There are a lot of different challenges when you are trying to make international shipments. There is a new challenge that has been faced by many businesses in China and Hong Kong since the end of the T86 free tax exemption. The previous policy, known as Entry Type 86, allowed small parcels and shipments to clear customs without any duties, hence streamlining the entire e-commerce process. However, with this exemption ending, small businesses are facing much more complex T86 custom clearance. So, let’s jump right into the article and have a look at it.
What is T86 Custom Clearance?
The T86 custom clearance refers to streamlining the Customs and Border Protection process. This was made for low-value e-commerce shipments, which were categorized under Entry Type 86. This card in Skype allowed small farces to enter the US from countries like China and Hong Kong. The shipments that were under $800 were allowed to enter the US borders without any duties or taxes, unlike the traditional customs procedures. This made the entire process much faster, and the minimal paperwork made it highly attractive for online retailers and logistic providers to use this method to ship products.
This was beneficial for de minimis shipments, which were under Section 321 of the Tariff Act. The T86 Custom parents only required electronic filing with CBP, which should have all the information, such as the consignee value of the shipment and a detailed description of the goods.
What is De Minimis?
Now, you might be wondering what de minimis is. This is a trade term that refers to the minimum threshold value under which shipments can enter a country without any customs or taxes. In the United States, the de minimis value is set as $800 per shipment. This means that the shipments valued below this amount will qualify as duty-free and tax-free under Section 321 of the Tariff Act.
This policy is great for small businesses as they won’t have to pay for the import costs, and it also simplifies the logistics for the small parcels. However, the new changes, such as the Entry Type 86, have now affected the de minimis shipments and how they are handled in the future.
Entry Type 86 Is Ending for Goods from China & Hong Kong
This new Entry Type 86 policy is now ending the goods from China and Hong Kong and will officially end team minimize tariff exemptions. Starting May 2nd 2025, the US government has formally announced that there will be a major shift in cross-border trade policy. Under this new system, the shipments, regardless of the value, were required to have a complete custom entry process and would be subject to duties and taxes. This means that even if your shipment is below $800, you will have to pay taxes and other responsibilities.
The US will impose a strict tariff on the poster shipments, about 120% tariff or a flat fee of $100 per item based on the value of each shipment. It is also important to note that this flat rate poster tariff can increase up to $150 per item starting June 1st 2025. This change of policy is significantly impacting businesses that rely on low-cost e-commerce exports, especially small businesses and dropshipping operations. As Entry Type 86 is now phased out for Chinese and Hong Kong companies, they are now trying to explore new ways to source products in the US without any customs and duties.
T11 and T01 Customs Clearance to Apply After T86 Ends
With the termination of Entry Type 86 and de minimis exception, the US Customs and Border Protection will now revert to the standard carrying model such as the T11 and T01.
The T11 Customs Clearance is designed for informal entries, typically for low-value shipments that are under $2500 and don’t require any custom bonds. T11 also demands documentation such as commercial invoices, proper product classification, and a few other things. The duties can be changed depending on the item and the origin of the country.
T01 Customs Clearance applies to the former entries, especially to the shipments that are valued at over $2500, as well as to the controlled goods. Here, you also need to provide extensive documentation and a custom bond with a licensed customs broker. Here, you will find a lot more strictness and higher administration costs.
| Before (De Minimis) | After (De Minimis Removed) | ||
| Comparison Items | T86 | T11 (Informal Entry) | T01 (Formal Entry) |
| Package Value | ≤ $800 per person/day | Entry value ≤ $2500 (Certain HTS codes limited to ≤ $250) | No limit |
| Declared Value | Transaction value | FOB value | FOB value |
| Import Duties | None | Base tariff + Section 301 + 204 + 304 + 409 duties | Same as T11 |
| Customs Charges | None | MPF: $2.62 per entry | MPF: 0.3464% of declared value; Min: $32.71, Max: $634.62 |
| Inspection Risk | Based on parcel check, release, and airline coordination | Based on entry: release, PGA inspection if needed; 1 entry = 1+ parcels under $2500 | Based on declared value, PGA inspection if needed; 1 parcel = 1 entry |
What’s the Solution for Small Parcels from China and Hong Kong After May 2?
After May 2nd 2025, there will be an end to the Entry Type 86 de minimis exception for goods from China and Hong Kong. This is why importers and e-commerce platforms need to find another way to maintain their profitability and competitiveness. Below, we have mentioned some of the solutions that can help e-commerce platforms from China and Hong Kong even after the T86 customs clearance.
Shipping Goods from China to the U.S. via T11/T01 Customs Clearance
As of now, all major cross-border logistics service providers are transitioning to T11 or T01 customs clearance methods for shipping parcels from China and Hong Kong. This shift means that new tariffs must be paid—but it also presents the most stable and low-risk shipping solution currently available, allowing businesses to continue operations smoothly.
Business owners are now required to prepay tariffs (typically around 165% of the FOB price) on behalf of customers. This has inevitably led to increased product prices, as already seen with platforms like Temu and Shein since April 25th. Consumers are now paying more at checkout.
An alternative is to use DDP (Delivered Duty Paid) shipping, where the service provider handles the tax, and the tariff cost is already included in the shipping fee. Both methods—prepaid tax via T11/T01 and DDP—are legal, reliable, and recommended under current regulations.
However, it’s important to declare product values accurately. If the declared value is significantly underreported to reduce tariffs, there’s a risk of inspection by U.S. Customs and Border Protection (CBP). In such cases, you may be required to repay the correct tax or risk having the goods discarded.
Expand Global Market
One of the best solutions after the implementation of T86 Custom Clearance is for vendors and small businesses from China and Hong Kong to try to expand their market. This means that instead of keeping the United States as a primary market for exporting goods, you must export to other countries that offer a de minimis policy. Countries such as South Asia, Europe, the Middle East, South America, and Canada are still offering less custom taxes, hence allowing you to grow and expand your business.
Use Transshipment: Re-Routing via 3rd Country (Note: Potential Risks Involved)
Another method that you can try when it comes to bypassing taxes is transshipment through third countries. This means that you first need to boot your books from countries such as Vietnam, Taiwan, or South Korea and then ship them to the US. If this method is done properly, you can still qualify for the parcels that are under $800 as a de minimis threshold. However, it is important that you properly relabel the products and repackage them. You also need custom documentation so that you can coincide with the import regulations. This process can take a little longer and take much more time for you to deliver your products to the customers. But this is a method through which you can maintain the lower overall cost and prevent yourself from paying the customs taxes and duties.
Ship in Bulk from China, Fulfill Locally in 2–3 Days with U.S. Warehouses
Another method is investing in U.S.-based fulfillment centers. While taxes and duties still apply, this long-term, scalable solution can help optimize costs and streamline customs clearance. This means the sellers will ship goods from China in bulk to different US warehouses and fulfilment centers and then process the orders domestically. This process is also great if you want to shorten the delivery times to just two to three days and reduce customs delays and unexpected duties. This method is also great if you want to improve customer service and ensure that your customers are getting all of their orders on time and quickly.
Beat the Tariffs with NextSmartShip
With the implementation of T86 Custom Clearance, products from China and Hong Kong have to face new tariffs where you need to pay customs and taxes. NextSmartShip is the ultimate solution for reducing taxes and maintaining your business’s profitability. We offer stable shipping from China to the U.S. using Entry Type 11 and Entry Type 01 to ensure your operations run smoothly with lower risks and costs. Therefore, if you are trying to find a sustainable and reliable partner, then NextSmartShip is the perfect option, as they will help you beat the tariffs and keep your business moving forward.
Conclusion
2nd May 2025 is the end of Entry Type 86, and it will cause a major shift from cross-border e-commerce, especially for the sellers in China and Hong Kong. The implementation of T86 clearance customs will cause the sellers to pay taxes and duties even if the value of the shipment is under $800. This can affect the businesses significantly and cause them significant losses. This is why this article was beneficial for you. Now that you know everything about the T86 Clearance Customs and how you can prevent it, make sure to check out NextSmartShip for their amazing services and how they can help you with this change.
