On Wednesday, President Trump closed a trade loophole that allowed cheap goods from China to be exempt from tariffs.
At 78, Trump reportedly permitted shippers to the People's Republic and Hong Kong to “hide illegal items” in their packages and products because of the “de minimis” exception.
“These shippers frequently evade detection by managing de minimis exemptions,” the president noted, stating that duty-free shipments from China “contribute significantly to the US synthetic opioid crisis.”
Items eligible for De Minimis treatment must be valued under $800.
Online retailers in China, such as Temu and Shein, are leveraging this loophole to offer extremely low-priced items to US customers, who might face significant impacts from new tariffs.
In February, Trump momentarily halted loopholes before reinstating the exemption, allowing the Commerce Department additional time to formulate plans for collecting new revenue.
“The Secretary of Commerce has informed me that an adequate system is now established to process and gather tariff revenues for qualifying products from PRCs subject to the minimum tax exemption,” Trump wrote.
New tariffs on De Minimis goods will be enforced “instead of other obligations, barring the freight,” including a 20% collection fee on Trump's imports from China.
Effective May 2nd, shipments valued under $800 will incur an AD Valorem obligation of 30% of the item value or $25 for each mail item. On June 1st, the customs duty for typical items will rise to $50.
Trump’s directive also mandates that carriers transporting international mail items from China or Hong Kong to the United States must have “an international airline bond to guarantee payment of obligations.”
In recent years, Chinese fast fashion brands have boosted the export of lower-value items, utilizing ERA trade rules from the 1930s.
Cheap exports have skyrocketed in 2023, rising from $5.3 billion in 2018 to $66 billion, according to a report published earlier this year by Congressional Research Services.
The DE Minimus exception was originally introduced to allow tourists to bring souvenirs home from international trips without complications.
The Cato Institute, a libertarian think tank, asserts that the De Minimis exemption “acts as a crucial trade facilitation mechanism, especially benefiting lower-income consumers.”
The think tank references a research paper indicating that America's low-income postal code receives a significantly higher volume of minimal shipments, particularly from China, compared to affluent postal codes.
One study mentioned by the Cato Institute estimates that eliminating exceptions could cost Americans between $11 billion and $13 billion annually, roughly $35 to $80 per person.
On the same day the president announced new mutual tariffs on several countries, he signed an enforcement lawsuit.
