The Biden-Harris Administration announced new measures to tackle the abuse of the de minimis exemption by Chinese e-commerce platforms like Shein and PDD Holdings Inc. PDD owned Temu.
What Happened: As per the official statement from the White House on Friday, the de minimis exemption, which allows goods valued at $800 or less to enter the U.S. duty-free, has seen “increased abuse” over the past decade. The number of shipments claiming this exemption has surged from around 140 million a year to over one billion a year, making it harder to enforce U.S. trade laws and block illicit shipments.
Chinese e-commerce platforms have been exploiting this loophole, resulting in a massive influx of low-value products such as textiles and apparel into the U.S. market. This not only puts American consumers at risk but also undermines American businesses and workers.
The Biden administration is now using executive authority to halt this abuse. It is also urging Congress to pass legislation this year to reform the de minimis exemption comprehensively.
Proposed changes include excluding all shipments containing products covered by tariffs from the de minimis exemption and improving accountability and enforcement in de minimis shipments. The administration also plans to prevent de minimis shipments from circumventing safety standards.
The administration is also exploring ways to support U.S. textile and apparel manufacturers, who face unfair competition from Chinese e-commerce giants exploiting the de minimis exemption.
Why It Matters: The move by the Biden administration comes in the wake of growing concerns over the practices of Chinese e-commerce platforms. Earlier this month, the U.S. Consumer Products Safety Commission called for an investigation into Shein and Temu, over allegations of selling “deadly baby and toddler products”. Both companies have been flagged for their use of the de minimis rule, allowing them to evade tariffs on goods shipped directly to consumers.
Furthermore, these platforms have faced regulatory hurdles globally. In July, the European Union was considering imposing customs on inexpensive goods bought online through Chinese retailers like Shein and Temu, following a surge in e-commerce imports. The proposed changes aimed to abolish the current 150 Euro duty-free threshold.
