US lawmakers urge Biden to close tariff 'loophole' for Chinese small package imports

[September 12, 2024]  By David Lawder

WASHINGTON (Reuters) - A majority of Democratic U.S. House of Representatives members on Wednesday urged President Joe Biden to use his executive powers to end a tariff "loophole" for low-value packages that they say are being exploited by Chinese e-commerce firms and fentanyl traffickers.

The lawmakers in a letter asked Biden to end the "de minimis" trade provision that allows shipments valued under $800 to enter the U.S. duty free and without customs inspections as long as they are addressed to individuals.

The substantial limit has fueled the growth of Chinese e-commerce firms Shein and PDD Holdings' Temu, which ship to U.S. consumers directly from China, but other retailers, including Amazon and Walmart, are also utilizing it. The small-package exemption has been part of U.S. trade law since 1930, but the threshold was increased to $800 from $200 in 2015.

The lawmakers, led by Earl Blumenauer, Rosa DeLauro and Tom Suozzi, argued that the de minimis provision was being exploited by traffickers of the deadly opioid fentanyl and its precursor chemicals.

"The urgency of closing the de minimis loophole cannot be overstated. Americans continue to die from mislabeled fentanyl-laced pills that are ordered online, skirt inspection thanks to de minimis and are delivered to Americans’ doorsteps," they wrote. "De minimis imports, particularly from China, also evade most existing trade enforcement mechanisms, including the Uyghur Forced Labor Prevention Act and Section 301 tariffs used to hold trade cheats accountable."

The National Council of Textile Organizations, representing domestic manufacturers, argues that de minimis shipments from fast-fashion e-commerce firms including Shein are dodging the punitive "Section 301" tariffs on many Chinese textile imports and have led some 18 U.S. plants to close in the last year alone.

Chinese and U.S. flags flutter in Shanghai, China June 3, 2020. REUTERS/Aly Song/File Photo

The group said shipments keep growing, with over 4 million individual packages arriving under the threshold daily, topping 1 billion last year.

The total value of estimated imports of low-value shipments under the de minimis threshold has more than doubled since 2014 to $23.4 billion last year, making it the 12th largest U.S. import category globally, according to U.S. Census Bureau data retrieved through the International Trade Centre's Trademap tool. That is just ahead of medium-duty pickup trucks, largely from Mexico.

Such shipments from China also more than doubled to $4.6 billion over the same period, making it the eighth largest category after computer monitors.

A White House spokesperson could not immediately be reached for comment on the request by the lawmakers, who also have been working on legislation to close the de minimis provision.

The National Foreign Trade Council, a trade group representing interests of a wide range of U.S. companies, cautioned the move would raise costs for consumers at time when inflation is a hot issue in the November presidential election campaign.

"Weakening de minimis would cost consumers billions, require new appropriations for Customs and Border Protection, and do nothing to enhance enforcement or improve security at our ports," NFTC supply chain senior director John Pickel said in a statement.

(Reporting by David Lawder; Editing by David Gregorio)

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