What’s happening: The Biden-Harris administration announced a series of actions to curb the exploitation of the de minimis trade exemption, which allows shipments valued under $800 to enter the U.S. duty-free with minimal screening. The move targets foreign e-commerce giants, particularly China-founded platforms, using this loophole to flood the U.S. market with low-value goods.

Why it matters:

• Surge in Low-Value Shipments: Over the past decade, de minimis shipments have skyrocketed from approximately 140 million to over 1 billion annually.
• Challenges to Enforcement: The overwhelming volume makes it difficult for U.S. Customs and Border Protection (CBP) to enforce trade laws, protect intellectual property, and block unsafe or illegal goods, including synthetic drugs like fentanyl.
• Impact on U.S. Businesses: Exploiting the exemption undermines American workers and businesses by allowing foreign companies to avoid duties and skirt regulations.

Key actions announced:

1. New Rulemaking to Exclude Tariffed Products from De Minimis Eligibility:
   • What it means: A proposed rule will prevent shipments containing products subject to tariffs under Sections 201, 232, and 301 from qualifying for the de minimis exemption.
   • Impact: This change would affect approximately 40% of U.S. imports, including 70% of textile and apparel imports from China, ensuring these goods are subject to the same duties and scrutiny as larger shipments.
2. Enhanced Data Requirements for De Minimis Shipments:
   • Details: Another proposed rule will require additional information for low-value shipments, including the 10-digit tariff classification number and the identity of the person claiming the exemption.
   • Purpose: Improved data collection will help CBP better target and intercept shipments that violate U.S. laws and facilitate quicker clearance of lawful goods.
3. Final Rule to Enforce Safety Standards:
   • Action by CPSC: The Consumer Product Safety Commission plans to require importers to electronically file Certificates of Compliance for all consumer products at entry, including de minimis shipments.
   • Goal: This measure prevents foreign companies from using the exemption to bypass U.S. health and safety regulations.

Call to Congress:

• Urgent Legislative Action Needed: The Administration urges Congress to pass comprehensive de minimis reform by the year’s end to protect American interests further.
• Key proposals include:
  • I am excluding Import-Sensitive Products, Specifically textiles, and apparel, from de minimis eligibility.
  • Formalizing Tariff Exclusions: Legislating the exclusion of tariffed products from the exemption to support trade enforcement.
  • Implementing Fentanyl-Related Reforms: Adopting measures from the Detect and Defeat Counter-Fentanyl Proposal to combat the importation of illicit drugs.

Supporting American Industries:

• Boosting U.S. Textile and Apparel Manufacturing:
  • Increased Government Procurement: The administration will explore ways to prioritize purchasing American-made textile and apparel products across federal agencies.
  • Strengthened Enforcement: Ongoing efforts to target illicit imports, expand the Uyghur Forced Labor Prevention Act Entity List, and conduct more customs audits and verifications.

What they’re saying:

• Administration Officials: “Foreign corporate giants who exploit the de minimis exemption… put American consumers at risk, undercut American workers and businesses,” the administration stated.
• Industry Response: U.S. manufacturers have welcomed the move, emphasizing the need for a level playing field to compete fairly against foreign companies.

Between the lines: The de minimis exemption was initially intended for travelers and low-value personal shipments but has been increasingly leveraged by large e-commerce platforms to avoid tariffs and thorough inspections.

The bottom line: The Biden-Harris administration’s actions aim to tighten trade loopholes, enhance enforcement against unsafe and unfairly traded products, and bolster American industries. Comprehensive legislative reforms are necessary to fully address the challenges posed by the surge in de minimis shipments.