More than 2 million packages enter pass through U.S. customs per day without paying applicable taxes or tariffs.
The Alliance for American Manufacturing has joined a group of trade associations and unions, including the United Steelworkers and AFL-CIO, to petition House and Senate leadership to support a provision within the House’s America COMPETES Act that would stop the exploitation of a substantial tariff loophole.
The provision within the act would mandate that all goods imported from countries that are both non-market economies and on the U.S. Trade Representative’s Watch List (read: China), be inspected and eligible for applicable taxes, regardless of the items’ value. This legislation would resolve a substantial blind spot in U.S. customs law created by the de minimis threshold.
Originally introduced to ease the burden of import inspections on customs officers for goods considered to be of trivial value – initially $1 in the 1930s – the de minimis threshold was never meant to be a means of substantial commerce. Since its institution, the threshold has seen gradual increases, reaching $200 in the 1990s. However, in 2016, Congress dramatically raised the de minimis threshold to $800, which is the highest in the world.
With this much higher threshold and the rise of ubiquitous e-commerce giants like Amazon, nations that unfairly subsidize their manufacturing (read: China) have been able to flood the United States with imports. These unchecked imports further weaken America’s domestic supply chain and increase our nation’s exposure to goods made by forced labor.
The letter states:
Aggressive logistics platforms have fueled exponential increases in de minimis shipments, which now account for over 2 million packages per day arriving at our borders. Unlike traditional import commerce, where goods would pass title to U.S. based importers and wholesalers before arriving at retailers, these two million de minimis shipments per day are mailed and couriered directly from foreign vendors into American homes. These de minimis shipments supercharge forced labor supply chains, hurting U.S. workers and our free trade partners, and flooding the U.S. with counterfeits and products that fail to meet health and safety standards.
The U.S. annual goods trade deficit for 2021 is expected to have reached new heights, likely exceeding $1 trillion for the first time. Frighteningly, the goods that pass through customs without tariffs courtesy of the de minimis threshold aren’t included in America’s trade deficit evaluations.
The Coalition for a Prosperous America estimates that the value of de minimis imports into the U.S. in 2021 amounted to $128 billion, which would increase our annual goods trade deficit by 15% if these imports were part of the record.
As Congress considers legislation to boost America’s global competitiveness, strengthening U.S. customs law and closing this tariff loophole is a critical move and supports the larger goals of the America COMPETES Act.
Read the letter urging Congressional leadership to take action on the de minimis threshold here.