Online ReporterWhat was once too much of a nuisance for the US to regulate became too big an economic force to ignore any longer.
A US trade provision dating to the 1930s, which eventually cleared the way for more than a billion small parcels each year, ended Friday. While winners and losers are emerging, the extra time, paperwork and money are gumming up the gears of global e-commerce and adding a fresh layer of confusion in President Donald Trump’s reordering of international trade.
The value of goods subject to the “de minimis” tariff exemption — from Latin meaning “too small to matter” — has been $800 since 2016, very generous by global standards. The number of small packages entering the US duty-free exploded to nearly 1.4 billion last year, a 600% increase over the prior decade, according to US Customs and Border Protection. An estimated three-quarters or more came from China, with a big share from Shein Group and Temu.
Pandemic-restricted Americans loved the cheap goods and the speediness of factory-to-doorstep service. But the tsunami of stuff raised concerns in Washington about foreign rivals undercutting small businesses, illegal drugs like fentanyl entering the country and imports produced with forced labour slipping in undetected.
“There actually is bipartisan support,” said Washington-based Greg Husisian, head of the international trade practice at Foley & Lardner. “This was intended for grandma sending over an $80 package of toys, unlike a huge Chinese company sending tens of thousands of packages every single day of $12 T-shirts.”
Plans for a crackdown were underway during the Biden administration, then Trump followed through in May by scrapping the exclusion for China and Hong Kong. Before China and Hong Kong lost the de minimis exemption, 4 million duty-free packages arrived in the US on average each day, said a senior administration official. Since then, that’s dropped to an average of about 1 million de minimis packages per day.
Now small parcels that used to let inexpensive items flow easily from across the rest of the globe will get hit with a tariff and customs forms, too. — Bloomberg
