The Biden administration is addressing the “de minimis” exemption that it says some Chinese e-commerce companies “abuse” to ship products under $800 to US customers without tariffs.
New rules proposed on Friday subject certain shipments from China to closer inspection and tariffs — a move that will affect products sold by ultra-low-cost retailers like Shein and Temu.
With the rise of Chinese e-commerce sites like Shein and Temu, the US has seen a surge in shipments claiming the duty-free exemption. These shipments have increased from 140 million per year to more than one billion over 10 years, with the “majority” of products using the exemption coming from China. Shein and Temu claim the exemption because they send individual products directly to customers rather than shipping them in bulk to warehouses.
Under the proposed rules, the US will prevent companies from claiming the de minimis exemption if their goods are covered by Section 301, Section 232, and Section 201 tariffs, which apply to products from China, steel and aluminum, as well as washing machines and solar panels. In addition to slapping these shipments with tariffs, the rule change would subject them to closer inspection by US Customs and Border Protection.
Earlier this week, House Democrats wrote a letter to President Joe Biden, urging the administration to close the de minimis “loophole.” Safety regulators have also called on the US Consumer Product Safety Commission to investigate Shein and Temu over concerns they sell dangerous products banned in the US.
The Biden administration said the proposal would help “protect consumers from goods that do not meet regulatory health and safety standards.” Even though Shein is headquartered in Singapore, it’s known for cheap fast fashion that’s mainly manufactured in China. The China-based Temu sells clothes, household items, electronics, and a variety of other goods made in the country as well.
“American workers and businesses can outcompete anyone on a level playing field, but for too long, Chinese e-commerce platforms have skirted tariffs by abusing the de minimis exemption,” US Secretary of Commerce Gina M. Raimondo said in a statement. “With these new actions, the Biden-Harris Administration is standing up for American consumers and cracking down on Chinese companies’ efforts to undercut American workers and businesses.”