Stord CEO: de minimis exemption removal is forcing brands to fundamentally rethink US inventory strategy

Summary

The de minimis exemption — the century-old rule exempting sub-$800 packages from US tariffs — is being eliminated far ahead of schedule, and brands that built cross-border fulfilment strategies around it are scrambling to restructure. The Trump administration had previously signalled a 2027 phase-out, giving brands a two-year runway. Instead, on Wednesday, July 30th, the exemption was announced as ending August 29th, compressing that window to under four weeks.

The Economics That Drove the Behaviour

The cost arbitrage was significant. Storing and shipping inventory domestically through the US — warehousing, last-mile delivery, and tariff combined — ran roughly $14 per unit. Keeping inventory offshore in Mexico, Canada, or Europe and shipping internationally cost closer to $10, with slower one-to-two-week delivery times but no tariff exposure. That $4 gap per unit was enough to restructure entire supply chains around avoiding US soil.

Over 50 of the top 100 Shopify merchants were estimated to be shipping into the US from Mexico under this model. The scale is substantial: $64 billion in commerce entered the US through the exemption last year alone, representing approximately $10 billion in missed tariff revenue and $4 to $5 billion in missed US logistics infrastructure revenue.

Shein and Temu Set the Template

While the exemption predates both companies, Shein and Temu exploited it at a scale no other operator matched, shipping billions of dollars of goods directly from Chinese warehouses to US consumers without touching the tariff system. The model then diffused broadly across mid-market direct-to-consumer brands, particularly in apparel.

What Brands Are Doing Now

With the August 29th deadline, brands are urgently seeking US-based fulfilment capacity. The constraint is not warehouse leases — space exists — but fully operational facilities with the technology, infrastructure, and labour in place. Most logistics providers are quoting four to six months to onboard a new brand, a timeline that is commercially devastating given the cost exposure brands now face shipping from outside the US without tariff protection.

Stord, the Atlanta-based logistics platform, is positioning itself as a faster alternative. The company cites onboarding True Classic, a multi-hundred-million-dollar apparel brand that had been operating out of Mexico, from initial meeting to go-live in 18 days.

On tariff pass-through, Stord's view is that the impact on consumer prices is non-linear. Tariffs apply to the commercial unit cost, not the full retail price, which also embeds brand margin, advertising spend, and logistics. Mid-market brands with real profitability can often absorb the tariff hit rather than repricing.

Policy Durability

Confidence that the current tariff regime is stable and durable is rising, per Stord's assessment. The administration has collected over $150 billion in incremental revenue since Liberation Day through tariffs alone, and achieved at least one budget-positive month. The expectation is that the administration views the results favourably and will not reverse course, with the longer-term thesis being that reshoring logistics and manufacturing creates domestic employment that offsets front-end consumer price increases.