India is set to suspend its parcel services to the United States starting August 25, 2025, amidst escalating trade tensions between the two nations. This decision follows the Trump administration's imposition of significant tariffs on Indian exports, including penalties linked to India's continued imports of Russian oil. The move to suspend parcel services is a direct consequence of the U.S. decision to eliminate the "de minimis" rule, which previously allowed goods valued under $800 to enter the U.S. with minimal paperwork.
Under the new regulations, which take effect on August 29, all parcels entering the U.S. will be subject to customs duties, except for small gifts valued at under $100. This change stems from Executive Order No. 14324, issued on July 30. The U.S. Customs and Border Protection (CBP) has tasked international postal carriers and other "qualified parties" with collecting and remitting these duties. However, critical aspects of the process, such as who qualifies as a "qualified party" and the exact mechanisms for duty collection, remain undefined.
This lack of clarity has created significant operational challenges for postal services worldwide. Airlines responsible for transporting U.S.-bound consignments have informed Indian authorities that they cannot accept parcels after August 25, citing insufficient preparedness for the new regulations. Consequently, India Post has decided to temporarily suspend all parcel services to the U.S., with the exception of letters, documents, and gift items valued up to $100. Customers who have already booked parcels that cannot be dispatched will be eligible for refunds.
The suspension is expected to cause major disruptions to trade flows, affecting businesses and individuals alike. India Post typically handles an average of 3 tonnes of cargo daily to the U.S., totaling 100 to 200 tonnes monthly. L.K. Dash, the deputy director general of the Department of Posts, acknowledged the significant impact on exports, stating that businesses and individuals would be "badly hit" until the issues are resolved.
India Post has reached out to U.S. Customs and Border Protection and has escalated the matter to the Ministry of Commerce and the Ministry of External Affairs for discussions with American authorities. However, the duration of the suspension remains uncertain.
The move to suspend parcel services is not unique to India. Postal operators in several European countries, including the Czech Republic and Austria, have also halted shipments to the U.S. due to the confusion surrounding the new import duties. Deutsche Post DHL's German parcel service will also stop accepting standard U.S.-bound parcels from August 25.
This situation unfolds amidst already strained trade relations between India and the U.S.. The Trump administration has imposed tariffs of up to 50% on Indian goods, citing India's increased purchases of Russian oil. India's foreign minister, Subrahmanyam Jaishankar, has criticized these tariffs as "unjustified and unreasonable". He has also asserted that India will not compromise on the interests of its farmers and small producers in trade negotiations with the U.S..
Analysts predict that the U.S. tariffs could significantly impact India's economic growth, potentially reducing it by 0.8 percentage points this year and next. They also warn that the tariffs could damage India's appeal as a global manufacturing hub.
