A tidal wave of packages is surging into the United States under a little-known trade provision, raising concerns about unfair competition, human rights violations, and national security vulnerabilities. This provision, known as "de minimis," allows goods valued under $800 to enter the country with minimal inspection, creating a potential loophole for exploitation.
Companies like e-commerce behemoths Temu and Shein have capitalized on this loophole. These online retailers can bypass the rigorous screening of bulk shipments by splitting them into smaller packages, each falling under the $800 threshold. This not only allows them to avoid customs duties but also raises concerns about potential violations of U.S. bans on goods made with forced labor, particularly in China's Xinjiang region, where Uyghur Muslims and other minority groups are subjected to systematic human rights abuses.
The sheer volume of packages entering the U.S. through this loophole is staggering. As of fiscal year 2024, nearly half a billion packages, estimated to be around a third from Temu and Shein alone, have entered the country under de minimis provisions. This represents a significant jump compared to the entirety of fiscal year 2022.
Lawmakers across the political spectrum are calling for action to address this growing concern. Congressman Mike Gallagher (R-WI) and Congressman Raja Krishnamoorthi (D-IL) are spearheading efforts to restrict certain goods, like apparel, from using the de minimis loophole. U.S. Customs and Border Protection (CBP) acknowledges the potential risks associated with these low-value shipments, highlighting potential threats to health, safety, and economic security. Law enforcement agencies also raise concerns about the use of these packages for smuggling dangerous substances like fentanyl.
While some industry groups, like the National Foreign Trade Council, argue that de minimis facilitates economic activity and allows businesses to compete effectively, the potential downsides cannot be ignored. The U.S. business community is divided on this issue, with some expressing anxieties about unfair competition from companies exploiting the loophole.
The de minimis loophole presents a complex challenge for the U.S. Striking a balance between facilitating legitimate trade and safeguarding national security, consumer welfare, and human rights requires a comprehensive approach. This may involve revising the de minimis threshold, increasing CBP resources for inspecting low-value shipments, and collaborating with international partners to address forced labor concerns.
