By Timothy Lyons | Staff Editor

April 24, 2024

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In 2023, over 1 billion de minimis shipments worth over $50 billion entered the United States.[1] Less than ten years ago, that number was less than 150 million.[2] What is a de minimis shipment? By definition, a de minimis shipment is too small to be meaningful.[3] That is, however, no longer the case. Currently, any shipment sent into the United States with a fair retail value less than $800 is not subject to duty or import tax.[4] The rationale being that U.S Customs and Border Protection should focus on high-value shipments and spend less time and resources on low-value ones. To that end, Congress raised the de minimis threshold from $200 to $800 in 2016.[5] In the interim, the prevalence of e-commerce skyrocketed.[6]

Traditionally, large companies send shipping containers full of products to a warehouse in the United States. At the port of entry, the requisite duty is paid, and the container is subject to inspection.[7] The de minimis exception enables foreign companies to bypass this process. In particular, Chinese companies ship small, direct-to-buyer packages directly to consumers.

So, what is the issue? De minimis shipments, beyond being tax and duty free, are subject to less stringent data standards. U.S officials have no idea what is being sent into the country or what is purported to be in the packages that come in under the de minimis threshold. This creates a public safety issue. As Representative Mike Gallagher (R-WI) put it “[n]o less than 94% of all import transactions now enter the U.S. through De Minimis rules, accounting for 90% of all illegal narcotics, agricultural goods, and counterfeit seizures by customs.”[8] The deluge of de minimis shipments are overwhelming the system and it has become far too easy to ship drugs (especially fentanyl) and counterfeit goods into the United States. Seemingly, all one must do is claim de minimis and the chances of an illicit shipment reaching its destination unscathed increases greatly.

Beyond the public safety aspect, the aggressive use of de minimis by foreign companies unfairly disadvantages U.S companies and deprives the United States of substantial revenue.[9] In 2023, the de minimis practices of Chinese companies SHEIN and Temu caught the attention of the House Select Committee on the Chinese Communist Party.[10] The Committee found that the two companies make-up over 30% of de minimis shipments into the United States, some 600,000 packages daily.[11] According to the companies themselves, SHEIN and Temu paid a grand total of $0 in import taxes in 2022. For reference, during the same year, GAP paid $700 million in import duty while H&M paid $205 million.[12] The Committee has called on Congress to act immediately to address de minimis concerns.

In today’s hyper-fractured political climate, bipartisanship often seems like a pipe dream. However, there are currently two bipartisan bills in the 118th Congress concerning the de minimis exception.[13] The Import Fairness Act––introduced by Representative Earl Blumenauer (D-OR), Representative Neal Dunn (R-FL), Senator Sherrod Brown (D-OH) and Senator Marco Rubio (R-FL)––aims to exclude certain countries, namely China and Russia, from using the de minimis exception. The De Minimis Reciprocity Act, introduced by Senator Bill Cassidy (R-LA) and Senator Tammy Baldwin (D-WI), would allow shipments from any given country to claim de minimis exception up to the same amount the origin country extends to the United States. For example, if Country A sets its de minimis level at $100 for imports, a package being sent to the United States from Country A could only claim a de minimis exception if the value was $100 or less.

Both bills were referred to the House Committee on Ways and Means and the Senate Committee on Finance, respectively. Since then, nothing has happened in Congress. Outside of Congress, labor unions, domestic manufacturers, business organizations and other business associations have announced the formation of a coalition to bring attention to the effort of de minimis reform.[14] Kim Glas, president and CEO of the National Council of Textile Organizations, supported the coalition’s efforts in stating, “[d]e minimis is not just a textile issue, de minimis is a wildfire out of control, killing our manufacturing sector and jobs, destroying local communities and facilitating illegal, illicit and dangerous products into the U.S.”[15]

To remedy this, Congress should reform the de minimis framework by passing the Import Safety Act or the De Minimis Reciprocity Act to protect American consumers and businesses.

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[1] De Minimis Shipment Worth Over $11 Million Stopped by Louisville CBP, U.S Customs and Border Protection (Mar. 11, 2024), https://www.cbp.gov/newsroom/local-media-release/de-minimis-shipment-worth-over-11-million-stopped-louisville-cbp#:~:text=In%20FY%202023%2C%20the%20U.S.,a%20billion%20de%20minimis%20shipments.

[2] Id.

[3] De Minimis, Merriam-Webster.com, https://www.merriam-webster.com/dictionary/de%20minimis (last visited Mar. 11, 2024).

[4] Id.

[5] Section 321 Programs, U.S Customs and Border Protection, https://www.cbp.gov/trade/trade-enforcement/tftea/section-321-programs (last visited Mar. 11, 2024).

[6] Mayumi Brewster, E-Commerce Sales Surged During the Pandemic, U.S. Census Bureau (Apr. 27, 2022), https://www.census.gov/library/stories/2022/04/ecommerce-sales-surged-during-pandemic.html.

[6] Id.

[7] Jordyn Holman, Bipartisan Proposals Would Hit E-Commerce Like Fast Fashion, N.Y Times (Jun. 15,2023) https://www.nytimes.com/2023/06/15/business/ecommerce-SHEIN-us-china-trade.html.

[8] Chelsey Cox, Labor Unions, Domestic Manufacturing Groups launch coalition to Reform De Minimis Import Loophole, CNBC (Mar. 6, 2024), https://www.cnbc.com/2024/03/06/lawmakers-stakeholders-coalition-against-de-minimis-import-loophole.html.

[9] Id.

[10] Fast Fashion and the Uyghur Genocide: Interim Findings, House Select Comm. on the Chinese Communist Party (Jun. 15, 2023).

[11] Id.

[12] Id.

[13] Import Security and Fairness Act, H.R. 6412, 118 Cong. (2023); De Minimis Reciprocity Act of 2023, S. 1969, 118 Cong. (2023).

[14] Cox, supra note 8.

[15] Id.