Tariffs have been a contentious topic and are currently heading to the Supreme Court, but how do they affect the U.S. territories?
The latest challenge for the territories is the end of the de minimis rule. As Rep. Stacey Plaskett (D-USVI) explained in a press release issued October 9, “Effective August 29, 2025, Executive Order 14324…eliminated the duty-free de minimis exemption for goods valued at $800 or less entering from outside of the U.S. customs zone. This order affects the U.S. territories outside the customs zone (the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands) requiring residents to prepay customs duties on packages shipped to the fifty U.S. states, the District of Columbia, and Puerto Rico, which is the only U.S. territory inside the customs zone.”
What’s the de minimis rule?
Shipments to the U.S. from other countries are now subject to an array of tariffs, depending not only on their country of origin but also the contents of the shipment. Until recently, shipments of goods totaling less than $800 were exempt. That meant that a U.S. customer ordering a pair of shoes from Italy or inexpensive household goods from Chinese retailers would not have to pay tariffs.
De minimis shipments made up 92% of all shipments into the United States, according to the U.S. Customs office.
Now, foreign shippers must prepay tariffs on small shipments. Some companies have simply stopped shipping goods to consumers in the United States. One store in Iceland offers a discount to offset the cost of the tariffs:
In most cases, however, costs are passed on to the consumer.
Personal gifts valued under $100 are still exempt.
This is a requirement whether a foreign company is shipping to Kansas City or to San Juan. Since Puerto Rico is in the U.S. customs zone, Puerto Rico residents must pay for the tariffs just as consumers in the states do. Since the poverty rate is higher in Puerto Rico, this may be more of a hardship for people on the Island, but the law is the same.
However, not all the U.S. territories are in the U.S. customs zone.
Foreign shipping rules for U.S. territories
Apart from Puerto Rico, the remaining inhabited U.S. territories — the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands — are now required to prepay duties shipped to the United States customs zone, including Puerto Rico. The territories are subject to the base 10% tariffs on all countries for many of their products, though not all. Items which are entirely grown and produced in the territory may be duty-free. However, they will still have to pay processing fees which have been added to formerly de minimis orders, even if they are duty-free.
The USVI ships about $600 million a year in goods to the states. Much of this is refined oil, but goods affected by the de minimis exemption, such as rum and jewelry, are also an important part of the Virgin Islands’ economy. All the other territories also rely on the states as trading partners, supplying goods from fish to electronics.
Rep. Plaskett is trying to arrange an exemption for these territories. After all, even though the territories are not in the U.S. customs zone, the territories belong to the United States. People born in these territories are U.S. citizens or nationals. It seems inconsistent to treat them as though they were foreign nations.
How are businesses coping?
St. John Spice, a manufacturer and retailer in the USVI, offers this explanation to customers:
These tariffs have huge implications for many businesses within the U.S. Virgin Islands who ship customer purchases, and the tariffs must be paid to get the goods in the hands of customers. We are partnering with other locally affected businesses and legal experts to try to make the situation more fair. In the meantime, customers will bear the cost of the tariffs.Here is what changed for our online store for the time being:1. Shipping prices have increased. Customs and Border Control is requiring us to use an online app to pay for the tariffs and associated fees before the U.S. Post Office will accept packages. There is a processing fee that must be paid to obtain a clearance code for each order, even in instances where no tariffs apply to the order. We have raised our shipping prices to account for this processing fee.2. Some items in our online store will be subject to price increases. In addition to the costs of the tariffs, the online app also charges a percentage of the tariffs. It has therefore been necessary to raise our prices on items that were not produced in the United States. Rather than try and figure out how to apply the varying rates of tariffs based on the country of origin at checkout, we will be raising prices on the affected items to reflect the tariff percentages.
While St. John Spice doesn’t point this out, the new ruling adds to the labor costs for shippers. Each company must create an account for a new app and must use it to list each item being shipped, with the number being shipped, the country of origin of the item, a description, and its value. The app then calculates the tariffs and provides the cost of duties and fees. The shipper must pay through the app and save the Declaration ID and QR code for each shipment. While this will be easier for some workers than for others, it will certainly add to the time involved in picking and packing, and it must be done before shipping. With the complexity and frequent changes of the tariffs, retailers who ship items from many different countries of origin may find the task particularly time-consuming.
Since American consumers have responded to the tariffs by buying fewer goods from abroad, merchants in the territories can expect to receive fewer online orders from the mainland, which can mean the loss of a significant income stream.
Next steps
“I remain committed to securing a solution, just as I successfully worked with the Trump Administration earlier this year to obtain an exemption for the U.S. Virgin Islands and the Caribbean from punitive port fees,” said Plaskett. “I will continue working with the same determination to secure relief for the people of the Virgin Islands and all affected territories.”
U.S. Virgin Islands Governor Albert Bryan has also raised his voice, along with governors from the other affected territories, asking President Trump to exempt the territories. “The residents of the Virgin Islands and all U.S. territories are Americans. We serve, we sacrifice and we contribute to the strength of this nation. We should not be penalized because of geography,” he said.
Puerto Rico, already more economically integrated into the United States than the less populous territories, is not affected by the change — except that Puerto Rican consumers may pay more for goods from other territories, or do without them.
