calculations, customs filings, tariff exposure, and landed-cost optimization.
Disclaimer
The figures in this article are illustrative examples only. Actual duties, tariffs, fees, and customs requirements depend on HTS classification, country of origin, shipment value, freight mode, and current CBP regulations. Always consult a licensed customs broker before making import decisions.
