But will this removal of the de minimis rule remain in the legislation?
Congressional Republicans, who control both the U.S. House of Representatives and the U.S. Senate, are right now trying to deliver a budget reconciliation bill that carries much of President Trump’s domestic agenda. The Big Beautiful Bill Act, so named because the president referred to it as that at some point, is indeed a big bill, including significant changes to public health programs and the extension of tax cuts. We’re not gonna get into whether it’s beautiful, though; we’re gonna get into a meaningful rule change included the version of it that has passed the House.
From Sourcing Journal last month:
While tax policies that benefit the wealthy and spending cuts to public health programs like Medicaid are its most hotly debated elements, the text also contains language stipulating an end to de minimis for all commercial shipments from all countries by July 1, 2027. This would impact not just foreign brands and online retailers, but U.S. businesses that drop ship from factories in Mexico or Canada, for example.
That’s right: The House’s budget reconciliation bill as passed repeals de minimis rules for imported packages from everywhere, not just for those from China, by 2027. That’s a long runway, but it’s also a big deal for trade enforcement.
President Trump has both raised and lowered rates on Chinese de minimis shipments in his ongoing trade negotiations with Beijing. They now sit at 54%, greatly affecting the business of China’s e-commerce giants that have made loads of money shipping orders directly to U.S. consumers duty- and virtually inspection-free.
But a comprehensive de minimis repeal like the one in the House bill would preemptively solve the circumvention problems that will arise as shippers route their orders through third countries to maintain the duty-free status.
There are serious problems with the de minimis loophole. Use of this rule, which allows foreign shipments that qualify for it to pass through U.S. customs and Border Protection virtually inspection-free, has exploded in the decade since its threshold was raised to $800. It promotes wasteful consumption, invites fraud, undercuts competing domestic manufacturing workers, and encourages poor working conditions in the workshops that churn out apparel for fast fashion behemoths in this space. There are also the allegations of outright forced labor in the supply chains.
That’s why the Alliance for American Manufacturing has been calling for action to address de minimis for a long time. We’re a member of the Coalition to Close the De Minimis Loophole, and we’ve endorsed legislative proposals to that end, like this bill from Sens. Sheldon Whitehouse (D-RI) and Lindsey Graham (R-SC), with corresponding legislation in the House sponsored by Rep. Linda Sanchez (D-CA). And we’ll be watching very carefully to see what the lawmakers on the Senate Finance Committee do when they produce their own version of the budget reconciliation bill.
Will they cut out the House’s de minimis repeal? Or will they leave it in? The text is expected today. Stay tuned!