Rising US tariffs on Chinese goods and the elimination of the $800 de minimis exemption have made many small and medium-sized importers rethink their supply chains. For SMEs that still source from China, the right strategies can keep landed costs under control and preserve margins. This article outlines the current tariff landscape and practical ways to save money without abandoning China sourcing where it still makes sense.
The 2025 Tariff Landscape for Chinese Imports
As of late 2025, US imports from China face several layers of duties. A 10% reciprocal tariff applies on top of existing Section 301 rates (which range from 7.5% to 100% by product). An additional fentanyl-related tariff was reduced from 20% to 10% in November 2025. Because these duties stack, total tariffs on many products can reach the mid‑fifties percent or higher. Certain goods also face Section 232 or other product-specific tariffs.
A major change for small businesses is the end of de minimis for China and Hong Kong (effective May 2, 2025). Low-value shipments that previously entered duty-free under $800 now incur applicable tariffs and, for postal shipments, additional fees. De minimis was later suspended for all countries (August 2025), so low-value imports from any origin now face formal duty and entry requirements. For SMEs that relied on sub-$800 parcels, this has increased both cost and administrative burden.
Why China Sourcing Still Makes Sense for Many SMEs
Despite higher tariffs, China remains a core sourcing base for many categories. Its manufacturing scale, vertical integration, and mature supply chains often still deliver lower unit costs and shorter development lead times than many alternatives. Vietnam, Mexico, and other markets face their own tariff and capacity constraints. For SMEs, the question is rarely “China or not” but “how to source from China more efficiently under the new rules.”
Five Ways to Reduce Your Landed Cost
Get Your Classifications Right (HTS)
Accurate Harmonized Tariff Schedule (HTS) classification directly affects duty rates. Misclassification can lead to overpayment, penalties, or delays. Conduct a classification review for your main SKUs: verify product descriptions, materials, and use. Even a small shift to a lower-duty heading can materially reduce landed cost on high-volume items. When in doubt, get a customs ruling or work with a broker or compliance partner.
Consolidate Shipments and Use Formal Entries Wisely
Splitting orders into many small parcels used to benefit from de minimis; now those parcels often face per-shipment duties and fees. Consolidating goods into fewer, larger shipments can reduce per-unit duty and logistics cost. For low-value consignments from China and Hong Kong, informal entry (e.g. Entry Type 11) is typically used where value is under the formal-entry threshold; formal entry is required above that. A fulfillment or logistics partner that consolidates and files entries correctly can help you optimize both cost and clearance time.
Leverage Exclusions and Drawback
Section 301 exclusions have been extended for certain products; check whether your HTS codes qualify. Where you pay duty on imports and later re-export or use goods in manufacturing, duty drawback can recover some or all of the duty. Staying current with CBP and White House guidance on exclusions and drawback is essential so you don’t overpay or miss refunds.
Diversify Selectively Without Dropping China
Diversification can spread tariff and geopolitical risk but doesn’t have to mean leaving China entirely. Consider adding a second origin for critical or high-tariff SKUs while keeping others in China. Compare full landed cost (product, freight, duty, and compliance) across origins. Sometimes China remains the most cost-effective option even after tariffs; other times, a hybrid approach saves the most.
Work With Partners Who Handle Compliance and Fulfillment
Tariff and customs rules are complex and change frequently. A partner that handles classification, entry filing, and fulfillment can reduce errors and delays and help you capture savings from exclusions, drawback, and consolidation. For SMEs, outsourcing these tasks is often more cost-effective than building in-house expertise. Choosing a provider with experience in US–China trade and low-value entries will make it easier to keep saving money as rules evolve.
The Bottom Line
Higher US tariffs and the end of de minimis have increased the cost of importing from China, but they have not made China sourcing obsolete for SMEs. By improving HTS accuracy, consolidating shipments, using exclusions and drawback, diversifying where it pays, and relying on capable compliance and fulfillment partners, you can still control landed cost and protect margins. The right sourcing and fulfillment setup is more important than ever in 2025.