The US has moved to attempt to shut-off the de minimis feature of international internet retailing that enables low value items to pass through customs with minimal tariffs and customs duties. Joe Biden’s administration stated on the 13th September that it intended to use “executive authority to stop the abuse of the de minimis exemption”. It appears that the White House hopes to use executive powers to attempt to restrict the use of de minimis but is also looking to persuade the American Congress to pass legislation to suppress its use. However, the list of legislation is long and complex, suggesting getting rid of de minimis entirely will not be easy.
Of course, what Joe Biden is seeking to do is to make life hard for the Chinese e-retailers. The statement asserts that Biden is seeking to “protect American consumers, workers, and businesses by addressing the significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms”. The statement from the White House elaborates that “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”, but crucially continues, “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”.
The prospect of lowering the flow of e-retailing goods from China would have significant effects on logistics markets, especially air freight markets out of China. At present the demand from the likes of Shein and Temu are sustaining the healthy demand for airfreight across the Pacific. However, as the details of the White House’s statement imply, blocking-off de minimis may take time. Possibly the price-threshold may be changed, but much of the existing goods flow is likely to be considerably under the US$800 level that de minimis is applied at.
The founder of Shein, Donald Tang, responded to the White House statement by asserting that Shein’s competitiveness was not dependent on the de minimis rules. This is very credible. However, the rhetoric within the statement, such as references to “putting American consumers at risk” or “undercutting American workers and businesses” perhaps ought to give Mr Tang more pause for thought. For the push to change the di minimis rules may be motivated by wider political and economic objectives.
Source: Ti Insight
Author: Thomas Cullen
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