How Democrats are Urging President Biden to Close Tariff 'Loophole' Exploited by Chinese E-Commerce Firms and Fentanyl Traffickers
By David Lawder
A majority of Democratic U.S. House of Representatives members are calling on President Joe Biden to take action against a tariff "loophole" that is being used by Chinese e-commerce firms and fentanyl traffickers. They want Biden to eliminate the "de minimis" trade provision, which allows packages valued under $800 to enter the U.S. duty-free and without customs inspections.
This provision has benefitted Chinese e-commerce giants like Shein and PDD Holdings' Temu, as well as other retailers such as Amazon and Walmart. However, lawmakers argue that it is also being exploited by traffickers of the deadly opioid fentanyl and its precursor chemicals.
The National Council of Textile Organizations states that de minimis shipments from Chinese fast-fashion e-commerce companies are bypassing punitive tariffs and causing U.S. textile manufacturers to close plants. Shipments under the threshold have been increasing, with over 4 million individual packages arriving daily and totaling over 1 billion last year.
According to U.S. Census Bureau data, the total value of low-value shipments under the de minimis threshold has more than doubled since 2014, reaching $23.4 billion last year. This makes it the 12th largest U.S. import category globally.
Lawmakers have been pushing for legislation to close the de minimis provision, but the National Foreign Trade Council warns that this could raise costs for consumers and potentially impact security at ports.
Analysis:
The closure of the de minimis loophole could have significant implications for the U.S. economy and consumers. By addressing this issue, the government aims to crack down on illicit activities while protecting domestic industries. However, critics argue that this move could lead to increased costs for consumers and logistical challenges. Ultimately, the decision on whether to close the tariff loophole will have far-reaching consequences for trade, security, and the economy as a whole.