President Joe Biden is being urged to take executive action by two U.S. senators who want to reduce the amount of duty-free packages coming into the country from China. They claim that U.S. manufacturers are unable to compete with low-cost competitors who, in their opinion, rely on forced labor and government subsidies in important industries.
(Photo : by SEM VAN DER WAL/ANP/AFP via Getty Images)President Joe Biden is being urged to take executive action by two U.S. senators who want to reduce the amount of duty-free packages coming into the country from China. They claim that U.S. manufacturers are unable to compete with low-cost competitors who, in their opinion, rely on forced labor and government subsidies in important industries.
Under U.S. trade law, tariff-free entry is permitted for packages priced below a specific level that are intended for American customers. This cutoff, which falls under the "de minimis" category, is set at $800 per person per day. Most imports are retail items that are bought online.
Lawmakers in both chambers have submitted legislation to change how the United States handles imports priced at less than $800, citing alarm about the significant growth in such shipments from China. Sens. Sherrod Brown of Ohio and Rick Scott of Florida have now written to Biden urging him to completely remove the duty-free status for certain goods.
In their letter, Senators Brown and Scott specifically identified Temu, Shein, and AliExpress as companies that they believe unfairly capitalize on the duty-free treatment of their products. They highlighted that the influx of shipments from these companies negatively impacts large retail chains and other businesses in the United States.
The senators expressed concerns about the detrimental effects of this trend on the safety and livelihoods of American workers, emphasizing the outsourcing of manufacturing and retail sectors to China. They underscored China's use of practices like slave labor, which they argued undermines the U.S. economy.
Expanding Duty-Free Imports: Implications of the $800 Threshold Increase
In 2016, Congress increased the threshold from $200 to allow expedited and duty-free imports into the United States. The justification for this is that it expedites trade and reduces expenses for buyers.
Additionally, it permits U.S. Customs and Border Protection should concentrate its efforts on the more expensive goods that bring in more money for the federal government through tariffs.
"De minimis" exports increased dramatically as a result of the duty-free treatment shift, from around 220 million parcels in fiscal year 2022 to 685 million in 2022.
Business community support for the increased $800 threshold for duty-free treatment is robust. Senior director John Pickel of the National Foreign Trade Council, a trade group that advocates for a wide spectrum of businesses, stated that complying with the senators' requests would lengthen the time it takes for shipments to arrive since they would have to pass through a more onerous inspection procedure at the border. Plus, those goods would be more expensive.
Pickel noted that the increase in the de minimis threshold from $200 to $800 hasn't significantly driven volume growth. Instead, consumer demand for quick access to products at lower transaction costs is the primary driver. He highlighted that the average value of shipments entering the U.S. under the de minimis category is $55.
Without this treatment, consumers would face approximately double the cost, as importers would need to engage a customs broker and cover additional processing fees and import duties.
The National Council of Textile Organizations, representing the textile industry, echoed the need for executive action by the Biden administration on duty-free packages. President and CEO Kim Glas emphasized the devastating impact on the industry, citing the closure of 10 plants in the past four months. Glas attributed part of this to the unrestricted flow of imports exploiting the de minimis loophole, which undermines both the industry and its workforce.
