The Trump administration this week rolled back the duty for small-dollar shipments from China and Hong Kong as part of tariff deescalation with China, while a House committee advanced legislation to permanently end the duty-free “de minimis” exemption from all countries.
President Donald Trump’s executive order lowering new 145% tariffs on Chinese goods to 30% for 90 days represents a reprieve for popular Chinese shopping platforms and other e-tailers that ship parcels directly from the factory to individual shoppers. E-commerce orders and airfreight shipments plummeted after the U.S. government on May 2 rescinded duty-free treatment for low-value goods, subjecting them to the same duties imposed on all Chinese products.
Before then, U.S. trade law allowed an individual each day to import goods valued at $800 or less and use an informal entry process. The rule helped fuel cross-border shipping from Chinese shopping platforms direct to consumers. About two-thirds of all packages entering the country through the de minimis channel are from China.
The executive order also proactively lowered fees for low-value shipments from China sent through the international postal system. Postal shipments under $800 are now subject to a 54% tariff instead of 120%. Carriers can opt instead to pay $100 per postal item containing goods. Monday’s order canceled a June 1 increase to $200 for the flat fee.
The revised fees still present a significant cost increase, but the pause provides retailers time to adjust operations.
Logistics professionals say shipping rates could rise as businesses rush to order goods before the next deadline. Trade publication Modern Retail reported that fast-fashion retailer Shein on Wednesday announced price reductions for U.S. customers following the relaxation of de minimis rules on Chinese imports. Shein had raised prices and cut U.S. advertising after the change in de minimis rules sharply increased delivery costs.
The publication also said that Temu had resumed selling nondomestic items to U.S. customers.
Momentum builds to turn off de minimis
Congress a decade ago increased the de minimis ceiling from $200 to $800 as a way of helping small businesses with an online presence take advantage of international trade. But attitudes began to change when huge Chinese sellers like Temu, Shein and Alibaba flooded the trade facilitation program to minimize costs, putting a strain on U.S. Customs and Border Protection’s ability to cross-check shipments for trade, consumer safety or security compliance.
Critics say the exemption creates a conduit for criminals to smuggle goods with little scrutiny, gives overseas merchants an advantage over retailers that source domestic products and results in billions of dollars in uncollected tariff revenue.
CBP last year processed an average of more than 4 million de minimis imports per day but says the minimal information supplied on the informal entry makes it difficult to identify and interdict illegal drugs such as fentanyl, as well as counterfeit products and other contraband. It also has found cases of importers misclassifying and undervaluing goods, and misdelivering goods before they are officially released from CBP custody.
The U.S.-China Economic and Security Review Commission in December recommended that Congress eliminate de minimis eligibility for imports sold through online marketplaces.
On Tuesday, the House Ways and Means Committee approved a massive tax bill, which includes Trump’s tax priorities and a provision that would permanently end de minimis for commercial shipments from all countries by July 1, 2027.
“As the bill makes its way through the legislative process, we strongly support a more aggressive timeline to implement a permanent ban on de minimis globally given its significant harm to manufacturers, retailers, and the fight against fentanyl and other illegal products. Express shippers have already transitioned to processing all Chinese imports through sophisticated logistics systems, demonstrating their ability to comply with the president’s executive orders and pivot quickly,” said Kim Glas, president of the National Council of Textile Organizations, in a statement.
Meanwhile, other efforts are in progress to curb the use of de minimis entries.
Customs and Border Protection is developing a new rule, proposed in the waning days of the Biden administration, that would require certain shippers to electronically submit additional data elements on low-value consignments prior to arrival and would remove de minimis eligibility for imports subject to certain tariffs.
The White House has said it plans to use emergency powers to delete the de minimis exception once systems are in place to collect duties from millions of parcels per day, including ones sent through postal channels.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
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