Shipments worth less than $800 from China are no longer eligible for a special U.S. customs exemption.
The Biden-Harris Administration has ignited discussions with its recent decision targeting low-cost Chinese imports, particularly those linked to popular e-commerce platforms like Temu and Shein. This new executive action notes the administration's concerns over substantial abuse of the de minimis exemption, which allows goods valued below $800 to enter the U.S. without customs duties.
According to the White House, this exemption has exploded over the past decade. The number of shipments utilizing the de minimis exception increased dramatically from about 140 million per year to over 1 billion, primarily driven by Chinese e-commerce platforms. The administration argues this surge raises significant challenges for U.S. trade enforcement.
President Biden pointed out several safety risks stemming from these imports, such as difficulties in enforcing trade laws and ensuring compliance with health and safety standards. He highlighted the exemption's loophole as facilitating the entry of illicit products, complicate efforts to intercept dangerous synthetic drugs like fentanyl, and diminishing potential revenue through uncollected tariffs.
The recent executive order seeks to block imports classified under the de minimis exemption if they are subject to existing U.S.-China tariffs. This move involves shipments covered by major tariff provisions, impacting nearly 40% of U.S. imports, including about 70% of textile and apparel items sourced from China.
Among the companies facing scrutiny are Shein, which is technically registered in Singapore, and Temu, headquartered in Boston. Nevertheless, both platforms are predominantly seen as Chinese retailers due to their operational ties to mainland China. Their popularity, especially among younger consumers, poses significant competitive challenges to U.S. retailers.
Both Shein and Temu managed to avoid paying import duties last year by leveraging the de minimis exemption to their advantage. Reports suggest these two apps comprise nearly half of all de minimis deliveries from China to the United States. A solid illustration of their influence can be seen with Shein, which recently filed for its initial public offering (IPO), indicating plans to join major retail operations.
This new push against de minimis shipments isn't just about safeguarding trade but also about leveling the playing field for U.S. businesses. Companies like Amazon are strategically responding by considering launching sections on their platforms for direct purchases of discounted Chinese products, indicating fierce competition among e-commerce giants.
On top of these developments, Shein and Temu are embroiled in legal battles against each other. Accusations include unfair trade practices and labor concerns, highlighting the competitive tension between these platforms as they vie for significant market share.
While the administration's actions aim to curb the growth of low-cost imports, it also plans new legislation to revise the de minimis exemption itself, ensuring it aligns with current economic practices and consumer safety regulations. The stakes are high as the U.S. government looks to bolster domestic markets and enforce integrity across industries.
This pushback against de minimis imports marks a pivotal moment as U.S. leaders seek to reinforce trade policies, leveraging regulatory measures to not only protect American jobs and safety but also to invigorate local businesses against international competition. With the dust still settling from these changes, the future of e-commerce from China could be on the brink of significant transformation.
