Oregon Congressman Earl Blumenauer (D-OR-3) wants to persuade House Ways and Means Committee colleagues in the days ahead to exclude China from an import tax loophole for e-commerce imports. The de minimis threshold of $800 means anything bought online and imported at values below that figure is allowed into the country duty-free. It’s not only an end-around China tariffs and a gateway to counterfeit goods; it’s also a potential death knell to American retail, too.
Last year, over 12,000 stores closed down due to a combination of lockdown restrictions in response to Covid, and e-commerce.
Blumenauer’s “Import Security and Fairness Act,” (HR 6412) was introduced in January and will stop goods from non-market economies on the Special 301 “priority watch list,” as well as goods subject to Section 301 and Section 232 tariffs from benefitting from de minimis treatment. China is the main target.
Each year, the USTR issues a Special 301 report that names U.S. trading partners with lax intellectual property protections. The worst offenders are placed on the report’s priority watch list.
Blumenauer’s bill was included in the America COMPETES Act, the House version of the Senate’s U.S. Innovation and Competition Act, passed last year. Both bills are headed to committee now in order to come up with a compromise version of the two. The Oregon congressman wants his Import Security and Fairness Act to be part of it. With a tight and full schedule in Washington at the moment, the compromise bill is expected to take weeks to complete.
CPA is supporting keeping the de minimis provision in the bill. CPA would like to see the global de minimis threshold cut back to $10, similar to China’s level, but that is not in the current bill.
***Sign the CPA petition to change the de minimis rule. ***
CPA chief economist, Jeff Ferry, published a report on January 26 showing that the U.S. goods trade deficit is 15% bigger than the $1.1 trillion posted last year thanks to duty-free e-commerce shipments.
CPA conducted a first-ever estimate of how the “de minimis” provision of U.S. customs law allows makes for a shadow trade deficit. The impact of this unrecorded loophole on the U.S. economy is large and getting larger. CPA estimates the value of de minimis imports into the U.S. were $128 billion in 2021, suggesting our actual trade deficit to be 15% higher than official figures show. Rising de minimis imports cost the U.S. hundreds of thousands of good-paying jobs and hurt U.S. manufacturing and bricks-and-mortar retail sectors.
Earlier this week, tech start-up WeCultivate said that 53% of Amazon’s sellers in its Marketplace are based in China.
WeCultivate created a web-based application that, when downloaded as an extension to a browser like Apple Safari and Google Chrome, will show Amazon users where the product they are looking to buy is manufactured and from where it is shipped. The program then shows American-made alternatives or allows for users to donate to causes helping U.S. small businesses instead.
Amazon is suing two companies for posting fake, positive, Marketplace product reviews.
America’s biggest e-commerce platform has become the Godfather of the new China-direct consumer model that has turned American laptops and smartphones into Chinese shopping malls.
Some who stand in opposition to the Blumenauer bill argue that the U.S. does not manufacture many of the items imported via e-commerce – whether it’s makeup or a pair of shoes. But as e-commerce becomes more prevalent, the impact on the retail service sector job market will lead to increased job losses.
This will have an outsized impact on Black and Latino communities, particularly the Black community, where they constitute a large portion of the retail services employment compared to their actual population size.
In May, CPA looked at job quality for Black and Latino workers and found that they were in worse shape than previously imagined. Both are heavily represented in the retail space.
E-commerce is a growing trend, so stopping all of the bloodletting for traditional retail stores will be very difficult. Allowing for duty-free access to foreign manufactured goods will expedite that trend and further cement China as America’s virtual shopping mall.
The Trade Deficit is Worse Than We Thought: De Minimis Hides $128 Billion of U.S. Imports