CPA Statement on Biden Administration Action to Prohibit Certain Imports from Using De Minimis Loophole

WASHINGTON — The Coalition for a Prosperous America (CPA) today welcomed the Biden administration’s announcement that it will seek to prohibit goods subject to Section 201, 232, and 301 tariffs from entering the U.S. via the de minimis loophole. The administration’s move will substantially curtail the imports of textiles and apparel from China, which is crucial as 18 textile plants have recently closed in the US. Further, the proposal requires the collection of more specific information – at the 10 digit HTS level – and for those claiming the de minimis exemption to be identified. These long overdue measures are a significant step forward in curbing the flow of unfairly traded goods, particularly from China, which exploits this loophole to flood the U.S. market with imports. However, CPA strongly urges the administration to take further action and close the de minimis loophole entirely.

CPA has been one of the leading voices in calling for closing the de minimis loophole, which allows unidentifiable foreign vendors to ship millions of packages per day into the U.S. without facing taxes, fees, or legal accountability. As a result, this cripples domestic manufacturers and workers, undermines retailers, and strains law enforcement resources. It also kills thousands of people who are poisoned by fentanyl each year—the leading cause of death for people ages 18-49.

“We commend the Biden administration for taking initial steps towards closing the de minimis loophole, which China and transnational criminal organizations have weaponized against America,” said Michael Stumo, CEO of CPA. “Approximately 26,000 Customs officials handle 110,000 regular import shipments per day in which the importers or their brokers are known, are accountable, are subject to inspection, pay the required tariffs and fees, and provide full information of what is in the shipment. But the de minimis loophole makes a mockery of this process by allowing high volume trade anarchy with 4 million packages per day, sent by unknown and undiscoverable vendors, which the U.S. Postal Service then delivers to customers, or criminals, all across America. President Biden’s action will thankfully reduce the de minimis shipment volume. It is important that Imports should be allowed only by identifiable persons with accountability to our laws, who accurately represent what is in the package, and who present the goods for inspection and the payment of duties and fees.”

The de minimis loophole has created an avenue for Chinese firms and other foreign entities to evade tariffs designed to protect U.S. industries, while overwhelming U.S. customs and law enforcement agencies. In May, CPA and members of the Coalition to Close the De Minimis Loophole sent a letter to House Ways and Means Committee Chairman Jason Smith (R-MO) and Ranking Member Richard Neal (D-MA) highlighting how the de minimis loophole contributes to illicit fentanyl trafficking and fatalities.

The de minimis loophole also undermines the Uyghur Forced Labor Prevention Act (UFLPA) by allowing goods produced with forced labor to enter the U.S. undetected. Earlier this year, Department of Homeland Security Secretary Alejandro Mayorkas warned that the de minimis loophole is a risk to the U.S. and undermines enforcement of the UFLPA.

“To fully protect American industries and communities, the President should use his existing statutory authority to close the de minimis loophole altogether,” added Stumo. “Imports should be allowed only by identifiable persons with accountability to our laws and who present the goods properly and in an orderly manner to CBP for inspection and the payment of lawful duties and fees.”

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