The de minimis exception: a loophole closed after Trump signed a 10 percent tariff on Chinese goods in the U.S. and the European Union
The confusion comes after President Trump used an executive order imposing a 10 percent tariff on Chinese goods to also close a loophole called the de minimis exception, which allowed packages valued below $800 to enter the US duty free. It is how e-commerce outfits such as Shein and Temu are able to sell goods at such low prices to US buyers. It is also widely exploited by the likes of Amazon and by merchants on Etsy and eBay.
President Trump signed an executive order stating that products made in China will not be treated as de minimis in the U.S.
De minimis shipments “often don’t have as much documentation, making it easier to get the shipments into the United States, whether we’re talking about unsafe consumer products or fentanyl or food items that aren’t permitted to be imported,” Murray said.
When asked to comment on the U.S. shift, Teresa Murray of the Public Interest Research Group consumer watchdog told NPR that her group supports changes to the law.
De minimis is a Latin term denoting something that is “trifling or of little importance,” according to the U.S. International Trade Commission. The law was enacted in 1930 to let people skip import fees for small-value shipments.
About 100 countries have de minimis exceptions, based on a wide range of monetary thresholds. The U.S. level went from $200 to $800 in the year 2016 after President Barack Obama signed the Trade Facilitation and Trade Enforcement Act. Across the European Union, the level is 150 euros (about $156).
Items imported under the exemption “are free of duty and taxes and are subject to expedited clearance processing,” the U.S. International Trade Commission notes.
What’s the problem with de minimis? The public interest group wants to see more action by the U.S. government to improve the “cheap crap”
Backers of the existing de minimis structure say it eases commerce and gives consumers low prices; critics say it is used to hawk “cheap crap,” as one lawmaker put it, and gives foreign companies an unfair advantage over domestic retailers.
Even before Trump was sworn in last month, de minimis was being targeted for change. The Biden administration proposed a new rule last fall to close the loophole. And U.S. agencies and politicians have said the law is prone to abuse, from unscrupulous retailers falsely labeling expensive items as costing under $800 to criminals shipping illegal drugs under the guise of innocuous goods.
The USPS did not state a reason in a brief announcement, but the suspension came after Trump closed the “de minimis” customs exemption this week that allowed shoppers and importers to avoid duties on packages worth below $800.
Together, Temu and Shein accounted for about 17% of the U.S. discount market in 2023 for items such as consumer goods, fast fashion, and toys, according to a report on de minimis policies that the Congressional Research Service (CRS) updated last week.
According to the Public Interest Research Group, their group supports bipartisan legislation such as the Ensure Assurance in De Minimis Act which limits which shipments can benefit from de minimis rules.
It’s important to keep unsafe toys and other products out of our homes, and that’s why I would like to restrict what qualifies for a de minimis exemption. “This would make people in the United States safer.”
She said that if the U.S. limit on de minimis is lowered it won’t be enough to stop small packages from being shipped directly to U.S. consumers.
They use master cartons and transshipments to hide the origin and contents of their products.
The “last chance for you”: identifying made-in-China goods and services at the Chinese Customs and Border Protection Service (CBP)
Some Chinese businesses have moved key parts of their structures outside of China. The CRS report notes that Shein doesn’t sell goods within China and has a parent company that “is based in Singapore and tied to a holding company in the British Virgin Islands,” while Temu’s parent company, PDD Holdings¸ “changed its legal domicile from the PRC to Ireland.”
Shein uses USPS more for direct-to-consumer shipping from China and without this channel, it will have to rely more on private carriers.
It’s not known how long the suspension will last but the effort to crack down on the de minimis excemption seems like a longer-term shift in policy.
China will take necessary measures to protect its companies and the United States should stop using economic and trade issues as a tool, according to the Chinese Foreign Ministry.
The move will impact Chinese firms like Shein, but she is more likely to be affected, according to Jacob Cooke, CEO of WPIC Marketing + Technologies.
Cheap, direct postal service helps these companies keep costs low, as did the “de minimis” exemption that previously allowed shipments to go tax-free if their value is under $800.
“That will increase logistics costs, which along with the recent scrapping of the de minimis exemption for most products from China, could erode its price advantage.”
The cargo supervisor at the Montana CBP told Daniel everything is from the top. “A lot of trucks were actually turned away today at the border, we were told by our drivers. Many officers were checking trucks and questioning the drivers if they had any made-in-China items. This is the last chance for you. They were looking through the trucks for packages.
The process of identifying and differentiating the packages from China is very time consuming and it usually contains many small parcels such as DVDs, toys, and video games.
What Happens at E-Biking Companies? Contacting the Congressional Research Service (ARC) via Email or Face-to-Face
According to the US Congressional Research Service, roughly two-thirds of the 10,000 people who work for the American Development Agency are stationed overseas. The agency has more than 60 regional and country missions and represents less than 1 percent of the total US federal budget overall.
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Roughly 100,000 entries will be filed and processed daily by US Customs, according to a vice president of customs at Flexport. The agents have to verify the prices and what’s in the packages as more packages are processed.
Concerns about the safety of low quality products have made it easier to reach US buyers with de minimis shipments. In the extreme case, some e-bike and battery manufacturers have used de minimis to skirt safety regulations and avoid product inspection, contributing to hundreds of fires caused by faulty e-bike batteries in New York City alone.
