The Coalition for a Prosperous America (CPA) today applauded a bicameral bill targeting the misguided de minimis loophole, a lawless backdoor around U.S. customs and what a senior U.S. Customs & Border Protection official dubbed the “China free trade deal.”
On Thursday, U.S. Representatives Earl Blumenauer (D-OR) and Neal Dunn (R-FL) were joined by U.S. Senators Sherrod Brown (D-OH) and Marco Rubio (R-FL) in introducing the Import Security and Fairness Act to stop China and Russia from exploiting the de minimis threshold and require Customs and Border Protection (CBP) to collect more information on de minimis shipments.
The de minimis loophole allows the post office, express shippers such as FedEx and UPS, and others to bring millions of packages valued under $800 into the United States without paying duties, taxes, fees or undergoing rigorous inspection. There is also limited data currently required of such shipments. Missing data that this bill would mandate includes harmonized tariff system (HTS) codes, merchandise country of origin information, requiring a good’s value to be assessed at the U.S. transactional value—making it consistent with other areas of custom’s law—and other essential data points that will allow CBP to combat the current lawlessness. The loophole has been a popular gateway for illicit drugs like fentanyl and counterfeit goods that violate U.S. intellectual property.
“There is a 25% tariff on China flatware under Section 301…and that duty is circumvented with de minimis,” says Greg Owens, CEO of Sherrill Manufacturing, Inc., makers of the Liberty Tabletop brand of flatware in upstate New York. “We don’t know the exact amount, because there are no records on that. Does that impact us? I’d say so. China is about 80% of imports of flatware into the U.S. at least as of 2021.”
These two bills follow a previous de minimis reform bill on Wednesday by Senators Bill Cassidy, (R-LA), Tammy Baldwin (D-WI) and JD Vance (R-OH).
“De minimis has been the primary avenue of entry that allows China online retailers like Shein and Temu to sell tax-free, and tariff-free into the U.S. while American malls, employers of real Americans, have to pay property taxes, income taxes, and in some cases, import duties for large container shipments of goods,” said Zach Mottl, Chairman of CPA. “Why do we allow these companies to undercut U.S.-based competitors, and circumvent tariffs, all while potentially bringing in all kinds of dangerous, faulty or counterfeit goods? Congressman Blumenauer has been a leader on this issue. It’s easy to see why CPA named him as Democratic Party Congressman of the Year. I’m grateful for his efforts.”
A poll of registered voters, conducted by Morning Consult on behalf of the CPA, shows an overwhelming majority (81%) of voters support the U.S. government prohibiting countries like China from using de minimis.
Last month, CPA CEO Michael Stumo testified at a U.S. House Ways & Means Committee hearing about the dangers of de minimis as he called for dramatic reform.
Fortune magazine called it Chinese fast fashion giant Shein’s “favorite tax loophole to test the Uyghur Forced Labor Prevention law.”
And The Economist magazine once called de minimis the “Swiss cheese” of America’s tariff wall against China.
