Two U.S. senators penned an “urgent request” to President Joe Biden this weekend, pushing for the use of executive authority to end the de minimis trade “loophole.”
Sen. Sherrod Brown (D-Oh.) and Sen. Rick Scott (R-Fl.) on Saturday sent an open letter to the president asking him to end duty-free treatment for e-commerce shipments worth under $800-an exemption created by Section 321 of the Tariff Act.
According to the lawmakers, the rule is being exploited to facilitate “the import of illegal products, goods produced with forced labor, and other contraband to the detriment of U.S. manufacturers, workers and communities.” De minimis doesn’t just provide foreign shippers with financial benefits, they argued-it also allows bad actors to circumvent customs enforcement, as individual packages of lower value often enter the country “with minimal to zero inspections.”
The legislators said that Chinese goods made with forced labor “appear to be the heaviest users of de minimis, undermining enforcement of the Uyghur Forced Labor Prevention Act (UFLPA).” About 3 million parcels enter the country each day using the de minimis rule, and they pose an “elevated risk” of being made with forced labor, containing counterfeit products or contributing to the fentanyl crisis, as drugs have been smuggled in small, low-value shipments.
The “generous gift” of de minimis benefits comes with no rule of origin requirements, reciprocal market access or labor or environmental standards. This gives countries like China the opportunity to profit while committing trade infractions and undermining U.S. manufacturers that are subject to U.S. regulations, according to the lawmakers.
The letter writers pointed to Chinese juggernauts like Shein, AliExpress and Temu, saying the policy loophole allows them to evade tariffs and shirk compliance while deluging the American market in millions of shipments each day. “As a direct result, 2023 saw an 80 percent surge in U.S. retail store closures compared to the year before,” they wrote.
“The situation has reached a tipping point where vast sections of American manufacturing and retail are at stake if de minimis is not immediately addressed-including a large portion of U.S. textile production and employment, as well as the broader Western Hemisphere textile and apparel co-production chain,” the letter added.
What’s more, an increasing volume of fentanyl is being discovered by Customs and Border Protection (CBP) at American borders. During fiscal 2021, Customs seized more than 11,000 pounds of the narcotic. That number ballooned to 27,000 pounds in fiscal 2023-enough to kill 6.1 billion people, according to the Drug Enforcement Administration (DEA). Those numbers only represent the fentanyl that was seized, and it’s likely that massive volumes are slipping through undetected through the mail system.
“Americans deserve better policy that closes this glaring and dangerous loophole and reestablishes basic customs principles for an overwhelming quantity of packages and goods entering the country,” the writers added.
Brown and Scott urged the administration to take swift action to end de minimis abuse “utilizing its clear statutory authority.” They wrote that President Biden should take several steps to achieve this goal, including ensuring that Section 321 shipments are subject to the same Importer of Record and Entry Summary requirements as other “Informal Entry” imports and directing the U.S. Treasury to ensure that de minimis isn’t being used by foreign commercial entities to circumvent duties.
They also said the president could protect domestic industries by excluding goods from de minimis that are subject to import notification requirements from Partner Government Agencies like the Department of Agriculture and the Department of Health and Human Services, as well as goods that are subject to punitive tariffs, like the Section 301 duties levied against China-made goods during the Trump administration. Products that violate the UFLPA and products made by sectors that have been designated as Priority Trade Issues by Congress should also be excluded.
They pointed to the EU’s recent customs reform efforts by way of example. In May 2023, the European Commission developed a proposal to dissolve its current de minimis threshold of 150 euros ($162.76).
“Executive action through an executive order or rulemaking on the de minimis exception can be issued in conformance with existing laws and regulations,” the senators wrote. “An executive order can also be drafted in a manner that is consistent with existing customs regulations, which already allow CBP to deny de minimis treatment and require a formal entry for enforcement or revenue protection purposes.”
“Swift, effective executive action is necessary to safeguard U.S. jobs and communities against the economic sabotage of the CCP,” they added. “We stand ready to further engage with the administration on this issue to make sure that critical American industries and innocent families no longer suffer at the hands of unfair competition and exploitation.”