The decision of President Trump to impose huge tariffs in Canada, Mexico and China included a slightly carved, but a significant change in the way the purchase on the network would be taxed when they enter the United States.
One provision of Mr. Trump’s executive order will increase the costs of more than 80 percent of e-trade imports in the US. The decision could transfer the landscape for Internet sales from Chinese suppliers such as Shein and the theme that quickly expanded their market share by sending cheap goods to the United States.
The president’s command deleted a solution that many companies have used in recent years, especially since Mr. Trump imposed tariffs on Chinese products in his first term. The provision, known as the exception of De Minimis, enabled certain products that were sent directly to consumers from online platforms to enter the United States without confronting tariffs, a huge tax advantage.
This obscure provision of trade law supports the main business models. Shein, the topic and many sellers on Amazon used the exemption from the de minimis to bypass the tariff. The exemption allows you to deliver the package from other countries without paying tariffs, until the shipments exceed $ 800 per recipient per day.
But critics say that the De Mining measure also helped to encourage the American drug crisis. Meeters who use de minimis do not have to provide us with as much information to customs and border protection as with other packages, for easier processing. This means that the drugs and precursors used to make it be easier to ship to the United States without being caught by the government.
De Minimis stems from a centuries -old commercial law, which was originally intended for shipments that would be too trivial to deserve the attention of the customs. But the use of this provision exploded in popularity.
The report published last week by the Congress Research Service found that Chinese Low Values Exports increased to $ 66 billion in $ 2023. With $ 5.3 billion in 2018. While the executive command of Mr. Trump is applied to China, Canada and Mexico, China is by far the largest source for such packages. The country is responsible for about two -thirds of them, sending more than all other countries in combination, according to federal statistics.
The neckline has prioritized the Chinese companies like Shein and the topic, which deliver millions of low -value packages to the consumer thresholds each year. This ability to bypass the tariff helped Shein and the topic to offer cheap prices, increasing their popularity. According to the Congress Research Service, two companies together hold about 17 percent of the e-commerce market with discounts in the United States to fast fashion, toys and other wide consumption goods.
This has angered traditional merchants, who usually bring large shipments in the warehouse for which they have to pay tariffs. Traders like Walmart -ai Amazon has been facing pressure Move more to the topic and Shein’s shipping model directly to consumers from China, which would mean that they create smaller jobs in US distribution centers.
Express shipping companies such as FedEx and UPS that fly many packages by the Pacific Ocean from China also spoke in favor of preserving the exception of De Minimis.
But Trump’s administration is focused on targeting de minimis for another reason: its obvious connections with the trade fentanil. The White House official said in a call with a journalist on Saturday that the provision caused the United States to lose a huge amount of tariff revenue, and also interfere with the efforts of customs officials to capture the shipments of the fentanis who come to the packages.
A group of groups to implement law, trade and drug prevention sent Letter to Mr. Trump Last month, asking him to end the exception of the trade, saying that he “overwhelmed the United States with fentanil, fental prekursor, pill presses and other illegal goods from China and other countries.”
The question has been breaking through for years, but the efforts to restrict or end the provision have recently been given in importance. MPs are considering the legislation as a rule de minimism and the administration of bidet Proposed changes Last year, this would narrow the exception when it comes to China, but have not yet entered into force.
Congress proposals for the change of de minimis would preserve exemption for international passengers that bring up to $ 800 in the United States in the United States in the United States, allowing them to avoid adopting customs declarations and payment of duties at US airports and other entrance points of the United States.
In contrast, Mr. Trump’s executive commands did not mention the preservation of exemption from the minas for people entering the United States. Depending on how customs officials solve it, this could complicate entry into the United States, starting Tuesday for people traveling from Canada, Mexico or China.
Timothy C. Brightbill, a lawyer at Wiley Rein, said the change in Trump’s administration “will” have a wide impact on many companies and industries. ” He said that various import industries “abused” de minimis, and the removal of the hole would be in accordance with the president’s goal of dealing with the shipments of the fental.
The Chinese Ministry of Trade did not answer questions about Mr. Trump’s decision on Monday. Shein and the topic also did not respond to the commentary request. A spokesman for the Chinese Embassy said China firmly opposed the Tariff levy and that there were no winners in a trade war.
The Congress raised the exemption from the minimis in 2016 to $ 800 with $ 200 in response to the complaints of US customs officials that they had already struggled to examine all the packets to come. With an increase in exemptions, the number of low values sent to the sent United States have increased each year.
Because many Americans buy such packages, change will also come with economic costs. The study revealed This would fully eliminate the exception of De Minimis, it would result in costs from $ 11 to $ 13 billion for US consumers and disproportionately hurt poorer and minority households.
Amit Khandelwal, an economist at Yale University who is the author of a study on a trade provision, said his research showed that Americans with lower income spent an disproportionate amount on shipments and imports from China compared to richer consumers.
“Individuals with lower incomes will be hurt more,” he said. “Homemade traders, domestic manufacturers, would obviously benefit from taxing that import, but there is a cost.”
Jim Marcum, the David Bridal CEO of David, said that the suspension of the provision of “De Minimis” was a “net positive” for US companies because he would “level the playground”.
Last year, David’s brides paid an average duty of 23.5 percent, while competitors based in Chinese who were delivered directly to customers managed to avoid it. If Mr. Trump moves forward with an additional 10 percent of tariffs to Chinese products, David’s brides, who gets about half of the clothes from China, would have to pay 33.5 percent of tariffs. But now his competitors would, he said.
“I think this leveling of the playground is great for the American job, “Mr. Marcum said in an interview.” I think he will help the economy over time. “
The completion of the exception of the De minimis will result in another interesting change: official figures for US store with China and US trade deficit will rise immediately. De minimis shipments do not appear in typical trade data published by the census.
The change will mean that maybe as many as $ 100 billion in stores will no longer be missing official statistics, said Brad W. Setser, economist at the Foreign Relations Council. “Returns the store in the shadow from the shadow.”
