US to use executive authority to curb de minimis abuse by e-commerce

The United States administration on Friday (September 13, 2024) announced that it is using executive authority to stop “the significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms.”

The US administration intends to issue a notice of proposed rulemaking that excludes 40 percent of current US imports from de minimis exemption, increases data and visibility requirements and demands Certificates of Compliance (CoC) from importers.

The administration also called on Congress to pass legislation this year to reform the de minimis exemption. The proposed rulemaking “would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.”

Section 301 tariffs currently cover 40 percent of U.S. imports, including 70 percent of textile and apparel imports from China. If finalised, these goods would no longer be eligible for the de minimis exemption.

The rule will also propose to strengthen information collection requirements to promote greater visibility into de minimis shipments.

“This regulatory action will propose to require specific, additional data for de minimis shipments – including the 10-digit tariff classification number and the person claiming the de minimis exemption,” the statement reads.

The final rule requires importers of consumer products to file CoC electronically with Customs and Border Protection (CBP) and Consumer Product Safety Commission (CPSC) at the time of entry, including for de minimis shipments.

“This regulation would strengthen CBP’s and CPSC’s ability to target and block unsafe products from entering the U.S. market and would help prevent foreign companies from using the de minimis exemption to circumvent consumer protection testing and certification requirements,” it reads.

A shipment is eligible for the de minimis exemption if the aggregate fair retail value of the articles imported is $800 or less. De minimis shipments often enter the United States with less information than other imports and are not subject to duties and taxes.

The statement from the White House notes that the growing volume of de minimis shipments makes it increasingly difficult to target and block illegal or unsafe shipments. And particularly points out that foreign corporate giants exploit the exemption do so for a variety of reasons.

“Some companies exploit the de minimis to conceal shipments of illegal and dangerous products and avoid compliance with U.S. health and safety and consumer protection laws. Other foreign entities use it to circumvent U.S. trade enforcement actions intended to level the playing field for American workers, retailers, and manufacturers,” it reads.

Over the last ten years, the number of shipments entering the United States claiming the de minimis exemption has increased from 140 million a year to over one billion a year.

“The majority of shipments entering the United States claiming the de minimis exemption originate from several China-founded e-commerce platforms, putting American consumers at risk, undercutting American workers and businesses, and resulting in the importation of huge volumes of low-value products such as textiles and apparel into the U.S. market duty-free,” it reads.