De Minimis Ending 2026 — What US Direct-Shipping DTC Brands Must Prepare Now

TL;DR: In 2026, the US de minimis exemption (duty-free low-value shipments) effectively ends. With mandatory HTSUS-10 code requirements and exemption restrictions on certain tariff-targeted goods, Korean DTC brands face a complete overhaul of customs processes and pricing strategies. Low-price product models risk severe profitability crises.

Game Changer Incoming — 2026 US Customs Regulation Overhaul

If you're a Korean DTC brand shipping directly to the US, 2026 will be a turning point. Until 2025, shipments under $800 enjoyed duty-free treatment under the de minimis exemption. From 2026 onward, this landscape changes completely.

According to The Fashion Law, 2026 brings stricter data disclosure requirements (including HTSUS-10 codes) and de minimis eligibility restrictions for goods subject to specific tariff measures (Section 201/232/301). In simple terms — low-value shipments no longer guarantee duty-free treatment.

This isn't just a regulatory tweak; it's a structural shift that threatens the profitability of Korean-origin DTC models. Brands selling fashion, beauty, or accessories in the $30-50 range via direct shipping must prepare now, or risk watching margins evaporate entirely.

De Minimis Changes — What Exactly Is Different?

Until 2025, the rule was simple: shipments under $800 = automatic duty exemption. From 2026:

HTSUS-10 codes are 10-digit product classification codes used by US Customs and Border Protection (CBP). Previously, 6-digit HS codes sufficed for customs clearance. Now, far more granular classification is required. For example, instead of declaring "cotton t-shirt," you must specify "men's short-sleeve cotton knit t-shirt (160g/m² or less)."

Section 201/232/301 refers to additional tariff measures the US imposes on specific countries or products. Most Chinese-origin goods fall under these measures. Even Korean brands using Chinese OEM manufacturing may be affected. Such goods lose de minimis eligibility regardless of value under $800.

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Why Korean DTC Brands Face Direct Impact

Most Korean DTC brands entered the US market via low-value direct shipping models. Bypassing platforms like Coupang or Amazon, they sold directly through proprietary sites or Shopify, maximizing the $800 duty-free threshold.

The problem? This model's profitability heavily depended on duty exemption. Consider this example:

• Product Cost: $20

• Shipping: $8

• Sale Price: $49

• Original Margin: $21 (43%)

With a 10% average tariff rate:

• Duty: $4.9

• New Margin: $16.1 (33%)

Margin drops 23%. Add HTSUS-10 code management overhead and customs delay risks, and real profitability falls further.

Brands selling primarily $30-50 products face complete erosion of price competitiveness. Already slower than US domestic shipping, losing price advantage means customers have fewer reasons to choose Korean brands.

Action Plan — 3 Things to Do Right Now

1. Build HTSUS-10 Code Management System

Map accurate 10-digit HTSUS codes for every product you sell. This isn't just customs paperwork — it's strategic work to minimize tariff rates.

• The same "t-shirt" can have tariff rates ranging from 5% to 20% depending on material, weight, and use

• Incorrect codes risk customs delays + additional duty assessments

• Product planning must consider tariff rates when selecting materials/specifications

Practical Tip: Search HTSUS codes directly on the US Customs and Border Protection (CBP) website. For complex products, consult a customs broker. Upfront consulting costs pay off through long-term tariff savings.

2. Redesign Pricing Strategy — How to Reflect Tariff Costs

Decide whether to pass tariff costs to customers or absorb them in margins. Two approaches:

Option A: Price Increase (Pass costs to customers)

- Pros: Maintains margin percentage

- Cons: Reduced price competitiveness → conversion rate risk

- Best for: Brands with high loyalty or differentiated products

Option B: Margin Compression (Absorb costs)

- Pros: Maintains price competitiveness

- Cons: Profitability decline → reduced marketing budget

- Best for: Early-stage brands prioritizing market share

Most brands will adopt a hybrid strategy — partially reflecting costs in price, partially absorbing in margin. The key is segmenting by customer type.

For example: - New Customers: Absorb tariff costs in margin to lower first-purchase barriers - Repeat Customers: Reflect costs in price but compensate via loyalty programs

Datarize's Conversion Probability Scoring predicts customer-level purchase likelihood, enabling segment-optimized pricing strategy testing.

3. Reassess Profitability — Which Products to Keep Selling

Continuing US direct shipping for all products isn't the answer. Portfolio restructuring is necessary.

For low-value products especially, consider US-based fulfillment centers (3PL). Ship bulk inventory from Korea to US warehouses, then fulfill orders domestically. Initial logistics costs rise, but long-term economics beat per-order duty payments.

Key Takeaways

• From 2026, the US de minimis exemption effectively ends with mandatory HTSUS-10 codes and exemption restrictions on certain goods.

• Korean DTC brands face 20-30% average margin decline due to complex customs processes and increased tariff costs.

• Accurate 10-digit HTSUS code mapping for all products is essential, with strategic classification to minimize tariff rates.

• Pricing strategies should segment by customer type: absorb costs for new customers, compensate repeat customers via loyalty programs in a hybrid approach.

• Low-value products (under $30) face severe profitability decline: evaluate US 3PL fulfillment or discontinuation.

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Frequently Asked Questions

Q1. Where can I find HTSUS-10 codes?

HTSUS-10 codes are searchable on the official U.S. Customs and Border Protection (CBP) website. Enter product name, material, and use to retrieve applicable code lists. For complex products, consulting a customs broker ensures accuracy. Incorrect code declarations can cause customs delays or additional duty assessments.

Q2. How do I check if products are subject to Section 301 tariffs?

Section 301 tariffs are additional duties primarily imposed on Chinese-origin goods. The U.S. Trade Representative (USTR) website publishes target product lists. Even Korean brands may be affected if using Chinese OEM manufacturing. Prepare accurate certificates of origin and consider production diversification if necessary.

Q3. Does using US-based 3PL avoid tariffs?

No, tariffs cannot be avoided entirely. However, shipping bulk inventory from Korea to US 3PL warehouses incurs duties once, with subsequent customer shipments processed as domestic deliveries. This is more efficient than paying duties per individual order. Initial logistics costs and inventory risk increase, but total costs may decrease for high-volume low-price models.

Q4. Can I charge customers for tariff costs?

Technically yes, but not recommended from a customer experience perspective. Charging additional duties post-purchase generates complaints and refund requests. Better to include tariff costs in sale price or clearly communicate a "Duties & Taxes Included" policy to maintain conversion rates.

Q5. What happens if I don't prepare now?

Shipping without preparation after 2026 regulations take effect risks customs delays, additional duty assessments, and even cargo seizure. Customers complain about delivery delays while brands face unexpected cost burdens and profitability decline. Peak season issues (Black Friday, year-end) cause severe sales impact. Start HTSUS code mapping and pricing strategy redesign now for safety.

Conclusion — Brands That Turn Crisis Into Opportunity Survive

The 2026 de minimis ending is undoubtedly a major challenge for Korean DTC brands. But it's also an opportunity to reshape competitive dynamics. Prepared brands can streamline customs processes and optimize pricing strategies to actually gain market share.

Datarize supports customer segment-level purchase probability prediction and personalized pricing strategy testing. If you want to be a brand that protects profitability through data-driven decisions amid tariff cost increases — start now.

Growth belongs to the prepared.