What is de minimis? Trump’s business could end amid tensions with China

President Donald Trump is considering changing “de minimis” exemptions on import tariffs, a key US trade benefit, to other countries as he accuses China of unfair trade practices and blames it for the crisis over the deadly drug fentanyl. Admit it.

His predecessor Joe Biden on Friday proposed curbing “lapses” in his final actions as president. Trump signaled on his first day in office that de minimis is unlikely to survive long in the US, at least in its current state.

What is de minimis?

De minimis, a legal term referring to matters of lesser importance, describes the US exemption from standard customs procedures and duties on imported goods worth less than $800 shipped to individuals.

This is one of the most generous such discounts in the world: for example, the EU de minimis limit is 150 euros ($156).

The US has used de minimis since 1938 to reduce administrative burden. During Barack Obama’s presidency, Congress quadrupled the exemption to $200, causing an explosion in the number of exempt packages entering the country. Shipments claiming de minimis have increased more than 600% over the past decade to more than 1 billion items in fiscal year 2023, according to Customs and Border Protection data.

Why is de minimis controversial?

The dispute primarily concerns the US trade imbalance and the synthetic opioid fentanyl – which is fueling a national epidemic that could kill about 75,000 people in 2023.

Reuters journalists found last year that they could easily import the main precursors to at least 3 million fentanyl tablets at a cost of $3,607.18 — with a potential street value of $3 million. For example, shippers successfully mislabeled packages as electronics.

Legal products are also controversial as Trump has stepped up his rhetoric against China, with the US facing its biggest bilateral trade deficit at $279 billion by 2023.

Big beneficiaries of de minimis include online retailers that primarily ship goods from China, such as Shein, PDD Holdings-owned Teemu and Alibaba’s AliExpress. Their growth prompted US rival Amazon to launch its own discount service, Hall, allowing marketplace traders to ship $5 accessories and other goods directly from China using de minimis.

Sheen declined to comment on potential changes to the US de minimis policy. The company called for minimal reforms in 2023 to “create a level, transparent playing field – where the rules are applied equally and equitably”. Teemu, AliExpress and Amazon did not respond to requests for comment.

Critics of de minimis also say it allows companies to avoid tariffs on Chinese goods and customs inspections under a law banning products made with forced labor.

What is happening?

On Monday, the Trump administration published an “America First Trade Policy” memorandum, calling on the Departments of the Treasury, Commerce and Homeland Security and the U.S. Trade Representative to assess the risks posed by lost revenues and the importation of “counterfeit products and prohibited drugs.” to be ordered. ,

Trump directed agencies to “recommend necessary amendments to protect both the revenues and the public health of the United States by deterring illegal imports”, without specifying what changes might be considered.

China has said it is willing to maintain communication with the US to “reasonably handle differences and expand mutually beneficial cooperation”, and seeks stable and durable relations with Washington.

Outside the US, the EU is discussing changing the bloc’s de minimis rules, while Mexico recently effectively eliminated its de minimis limits for packages coming from countries other than Canada and the US .

China GDP impact

China benefited from de minimis worldwide last year by exporting $240 billion in direct-to-consumer goods, accounting for 7% of its foreign sales and contributing 1.3% of GDP, according to Nomura estimates.

The brokerage estimates that eliminating the U.S. border would slow Chinese export growth by 1.3 percentage points and GDP growth by 0.2 points, a much bigger blow if Europe and Southeast Asia also removed their minimum requirements for customs duties.

Nomura believes China’s most exposed sectors include apparel, which accounts for 35% of China’s direct-to-consumer exports by value, consumer electronics at 22%, home decor at 17% and beauty products at 7%.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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