USA De Minimis Action
USA De Minimis Action
Biden-Harris Administration Announces New Actions to Protect American Consumers, Workers, and Businesses by Cracking Down on De Minimis Shipments with Unsafe, Unfairly Traded Products
Biden-Harris cracking down on De Minimis Shipments
September 13, 2024
Administration Also Urges Congressional Action on De Minimis Reform
Today, the Biden-Harris Administration is taking new actions to enforce our laws and protect American consumers, workers, and businesses by addressing the significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms, and strengthening efforts to target and block shipments that violate U.S. laws.
Over the last ten years, the number of shipments entering the United States claiming the de minimis exemption has increased significantly, from approximately 140 million a year to over one billion a year. This exponential increase in de minimis shipments makes it more challenging to enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to block illicit synthetic drugs such as fentanyl and synthetic drug raw materials and machinery from entering the country.
The majority of shipments entering the United States claiming the de minimis exemption originate from several China-founded e-commerce platforms, putting American consumers at risk, undercutting American workers and businesses, and resulting in the importation of huge volumes of low-value products such as textiles and apparel into the U.S. market duty-free. A shipment is eligible for the de minimis exemption if the aggregate fair retail value of the articles imported is $800 or less. De minimis shipments enter the United States with less information than other imports and are not subject to duties and taxes.
The growing volume of de minimis shipments makes it increasingly difficult to target and block illegal or unsafe shipments. Foreign corporate giants who exploit the de minimis exemption do so for a variety of reasons. Some companies exploit the de minimis to conceal shipments of illegal and dangerous products and avoid compliance with U.S. health and safety and consumer protection laws. Other foreign entities use it to circumvent U.S. trade enforcement actions intended to level the playing field for American workers, retailers, and manufacturers.
With today’s announcement, the Administration is using executive authority to stop the abuse of the de minimis exemption. The Administration also calls on Congress to pass legislation this year to reform the de minimis exemption comprehensively to further protect American consumers, workers, and businesses.
Administration Action Intended to Reduce De Minimis Import Volumes
New Rulemaking to Reduce De Minimis Volume and Strengthen Trade Enforcement: The Administration intends to issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.
Section 301 tariffs currently cover approximately 40% of U.S. imports, including 70% of textile and apparel imports from China. Some e-commerce platforms and other foreign sellers circumvent these tariffs by shipping items from China to the United States claiming the de minimis exemption. If finalized, these goods would no longer be eligible for the de minimis exemption.
It would also ensure that de minimis exemption eligibility for products covered by trade enforcement actions is consistent across U.S. trade laws. Products covered by antidumping or countervailing duty orders are already excluded from de minimis exemption eligibility.
Administration Action to Protect U.S. Consumers, Workers, and Businesses
New Rulemaking to Improve Accountability and Enforcement in De Minimis Shipments: The Administration intends to issue a Notice of Proposed Rulemaking regarding the entry of low-value shipments that will propose to strengthen information collection requirements to promote greater visibility into de minimis shipments.
This regulatory action will propose to require specific, additional data for de minimis shipments – including the 10-digit tariff classification number and the person claiming the de minimis exemption – which will improve targeting of de minimis shipments and facilitate expedited clearance of lawful de minimis shipments.
The proposed regulatory changes will also clarify who is eligible for the administrative exemption, and requires filers to identify the person on whose behalf the exemption is being claimed.
These new requirements would help U.S. Customs and Border Protection (CBP) protect consumers from goods that do not meet regulatory health and safety standards and protect U.S. businesses from unfair competition against imported goods that would otherwise be charged duties or restricted from entry.
Final Rule to Prevent De Minimis Shipments from Circumventing Safety Standards: Consumer Product Safety Commission (CPSC) staff intend to propose a final rule requiring importers of consumer products to file Certificates of Compliance (CoC) electronically with CBP and CPSC at the time of entry, including for de minimis shipments.
This regulation would strengthen CBP’s and CPSC’s ability to target and block unsafe products from entering the U.S. market and would help prevent foreign companies from using the de minimis exemption to circumvent consumer protection testing and certification requirements.
Comprehensive Legislative Reforms on De Minimis Needed to Protect American Consumers, Workers, and Businesses
The Administration is pursuing significant regulatory action to address the surge in de minimis imports that put American consumers, workers, retailers, and manufacturers at risk. But further comprehensive de minimis reforms are needed, and these reforms require congressional action. The Administration stands ready to work with Congress to pass comprehensive de minimis reform legislation by the end of the year. Key reforms Congress should advance include:
Exclusion from de minimis eligibility of import-sensitive products. Congress should act to exclude import-sensitive products, including textile and apparel products, from the de minimis exemption.
Exclusion from the de minimis exemption of shipments containing products that are covered by Section 301, Section 201, or Section 232 trade enforcement actions. The Administration intends to issue a Notice of Proposed Rulemaking to exclude shipments containing products covered by Section 301, Section 201, or Section 232 trade remedies actions, but legislative action by Congress to make this statutory change would help to achieve this important reform more quickly.
Passage of previously proposed de minimis reforms in the Detect and Defeat Counter-Fentanyl Proposal. These reforms would, among other actions, increase transparency and accountability under the de minimis program by requiring more data from shippers, including the product tariff classification number, and give border officials tools they need to more effectively track and target the millions of shipments coming in claiming the de minimis exemption. The Detect and Defeat Counter-Fentanyl proposal incorporates many of the bipartisan ideas put forward by Members of Congress, and will increase CBP’s ability to detect and seize illicit drugs and the raw material used to make them, and hold drug traffickers accountable.
Administration Action to Protect American Textile and Apparel Manufacturers
American textile and apparel producers play a critical role in the U.S. defense industrial base and support hundreds of thousands of direct and indirect jobs in the United States. U.S. textile and apparel manufacturers are facing unfair competition from several China-founded e-commerce giants, as these companies take advantage of the de minimis exemption to ship huge volumes of textile and apparel products to American consumers. In addition to the de minimis reforms highlighted above, the Administration is exploring other decisive actions to support U.S. textile and apparel manufacturers and their workers.
Executive Branch Action to Expand Procurement of Certain Textile and Apparel Products: The Administration will explore ways to increase procurement of certain textile and apparel products across agencies, as a way of ensuring that U.S. taxpayer dollars are supporting U.S. taxpayer jobs in the textile and apparel sector.
Strengthened Textile and Apparel Enforcement:The Administration continues to prioritize enforcement efforts against illicit textile and apparel imports through intensified targeting of small package shipments, joint trade special operations, increased customs audits and foreign verifications, and the expansion of the Uyghur Forced Labor Prevention Act (UFLPA) Entity List.
https://www.whitehouse.gov/briefing-room/statements-releases/2024/09/13/fact-sheet-biden-harris-administration-announces-new-actions-to-protect-american-consumers-workers-and-businesses-by-cracking-down-on-de-minimis-shipments-with-unsafe-unfairly-traded-products/
Tariff hikes will hit US consumers, experts say
The United States' latest move to raise tariffs on certain Chinese products threatens the stability of global supply chains and will ultimately pass the burden onto its consumers, market watchers and corporate executives said on Sunday.
The Office of the US Trade Representative announced on Friday that it has finalized tariff hikes on selected Chinese products following a four-year review aimed at "strengthening protections for strategic industries", despite opposition from multiple domestic sectors.
Business leaders and government officials said this will encounter industry opposition in the US, as finding substitutes for certain Chinese products in the short term will be challenging. Even if alternatives are found, they will come at a higher cost.
The US action not only severely disrupts international trade order but also fails to address the US' own trade deficit and industrial competitiveness issues.
These tariffs have raised the prices of imported goods in the US, and the costs will be ultimately borne by US businesses and consumers, said a spokesperson from China's Ministry of Commerce on Saturday.
The final revisions announced by the USTR under the Section 301 investigation into Chinese products not only maintained the tariffs on imports from China, including electric vehicles, lithium batteries, photovoltaic cells, steel and aluminum, semiconductors and port cranes, but also further increased the tariff rates on medical gloves, needles and syringes.
"We are also disappointed that the USTR did not meaningfully broaden its tariff exclusion process," said Craig Allen, president of the US-China Business Council, headquartered in Washington.
Allen said the tariffs make it harder for US companies to compete in the US and abroad, cost American jobs, increase consumer prices and invite Chinese retaliation.
A spokesperson from the Beijing-headquartered China Council for the Promotion of International Trade, said the US unilateral measures will severely undermine the confidence in long-term stable cooperation between relevant industries in China and the US, and negatively impact global industrial and supply chain cooperation.
Sharing similar views, Xu Deshun, a researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said that additional tariffs are protectionist activities, which is meant to hinder the development of China's emerging industries and products toward the mid-and high-end of the global value chains.
Stephan Buurma, a board member of Messe Frankfurt GmbH, Germany's largest trade fair and event organizer by sales revenue, underscored that as the growth of the global exhibition industry heavily relies on free trade and multilateralism, stable Sino-US and Sino-Europe economic and trade ties would benefit businesses on all sides.
"Despite external challenges, China remains a crucial market for global brands. Its vast consumer base, strategic importance in global supply chains and ongoing commitment to reform and innovation create significant opportunities," said Willie Tan, CEO of Skechers China, South Korea and Southeast Asia.
With over 3,500 stores in China, the US footwear brand plans to continue market expansion in the coming years.
To cope with impacts caused by geopolitical tensions and the rise of protectionism, Ulrik Knudsen, deputy secretary-general of the Organisation for Economic Co-operation and Development, called on countries to ensure a fair global playing field for trade by maintaining open markets and a well-functioning, rules-based international trading system.
The US remains China's third-largest trading partner, with bilateral trade value reaching 3.15 trillion yuan ($444 billion) in the first eight months of this year, up 4.4 percent year-on-year, accounting for 11 percent of China's total foreign trade value, according to statistics from the General Administration of Customs.
In another development, Chinese Minister of Commerce Wang Wentao met with Roberto Vavassori, president of the Italian Association of the Automotive Industry, in Turin, Italy on Saturday, the Commerce Ministry said in a statement.
The two sides exchanged views on topics including the European Union's anti-subsidy investigation into Chinese electric vehicles and China-Italy cooperation in the electric vehicle industry.
https://www.chinadaily.com.cn/a/202409/16/WS66e76cfaa3103711928a8278.html
Crackdown on online retailers, fresh blow to China-US economic relations
What is being targeted is a trade rule known as de minimis in Section 321 of the Tariff Act of 1930, under which imported packages valued under $800 receive tax exemptions and less oversight from US Customs.
Packages from Temu and Shein, most of which are valued under $800, account for nearly half of all de minimis shipments, which has resulted in the two Chinese companies enjoying a huge tax break. That has given them an unfair advantage over US retailers, their critics claim. The US Congress introduced bills last year seeking to make changes to the century-old trade practice, and on Friday the Department of Homeland Security said it will enhance law enforcement by improving the screening of packages to "prohibit illicit goods from US markets".
"We are dedicated to ensuring a fair and level playing field for American businesses," said DHS Secretary Alejandro Mayorkas in a statement.
Yet, the fact that so many successful Chinese companies are being targeted in the US, one after another, cannot but raise questions over the real motives behind the rising restrictions. The latest targeting of Chinese companies comes hard on the heels of the US House of Representatives voting in favor of a crackdown on the short video app TikTok last month, using national security concerns as the pretext.
Human rights have also served as ammunition for such attacks. In a report last year, the US House Select Committee on China accused Temu, owned by popular Chinese e-commerce giant Pinduoduo, of possibly violating a US law that blocks imports from the Xinjiang Uygur autonomous region. "There is an extremely high risk that Temu's supply chains are contaminated with forced labor," it said without offering any evidence to back up its allegation.
The two Chinese online retailers have achieved success in the US not by employing underhand practices as their accusers claim, but rather by utilizing technological advances and savvy business operations. By pricing items reasonably and despatching them quickly, the two companies have won the loyalty of customers. As a result, Shein's share of the US market overtook that of fashion giants Zara and H&M during the pandemic, while Temu has been one of the most downloaded apps in the US and has secured a strong position in the country since its launch in 2022, with more than 80,000 Chinese suppliers fueling its vast e-commerce platform.
The two companies have transformed the global online retailing landscape by allowing Chinese manufacturers and merchants to sell to the rest of the world. But in doing so, they are, of course, posing huge challenges to their US counterparts, including Amazon. Which may explain the difficult situation in the US the Chinese companies now find themselves in as the mentality of US politicians is: if we cannot compete with them, outlaw them.
But that attitude bodes ill for the health of the Sino-US economic relationship, which both sides have vowed to try and improve. It will also do a disservice to the US economic strategy focused on investing in the country's economic strengths. The US economy has long flourished on openness to trade and investment.
As US Treasury Secretary Janet Yellen said, the Sino-US economic relationship is among the most important in the world. Responsibly managing it is essential. That means eschewing politically motivated attacks on Chinese companies.