Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
The Biden administration is cracking down on cheap products sold out of China by companies such as Temu and Shein by saying that companies are no longer exempt from tariffs simply by shipping goods that they claim to be worth less than $800.
President Joe Biden would no longer exclude these “de minimis” imports from tariffs under a proposed rule released Friday to tax all imports if they’re covered under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.
Importers mainly from China have used the de minimis exemption for shipments of $800 or less to flood the U.S. market. The number of these shipments has jumped from 140 million annually to over 1 billion a year, according to a White House statement.
Shein has major operations in Indiana. In summer 2022, the company opened its Midwest distribution hub just northwest of Indianapolis—a 659,000-square-foot center in Whitestown—and announced plans for a second, 550,000-square-foot warehouse on its Boone County campus. Shein expects to boost employment at the site from about 750 to 1,400 by the end of 2025.
The action comes at a delicate moment for the world’s two largest economies. The United States has tried to lessen its reliance on Chinese products, protect emerging industries such as electric vehicles from Chinese competition and restrict China’s access to advanced computer chips. For its part, China has seen manufacturing and exports as essential for driving economic growth as it has struggled with deflation following pandemic-related lockdowns.
Because of the existing exemption, it is harder for the U.S. government to block the importation of fentanyl and synthetic drug content that are banned. The government also stressed that Chinese e-commerce sites have abused the exemption to sell cheap clothing and textiles to U.S. consumers, possibly harming domestic workers and companies.
The loss of the exemption could be a blow to Chinese companies such as Temu and Shein that compete by keeping their prices low and might now have to face additional scrutiny. The government said its Section 301 tariffs currently cover about 40% of U.S. imports, including 70% of textile and apparel imports from China.
The proposed regulatory changes would also include new standards for de minimis shipments, such as a 10-digit tariffs classification number and details on the person claiming the exemption.
Please enable JavaScript to view this content.
I thought this administration was against tariffs.
No, it’s against blanket tariffs that cover all things imported like Trump wants to do. Tariffs are a tool to be used surgically and strategically to guide consumer and market behaviors. It’s not a tax on other countries, as Trump likes to believe.
The de minimus rule allows large Chinese companies to sell directly to the American market at the retail level on places like ebay and even amazon, bypassing any import taxes that an American retailers would pay by importing the stuff in bulk. The Chinese government also heavily subsidies these imports by making the international mailing rate ridiculously low. This is a good move by the US to make sure that these good reflect the true cost to ship and import.