Ordering from Shein or Temu? Those imports might not stay duty-free forever

Two U.S. senators looking to crack down on the number of packages from China that enter the U.S. duty-free are calling on President Biden to take executive action, saying domestic manufacturers can’t compete with low-cost competitors that rely on forced labor and state subsidies in key sectors.

U.S. trade law allows packages bound for American consumers and valued below a certain threshold to enter tariff-free. That threshold, under a category known as “de minimis,” stands at $800 per person, per day. The majority of the imports are retail products purchased online.

Alarmed by the large increase in such shipments from China, lawmakers in both chambers have filed legislation to alter how the U.S. treats imports valued at less than $800. Sens. Sherrod Brown (D-Ohio) and Rick Scott (R-Fla.) have sent a letter to Biden calling on him to end the duty-free treatment altogether for those products.

“The situation has reached a tipping point where vast sections of American manufacturing and retail are at stake if de minimis is not immediately addressed,” the senators wrote.

Brown and Scott singled out Temu, Shein and AliExpress in their letter as companies that “unfairly” benefit from duty-free treatment of their goods. The surge in shipments, they said, hurts big-box stores and other U.S. retailers.

“This out-of-control problem impacts the safety and livelihoods of Americans, outsourcing not only our manufacturing, but also our retail sectors to China, which — as you know — systematically utilizes slave labor among other unconscionable practices to undermine our economy,” the senators said.

The White House did not immediately respond to a request for comment on the letter, which was provided to the Associated Press.

Congress in 2016 raised the threshold for expedited and duty-fee imports to the U.S. from $200. The argument for doing so was that it speeds up the pace of commerce and lowers costs for consumers. It also allows U.S. Customs and Border Protection to focus its resources on bigger-ticket items that generate more tariff revenue for the federal government.

The change to the threshold has led to a significant increase in de minimis shipments, from about 220 million packages in 2016 to 685 million in fiscal 2022.

The $800 threshold has strong backing from many in the business community. John Pickel, a senior director at the National Foreign Trade Council, which represents a broad range of companies, said that ending the duty-free treatment, as the senators are urging, would slow shipments’ arrival time as they go through a more cumbersome inspection process at the border — and those products would cost more.

“The increase from $200 to $800 has not really been a significant driver in terms of volume,” Pickel said. “What’s really driving interest in the use of de minimis is the desire for consumers to access their products quickly and at a lower transaction cost.”

He said the average shipment that comes into the U.S. through the de minimis category is $55. But that cost would roughly double for the consumer if de minimis treatment were no longer applied, because importers would have to hire a customs broker and pay additional processing fees as well as the import duty.