• The de minimis tax loophole is expected to close on May 2.
• Brands are exploring ways they can defer their duty payments.
• That could include using bonded warehouses or foreign trade zones.

The end is near for de minimis.

Though President Donald Trump paused most of his announced tariffs for 90 days, de minimis shipping of China-made goods will come to an end much sooner.

The shipments, part of Section 321 of US customs law, allow for duty-free import of goods valued at less than $800. But as of May 2, de minimis shipments of China-made goods will no longer be allowed.

Moving manufacturing to the US could be expensive and time-consuming, so many brands are looking for ways to have some control over when they pay duties.

"The name of the game is duty deferral now if your goods are made in China," Alex Yancher, the CEO of Passport Global, a startup that helps brands sell globally, told Business Insider.

Here are some strategies importers are exploring as they prepare for the end of de minimis and weather the storm of tariffs.

Storing inventory in a bonded warehouse

Bonded warehouses are federally licensed facilities that allow retailers to store goods without paying duty for up to five years. Rather than pay tariffs on an entire container of products, importers using this type of storage could instead fulfill smaller amounts of inventory and thus distribute their tax payments over a broader range of time.

Bloomberg reported that demand for bonded warehouses soared in the weeks after Trump's "Liberation Day" announcement.

Third-party logistics provider ShipMonk is one company trying to meet customer demand for this type of storage. It's converting parts of facilities in Texas, Kentucky, Nevada, and Canada into bonded warehousing space.

"The main thing here is the cashflow benefit, especially when brands are paying this exorbitant rate for duties and tariffs now," ShipMonk's president, Kevin Sides, told BI.

Shipping into a foreign trade zone

Similar to bonded warehouses, foreign trade zones allow importers to temporarily defer tariff payments. Both options also allow merchants to hold inventory in the US while waiting to see what happens next with tariffs.

Jeffrey Tafel, president of the National Association of Foreign-Trade Zones, told the FT that interest in foreign trade zones is two to four times higher since Trump took office this year.

Fulfilling orders closer to where they're manufactured

Though the end of de minimis means low-value goods won't be duty-free as of May 2, shipping orders from near where they are manufactured can still provide some advantages.

Portless is a startup that fulfills brands' orders in China and then ships them on planes directly to customers. Founder and CEO Izzy Rosenzweig describes it as a "balance sheet strategy" suited to smaller brands that don't have lots of cash on hand to pay tariffs.

"You only get taxed once a good enters the country. Portless is near the factory, so your goods have never entered the country," Rosenzweig said. "Don't bring it into the country unless you need to, and then do parcel by parcel shipments into the country."

Fulfilling orders from a neighboring country

Similarly, brands are exploring nearshoring, or fulfilling orders from Canada or Mexico.

"Nearshoring helps defer US duties because you only import what you sell into the US and pay duties at that point vs. importing pallets and paying the duties all at once upon import," Yancher said.

Diversifying suppliers and materials

Trade experts also recommend that brands research their supply chain to see whether they can save on tariffs by manufacturing in another country.

They could also do some tariff engineering, or change a product's design enough that it could be classified under a different category with lower tariffs. It's a strategy that has been used by Columbia Sportswear and Converse sneakers over the years.

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• Trump's trade war has increased demand for robotics and automation.
• Robots-as-a-service company Formic said its customers have stepped up their use of robots this year.
• Automation can help companies to save money amid uncertainty.

Automation company Formic said that its customers stepped up their robot usage this year as tariff announcements sent global supply chains into chaos.

Formic automates packing and palletizing — or placing packages on a pallet — for automotive, industrial, food, beverage, and consumer packaged goods companies. It operates on a "robots-as-a-service" model, meaning that customers lease Formic's robots and pay a monthly rate based on how much they use them. Its robots are deployed in more than 100 factories in the US and have stacked and packed more than 1.2 billion products.

Between January and February, Formic's customers increased their robot usage by more than 17% overall, Chief Marketing Officer Shawn Fitzgerald told Business Insider. Its food and beverage customers stepped up their usage by more than 13%. He said the usage numbers seemed particularly notable given that February has fewer business days than the other months of the year.

It's likely that brands were using robots to get ahead of any tariff-related price increases.

President Donald Trump made his first in a series of tariff announcements on February 1, placing tariffs on goods from China, Canada, and Mexico, and closing the de minimis tax loophole.

"This data suggests everyone sat down with each other and said, let's step on the gas as much as we can in February, and let's make as much as we possibly can at the price points we are at right now," Fitzgerald said.

Formic customers' robot usage dipped in March, but the numbers are showing signs of a rebound so far in April, the company said. This month has seen the return of global trade chaos as Trump announced a large set of tariffs on April 2 — which he called "Liberation Day" — then later paused those tariffs except for those on goods from China.

Fitzgerald said that working with Formic helps companies to get more predictability in their costs amid uncertainty.

"If you do unfortunately have to go to overtime, robots love first, second, and third shift and overtime all the same. They do not care," he said.

Using automation to 'fill in some of the gaps'

Formic's customers include Rumiano Cheese Company, a cheese-making and packaging company based in Willows, a small town in the Sacramento Valley of California. Automation is top of mind for the 106-year-old company — even more so as tariffs have posed a threat to their profits this year. Rumiano imports cheeses from Italy and exports products to Mexico, China, and the Dominican Republic through a third party.

Rumiano is installing a Formic robot that can pick up 30-pound boxes of cheese and move them from the production line to pallets to be shipped out to customers. But Formic's robots are just one of several automation solutions Rumiano has explored. It also uses a machine that puts stacks of cheese in the proper place so they can be packaged.

"We've had more AI and robotics conversations in the last two months than we've probably had in the year prior," said Patrick Henson, the vice president of operations at Rumiano.

Employees who previously stacked cheese by hand have been reassigned to other tasks in the facility.

Working with robotics and data partners is key for the small, family-owned company.

"We don't have teams of data scientists or anything like that," David Wolper, director of planning at Rumiano, said. "We are looking to partners to help us grow with AI tools to help us really dig into data so that we can make sure we're spending money on the right things, we're producing the right products, we're doing everything as efficiently as we can to help save costs."

Tariffs have created obvious challenges for brands, but supply chain optimization has been a hot topic for several years. It's an area where robots and software can help, Forrester analyst Paul Miller told BI.

"Since Covid there has been this broad idea about shortening supply chains, improving resilience, improving adaptability, and part of that is bringing manufacturing capacity closer to the customer," Miller said. "If you're trying to bring that manufacturing capacity to California or Germany or Japan, the people are not cheap. You need to use automation to fill in some of the gaps."

Commerce Secretary Howard Lutnick alluded to this idea in several TV appearances he made after Trump announced his tariff plans in April.

On CNBC, he said US factories are "going to see the greatest surge in training for what we call tradecraft — teaching people how to be robotics, mechanics, engineers and electricians for high tech factories."

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• A leaked 2024 deck shows how Emma Chamberlain aimed to grow her coffee company to $33 million in revenue this year.
• Chamberlain Coffee had some growing pains but planned to expand through retail and promotions.
• Other online and Hollywood stars have ventured into new business lines, with mixed success.

Superstar influencer Emma Chamberlain's coffee brand has big ambitions but experienced growing pains last year — and they're both detailed in a pitch deck obtained by Business Insider.

Chamberlain Coffee hit some bumps last year, partly due to supplier issues that led to stocking problems at stores, the 2024 deck revealed. But it expected to bounce back in a major way, with the deck projecting revenue to grow by more than 50% in 2025 to over $33 million.

The deck said the company eyed a "strong path to profitability by 2026." It's now expecting to reach that goal this year, a person familiar with the company told BI.

Late last year, it started prioritizing profitability over aggressive growth, this person said. After significant cost-cutting, it was in the black for the first two months of the year and expects to be profitable for all of 2025.

Chamberlain, now 23, catapulted to internet fame by posting funny videos about her mundane teenage life before becoming a high-fashion star. She's represented brands including Louis Vuitton and Cartier and played Vogue's red-carpet correspondent at the Met Gala.

She's one of the internet's most influential creators, with over 12 million YouTube subscribers and nearly 15 million Instagram followers. She cracked Time magazine's list of the 25 most influential people on the internet when she was just 18, and ranked No. 14 on Forbes' list of top creators last year.

Like many creators, including MrBeast, Chamberlain is now also a big business. She parlayed her online fame into a line of consumer goods, launching Chamberlain Coffee, a product that befits her longtime coffee habit, in 2019. ("I drank so much coffee I literally feel buzzed," Chamberlain said in a 2019 video.)

In the era of the multi-hyphenate, many celebrities have made forays into product lines and other businesses. Some have found success. Bloomberg recently reported that MrBeast was making more money from his chocolate bars than his videos. But some categories have become crowded with similar product offerings, and The Information reported last month that certain investors had soured on celebrity brands in general. Some celebrity-fronted production companies have also faced recent challenges as Hollywood has pared back on spending.

As celebrities build businesses across various sectors — harnessing the power of the creator economy — the successes and failures of different brands are closely watched by would-be investors and the broader public.

The deck and other information gathered by BI provide a picture of Chamberlain Coffee's trajectory over the past year, as well as more recent tweaks to its strategy.

The company grew aggressively, going from selling in 500 to 10,000 stores in one year as it cracked Target, Whole Foods, Walmart, and more. It added new products in colorful cans and packaging with an emphasis on cold drinks. In January, it opened a brick-and-mortar café in Los Angeles where fans can sip her signature cold brew.

Still, Chamberlain's brand has encountered challenges familiar to many startups, as the leaked deck reveals. It contains data up to the second quarter of 2024 and projects performance for 2025 and beyond.

Last year, Chamberlain Coffee went out to investors in search of another $5 million to $10 million. (The company previously said it had raised a combined $14 million in 2022 and 2023 rounds, led by investors including Blazar Capital, UTA, and Volition Capital.) It was able to raise an undisclosed amount in recent months, the person familiar with the company said.

In the 2024 fundraising deck, Chamberlain Coffee acknowledged growing pains, which it blamed on issues caused by a former co-packer — a company that handles packaging and labeling for consumer products — that led to Chamberlain's coffee being out of stock at some retailers.

It also referred to the work it was doing to get the product mix and formulations right. In the deck, the company forecast that 2024 revenue would grow 14% to $22 million after nearly doubling two years before. Some of the details in the deck were previously reported by The Ankler.

Chamberlain Coffee said in the deck that it was fixing these problems. The company said it was working with larger-scale suppliers to grow retail sales, its biggest channel, and planned to double its promotional spending. After focusing on a larger mass-market expansion, it's now concentrating on certain retailers like Whole Foods, Sprouts, and Target, the person familiar with the company said.

The deck also laid out the brand's plan to expand its line of matcha, which it characterized as beloved by Gen Z. In fact, the brand's appeal to Gen Z is a big part of its positioning in the deck.

It categorizes rival brands like this: Folgers is for boomers, Starbucks and La Colombe are for Gen X, and Blue Bottle and Stumptown Coffee Roasters are for millennials. But Chamberlain Coffee is made for Gen Z, with its emphasis on canned coffee, flavored drinks, and matcha. The company said in the deck that pre-made drinks and packaged coffees each made up about a third of the company's retail sales at the time, with matcha making up a fifth of sales.

In the deck, Chamberlain Coffee also emphasized the company's ties to its famous founder and ability to drive promotion based on her popularity, citing collabs with Kendall Jenner's 818 tequila brand, Levi's, Erewhon, and others. It pointed to the exposure it's scored from stars like Shawn Mendes and Kylie Jenner.

Looking forward, the deck outlined the company's bet on cafés, which it saw as a way to increase awareness of the brand and cross-sell bagged coffee and canned drinks alongside brewed coffee and pastries. It expected the first café to generate $1.8 million with a 17% EBITDA margin. The deck said the first five cafés would be jointly funded by an unnamed partner that would fully fund the expansion.

The company saw an exit in its future, with the deck saying it was on the radar of several industry players. It listed Coca-Cola, Nestlé, and JDE Peet's among potential acquirers.

Here are some key slides from the deck Chamberlain Coffee used to pitch investors in 2024 on its next phase of growth:

Chamberlain Coffee said Gen Z is poised to be a 'billion-dollar' market.

Its pitch was that Gen Z would represent a $71 billion share of the coffee market and that Chamberlain Coffee was well positioned to capture a meaningful share of that spending, with products like ready-to-drink coffee, cold brew, and flavored coffee.

Chamberlain Coffee said it had a big edge over its competitors.

The company cited a survey commissioned by one of its backers, UTA, showing its awareness was greater than other brands, including Blue Bottle and Stumptown. It also said its social engagement was off the charts compared to those other brands.

Chamberlain laid out its growth strategy.

The company detailed how it started with online sales before expanding to retail stores in 2023 to scale up and meet customers where they are.

The company said retailers' enthusiasm was strong.

The company shared a chart showing it had added a large number of new retail accounts in the second quarter of 2024, after a slowdown in growth earlier in the year. It said Costco had the potential to become its single largest retailer.

Chamberlain Coffee said it was bringing new shoppers into stores.

The company said it was bringing a big benefit to retailers like Walmart, Target, and Albertsons.

The company faced challenges in 2024.

Chamberlain Coffee said that after a slowdown in growth, it was learning to match the right products with retailers, improving its distribution by working with high-capacity suppliers, and moving toward profitability by improving its product formulations.

Chamberlain Coffee forecast more than $33 million in revenue in 2025.

The company said problems with former co-packers led to issues at retailers in 2024 and that it would improve its supply chain to get to "sustainable growth."

Chamberlain Coffee talked up the benefits of its new suppliers.

After supply-chain challenges, the company said it had new suppliers that were capable of handling its large-scale production ambitions.

Retail growth was a bright spot.

The company said while growth had slowed in 2024, it was still expanding, with sales forecast to approach $20 million in 2025.

Chamberlain Coffee is riding the matcha wave.

The company said it was jumping on the Gen-Z favorite with products including a flavored drink, latte powder, and canned version.

It was also expanding to cafés.

Chamberlain Coffee opened its first café in January. It said the cafés are designed to act as marketing vehicles and grow awareness of the brand while cross-promoting its packaged products.

Emma Chamberlain took a more active role at the company as growth slowed.

The company has had turnover at the top, with its eponymous founder stepping up as co-CEO in 2024 after its former chief executive, Christopher Gallant, left.

Chamberlain Coffee said it was 'already on the radar' as an acquisition target.

The company said it was "already on the radar" of some would-be acquirers. It listed potential acquirers, including Coca-Cola and Pepsico.

The company was seeking up to $10 million in new funding.

It laid out how it planned to use the new funding, with an emphasis on promotional spending to help reach profitability.

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• DTC brands say the sudden policy changes of the past weeks have had them in turmoil.
• Some businesses said the delay in the changes has made it even more difficult to plan.
• Retailers are in limbo until a timeline and implementation plan for the end of de mimimis is set.

Some brand owners feel like "collateral damage" in a global trade war after the Trump administration temporarily reversed its decision to end de minimis shipments. The sudden reversal was just the latest in a series of whiplash moves that have made it hard for brands to plan their next steps.

Jamie Ferguson-Woods is the founder and CEO of Victoria Emerson, a Canadian direct-to-consumer jewelry brand. When the Trump administration announced that it would be closing the de minimis loophole, Victoria Emerson halted its sales promotions and turned off its Meta ads.

Ferguson-Woods said the brand, which gets the vast majority of its sales from US consumers, would likely need to move its business to the US to survive. The delayed implementation gives them some much-needed time to get there.

"For a small business to move a warehouse, it's not something you can just do overnight," he told Business Insider.

For many brands, the uncertainty that ensued with Trump's executive order was a reminder of how razor-thin margins are in the retail business — and how easily disrupted their supply chains are.

Reuters reported that more than a million packages had piled up at John F. Kennedy International Airport in New York in the three days when the loophole was closed. Section 321, also known as de minimis, allows importers to avoid paying duty and tax on shipments that are valued at less than $800 and going directly to customers. Shippers using de minimis do not have to provide as much information to US Customs and Border Protection as shippers using more traditional methods would.

The mountain of packages prompted a meeting between CBP and logistics professionals, Reuters reported.

The Trump administration said it would pause its repeal of the de minimis loophole, giving customs officials time to implement a new process for collecting duty on packages sent using the loophole. However, it did not provide a timeline for when de minimis shipments would officially no longer be allowed, leaving brands wondering if they should still make adjustments to their supply chain — and when.

Some Canadian brands that sell to US customers are being hit particularly hard because they could face the double impact of tariffs on Canadian goods and the end of de minimis.

Katherine Homuth is the founder and CEO of SRTX, which manufactures tights under the Sheertex brand. Nearly half of the Canadian company's revenue comes from shipments to the US using the de minimis exemption.

When Trump issued an executive order on tariffs and de minimis, the company temporarily laid off 40% of its 350 employees. The team is now considering shifting some inventory to the US, but it would prefer to work with Canadian retailers and reduce its dependence on the US altogether. It's also working on sourcing yarn in the US to eliminate some of the tariff impact.

Homuth told BI the delay of the implementation "does not remove the risk," she said, adding: "In fact, it creates more uncertainty, making it harder to plan around these costs."

The return of de minimis wasn't the only time that brands experienced whiplash in recent weeks.

Tariffs on goods entering the US from both Canada and Mexico were delayed a month as the Trump administration negotiated with both countries. On February 4, the US Postal Service temporarily said it would not accept parcels from China or Hong Kong, only to reverse course less than a day later.

'All options are still on the table'

DTC bra brand ThirdLove fulfills its orders out of two different warehouses: one in Indianapolis and one in Vancouver. The company's senior director of operations, Andreas Andrea, said they had already been considering consolidating the two facilities to be more efficient. The tariffs and uncertainty around de minimis have made that decision more urgent.

"The question we've had this whole time is: which way do we go? Do we go all the way to Canada, put everything in Canada, assuming that Section 321 stays, or do we bring everything to the United States, assuming that it goes away?" he said.

"If it takes a year for it to go away or two years for it to go away, you've given up a lot of duty savings that you would've had. How do you predict what that timing is going to be like?"

"All options are still on the table," Andrea said.

The delays give brands time to troubleshoot, but some are finding that if tariffs were to go into effect as outlined, the hit to their profits would be steep.

Juliana Casale runs seltzer brand Balloon from Canada. She previously made a profit of about $18 per order, but tariffs and the end of de minimis would lower that profit to about $8 per order.

"I was considering lowering shipping costs or absorbing more of the cost myself," she said. "But it makes it a lot harder when I don't really have that much left on the profit to sink into that."

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• President Trump's executive order on tariffs has contributed to market volatility.
• The executive order also targets the de minimis customs loophole and has brands scrambling.
• Brands are considering raising their prices and using other entry methods for their goods.

President Trump's Saturday executive order placing tariffs on goods from China, Canada, and Mexico sent shockwaves through global markets.

But another part of the order has also had e-commerce brands scrambling for solutions. It targets a loophole in US customs law that has been used by e-commerce disruptors like Shein and Temu and many American companies.

Section 321, also known as de minimis, allows importers to avoid paying duty and tax on shipments that are valued at less than $800 and going directly to customers. Shippers using de minimis do not have to provide as much information to US Customs and Border Protection as shippers using more traditional methods would. Opponents of the provision have argued that since de minimis shipments are often not inspected, they have allowed bad actors to import illicit goods like fentanyl into the US.

Saturday's executive order closes that loophole, at least in part. However, there are still uncertainties regarding the future of de minimis.

The executive order imposes tariffs on goods originating in China, Mexico, and Canada and specifically calls out Canada for its failure "to do more to arrest, seize, detain, or otherwise intercept DTOs [drug trafficking organizations], other drug and human traffickers, criminals at large, and drugs." It does not mention de minimis shipments originating in countries aside from the three listed, leaving open the possibility that the loophole could still be used elsewhere.

DTC brands are scrambling

Companies that have relied on de minimis are trying to quickly make changes to their business models.

Maggie Barnett, CEO of third-party logistics provider LVK, said that some direct-to-consumer brands she spoke with over the weekend are facing cash-flow issues because they have relied on the de minimis provision to import their goods into Mexico or Canada before shipping them to customers in the US duty-free. They may have to raise their prices.

"They're used to not having to pay this money upfront before sales come, if at all," Barnett told Business Insider.

She said the company is advising its customers to weigh their options before revamping their supply chains in response to the executive order.

"Making changes to your supply chain can be very costly, and you wouldn't want to completely change your supply chain and then have a new announcement drop," she said. "I would urge all brands to be very cautious and to find optionality in their approach to their supply chains."

That could mean working with a US-based third-party logistics company if they don't already, or starting to work with suppliers in countries not affected by the executive order.

Portless, a startup that replicates Shein's model by fulfilling online brands' orders in China and then shipping them directly to customers, told BI on Monday that it would shift to using other methods like Entry Type 11. Entry 11 is faster than traditional types of import, but it does require importers to pay tax. Portless will now pay its customers' import duties upfront and then issue a monthly invoice for brands to cover.

"We've been preparing for this potential change over the last few months," CEO Izzy Rosenzweig said.

Some US politicians have called for reform to the de minimis provision in recent years, arguing it creates unfair competition for American companies and furthers trade of illicit goods.

The rise of Shein and Temu has brought further attention to the loophole. An interim 2023 report from the US House Select Committee on the Chinese Communist Party said that Shein and Temu "likely" account for more than 30% of all shipments made to the US under the de minimis provision. It added that almost 50% of all de minimis shipments to the US come from China. Both Shein and Temu have pushed back on the notion that they rely on de minimis to grow their business.

Canadian Prime Minister Justin Trudeau announced 25% retaliatory tariffs on the US following Trump's executive order. The tariffs on Mexico, meanwhile, have been delayed a month after Trump reached an agreement with Mexican president Claudia Sheinbaum on Monday.

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