The Biden-Harris Administration has announced a series of new actions aimed at addressing the growing abuse of the de minimis exemption, particularly by e-commerce platforms like Amazon, Shein and Temu.,
The administration’s efforts come in response to a significant rise in de minimis shipments, which have increased from 140 million annually to over one billion in the last decade, complicating efforts to regulate imports and block illegal goods.
The de minimis exemption allows shipments valued at $800 or less to enter the U.S. without being subject to duties or taxes and with minimal information provided.
While this facilitates trade for smaller shipments, the rising volume of these imports has introduced significant challenges. Many of these shipments originate from China-founded platforms, flooding the U.S. market with low-value goods, primarily textiles and apparel, at the expense of American workers and businesses.
Moreover, the lack of adequate data accompanying these shipments has made it difficult to track and block the entry of unsafe, illegal, or illicit goods, such as synthetic drugs.
To counter this, the Biden-Harris Administration is leveraging executive authority to curtail the abuse of the de minimis exemption and urging Congress to pass comprehensive reform legislation. T
One of the central actions announced is a Notice of Proposed Rulemaking to exclude certain products from the de minimis exemption.
Specifically, shipments containing products covered by tariffs under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962, would no longer be eligible for de minimis treatment.
This rule is significant because it targets goods such as textiles and apparel, a sector in which Chinese e-commerce platforms have capitalized on the exemption to evade tariffs.
In addition, the administration plans to introduce new rules that require additional data collection for de minimis shipments. This includes specific information, such as the 10-digit tariff classification and the identity of the person claiming the exemption, which would allow U.S. Customs and Border Protection (CBP) to better track and target problematic imports.
The enhanced data would not only improve enforcement but also facilitate the quick processing of legitimate shipments.
Another key aspect of the administration's strategy is a final rule proposed by the Consumer Product Safety Commission (CPSC). This rule mandates that importers of consumer goods file Certificates of Compliance (CoC) electronically at the time of entry, including for de minimis shipments. By requiring this documentation, the CBP and CPSC will be able to more effectively block the entry of unsafe products that do not meet U.S. safety standards, addressing a long-standing vulnerability in the import process.
The actions on de minimis comes just after a majority of House Democrats called for Administration action to close the de minimis loophole after House Republicans opted not to include bipartisan legislation to do so in their China Week legislative actions.
Congress is being urged to pass comprehensive legislation that would make these changes permanent and statutory, closing loopholes that have allowed foreign companies to exploit the system.
One of the legislative priorities highlighted by the administration, July's Detect and Defeat Counter-Fentanyl Proposal aims to increase transparency and accountability under the de minimis program by requiring more detailed data from shippers and enhancing CBP’s ability to track and block shipments of illicit synthetic drugs, such as fentanyl, which have been linked to the abuse of the de minimis exemption.
In addition to addressing the abuse of the de minimis exemption, the administration is taking steps to protect American textile and apparel manufacturers,. These actions include expanding procurement of certain textile and apparel products and strengthening enforcement against illicit textile imports. The administration has intensified efforts to target small package shipments of textiles, increase customs audits, and enforce the Uyghur Forced Labor Prevention Act, which restricts imports linked to forced labor in China.
More than 100 House Democrats called on President Biden to take executive action to end the de minimis loophole while bipartisan legislation remains stalled in the House.
A total of 126 Democrats signed on to a letter sent to the President Wednesday urging him to take action in the absence of Congressional action.
“These imports threaten US manufacturers, hurt union workers and local retailers, and expose American consumers to great risk by flooding the market with fake and sometimes dangerous imported goods, including fentanyl and precursor chemicals from China,” the lawmakers wrote.
Efforts are still underway in Congress to find a legislative solution, but in the meantime, “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. .”
In their letter, Democrats blamed to closure of 18 US textile plans over the last several months to the de minimis loophole.
“In the absence of a legislative solution at this time, we urge you to use the full range of your authorities to disqualify commercial shipments from de minimis treatment, so that packages entering the United States no longer evade inspection, information disclosure requirements, or the requisite tariffs and taxes,” they wrote.
“Disqualifying commercial shipments from de minimis treatment would significantly reduce the volume of small package imports. Instead of millions of individual packages arriving daily in express air delivery centers and via international mail, legitimate goods ordered online would arrive at formal ports aggregated in shipping containers with detailed information about the goods submitted in advance online as required by the SAFE Port Act.
"This would make it possible for Customs and other regulatory agencies enforcing product safety, labor rights, drug interdiction and other policies to target shipments that need inspection and seize violating imports. It would also close the door for bad actors now using the lack of inspection and information about de minimis shipments’ contents to flood the U.S. with illicit, forced-labor, fake, and deadly goods – leveling the playing field for domestic manufacturers and workers.”
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