WASHINGTON — Two U.S. senators seeking to crack down on the number of packages from China entering the country duty-free are calling on President Joe Biden to take executive action, saying U.S. manufacturers cannot compete with low-cost competitors who they say rely on forced labor and state subsidies in important sectors.
U.S. trade law allows packages destined for U.S. consumers with a value below a certain threshold to enter tariff-free. That threshold, under a category known as “de minimis,” is $800 per person, per day. The majority of imports consist of retail products purchased online.
Alarmed by the surge in such shipments from China, lawmakers in both chambers have introduced legislation to change the way the U.S. treats imports worth less than $800. Now Senators Sherrod Brown, D-Ohio, and Rick Scott, R-Fla., have sent a letter to Biden calling on him to end tax-free treatment for those products altogether.
“The situation has reached a tipping point where large swaths of American manufacturing and retail are at stake if de minimis is not immediately addressed,” the senators wrote.
Brown and Scott named Temu, Shein and AliExpress in their letter as companies that “unfairly” benefit from the duty-free treatment of their goods. The surge in shipments, they say, is hurting big box stores and other retailers in the US
“This spiraling problem is impacting the safety and livelihoods of Americans, outsourcing not only our manufacturing but also our retail sectors to China, which, as you know, systematically uses slave labor among other unscrupulous practices to undermine the economy.” the senators said.
The White House referred questions to the U.S. Trade Representative’s office, which did not immediately respond to a request for comment on the letter sent to The Associated Press.
In 2016, Congress raised the threshold for expedited and tariffed imports into the US from $200. The argument for this is that this speeds up the pace of trade and reduces costs for consumers. It also allows the U.S. Customs and Border Protection Agency to focus its resources on the higher-cost items that generate more tariff revenue for the federal government.
The change in duty-free treatment has led to a significant increase in the number of de minimis shipments, from approximately 220 million packages that year to 685 million in fiscal year 2022.
The higher $800 threshold for tax-free treatment has strong support from many in the business community. John Pickel, a senior director at the National Foreign Trade Council, a trade association that represents a wide range of companies, said doing what the senators are urging would mean shipments would take longer to arrive because they would go through a longer period of time. cumbersome inspection process at the border. And those products would cost more.
“The increase from $200 to $800 hasn’t really been a major driver in terms of volume,” Pickel said. “What is really driving interest in using de minimis is consumers’ desire to access their products quickly and at lower transaction costs.”
He said the average shipment entering the U.S. through the de minimis category is $55. But those costs would roughly double for consumers if the de minimis treatment no longer applies, because importers would have to hire a customs broker and pay additional processing fees and duties.
A trade group representing the textile industry said it agreed with the need for the Biden administration to take executive action on duty-free packages.
“The impact on the American textile industry has been devastating. The industry has closed 10 factories in the past four months, in part due to the unfettered flow of imports coming in through the de minimis loophole, which is undermining our industry and our workforce,” said Kim Glas, president and CEO of the National Council of Textile Organizations.