Biden Administration Proposes Restrictions on De Minimis Trade Rule

Biden Administration Moves to Restrict De Minimis Trade Rule

The Biden administration announced on Friday its intention to significantly curtail a trade regulation that permitted over a billion packages from China to enter the United States last year without incurring tariffs. This decision comes as part of a broader effort to protect American manufacturers and address concerns regarding the influx of illicit goods, including fentanyl and counterfeit products.

The trade rule in question, known as de minimis, allows packages shipped from foreign countries directly to consumers or businesses to bypass tariffs, provided that the shipments do not exceed $800 per recipient per day. The proposed changes are set to revoke this exemption for a wide range of products, likely impacting major importers of Chinese goods, including popular online retailers like Shein and Temu.

Originating from a century-old trade law, the de minimis provision was initially designed for shipments deemed too insignificant to warrant close inspection by U.S. customs officials. However, in recent years, online platforms such as Shein—and various sellers of Chinese goods on Amazon—have leveraged this provision to capture market share in the United States, facilitating the direct shipment of inexpensive clothing and other items from Chinese manufacturers to American consumers’ doorsteps. This practice not only allows these companies to evade tariffs but also to forgo the costs associated with warehousing in the United States.

The impact of the de minimis rule has been staggering, with the number of packages entering the United States under this regulation surging to more than one billion in 2023, compared to just 140 million a decade ago, according to federal statistics.