US lawmakers urge Biden to close tariff ‘loophole’ on Chinese small-parcel imports

By David Lawder

WASHINGTON (Reuters) – A majority of Democratic members of the U.S. House of Representatives on Wednesday urged President Joe Biden to use his executive powers to eliminate a tariff “loophole” on low-value shipments that they say is being exploited by Chinese e-commerce companies and fentanyl traffickers.

The lawmakers in the letter asked Biden to repeal the “de minimis” trade provision, which allows shipments worth less than $800 to enter the U.S. without duties or customs inspections, provided they are addressed to individuals.

The hefty cap has fueled the growth of Chinese e-commerce companies Shein and Temu of PDD Holdings, which ship goods to American consumers directly from China, but other retailers, including Amazon and Walmart, also benefit. The small-package tax exemption has been part of U.S. trade law since 1930, but the threshold was raised from $200 to $800 in 2015.

The lawmakers, led by Earl Blumenauer, Rosa DeLauro and Tom Suozzi, argued that the de minimis provision is being exploited by traffickers of the deadly opioid fentanyl and its precursors.

“The urgency of closing the de minimis loophole cannot be overstated. Americans continue to die from mislabeled fentanyl-laced pills that are ordered online, bypassed checks under de minimis, and delivered to Americans’ doorsteps,” they wrote. “De minimis imports, particularly from China, also bypass most existing trade enforcement mechanisms, including the Uyghur Forced Labor Prevention Act and Section 301 tariffs used to hold trade fraudsters accountable.”

The National Council of Textile Organizations, which represents domestic manufacturers, says de minimis shipments from fast-fashion e-commerce companies including Shein avoid punitive “Section 301” tariffs on many Chinese textile imports and have led to the closure of about 18 U.S. plants over the past year.

The group said shipment volumes were continuing to grow, with more than 4 million under-threshold parcels arriving daily, up from more than 1 billion last year.

The total estimated value of imports of low-value shipments below the de minimis threshold has more than doubled since 2014 to $23.4 billion last year, making it the 12th largest category of U.S. imports globally, according to U.S. Census Bureau data collected using the International Trade Center’s Trademap tool. That’s just ahead of midsize pickups, mostly from Mexico.

The value of shipments from China more than doubled during the same period to $4.6 billion, making it the eighth-largest category after computer monitors.

A White House spokesman could not immediately be reached for comment on the request from lawmakers, who are also working on legislation to repeal the de minimis provision.

The National Foreign Trade Council, a trade group representing the interests of a broad range of U.S. companies, warned that the move would raise costs for consumers at a time when inflation is a hot campaign issue ahead of the November presidential election.

“Weakening the de minimis will cost consumers billions, require new funding for Customs and Border Protection, and will do nothing to improve law enforcement or security at our ports,” John Pickel, NFTC senior director of supply chain, said in a statement.

(Reporting by David Lawder; Editing by David Gregorio)