Not so De Minimis: Tariffs and Cross-Border Trade on Online Marketplaces

De minimis (Latin for “about minimal things”) refers to a customs exemption that allowed imports valued below $800 to enter the United States duty-free and with simplified border processing. We study how the 2025 suspension of this duty-free channel affected trade inside Etsy, a global marketplace where foreign and domestic sellers compete side by side. Using data from one of Etsy’s largest categories, we estimate how the policy affected foreign sellers, domestic substitution, and total marketplace activity. Non-U.S. sellers lose sales after the policy change, with weekly unit sales falling by about 18% after implementation and remaining similarly depressed more than five months later. Some demand shifts toward U.S. sellers, but these gains are too small in volume terms to offset the large losses among foreign sellers; the losses are concentrated among larger non-U.S. sellers, while gains accrue mainly to smaller U.S. shops, which leads to a net contraction in sales. This suggests that in a marketplace for differentiated goods, domestic sellers do not always offer close substitutes for the foreign listings consumers would otherwise have purchased. The results highlight a limit to global digital-marketplace integration; product search and discovery may seem frictionless, but actual purchases remain exposed to border frictions.

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