Recent legislation introduced in the US House of Representatives would place stricter limits on who can ship low-value cargo into the US without paying import taxes. This legislation would effectively slow the ever-growing e-commerce market, particularly in the China-direct sector.
The Import Security and Fairness Act would make it harder for overseas exporters from using the “de minimis” exclusion, which excuses them from paying duties on shipments coming into the US that are valued at $800 or less. If this legislation passes, countries that are on one of the United States Trade Representative’s (USTR) watch lists for any of the various trade violations would be prohibited from using the de minimis exemption. According to the United States Trade Representatives, there are 33 countries on those lists, including China.
Additionally, the legislation would require de minimis importers to pay fees that support the United States Customs and Border Protection (CBP) enforcement actions and provide more details about de minimis shipments. The bill would also block the use of non-US distribution and warehousing for the use of holding low-value cargo into the country.
US congressman and sponsor of the bill, Earl Blumenauer, recently said in a statement that certain countries are “exploiting the de minimis threshold,” which is allowing dangerous and shady goods into the US and makes it even more difficult for US manufacturers to compete. Blumenauer believes that if foreign companies that sell their goods in America can split up their shipments to avoid tariffs, American businesses will continue to be at a competitive disadvantage. The current de minimis “loophole” makes it easier for overseas importers to bring in illegal goods and harmful products, because there is no real way of telling whether the packages contain products made through forced labor, IP theft, or other illicit ways.
Since the de minimis threshold was increased from $200 to $800 in 2016, the number of shipments has grown rapidly. According to data collected from the US Customs and Border Protection agency, 771.5 million import entries into the US were below the $800 threshold in 2021, which is a 21% rise from the 636 million entries from the year before. This bill, if passed, could have a significant impact on some major online stores such as Amazon, eBay and Zulily who all sell goods that meet the de minimis criteria. Online stores such as Alibaba’s AliExpress and Wish are even more at risk as they offer Chinese manufacturers direct access to the US market by selling de minimis goods online.
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