WASHINGTON (AP) — The Biden administration is cracking down on cheap products sold from China, stepping up efforts to reduce U.S. dependence on Beijing and bolster domestic manufacturing. But that could mean higher prices for U.S. consumers who flock to popular shopping sites like Temu and Shein.
The rule proposed by President Joe Biden would prevent foreign companies from avoiding tariffs simply by shipping goods that they declare to be worth $800 or less. Sellers, especially from China, have used the so-called de minimis exemption to flood the U.S. market. Shipping of clothes, shoes, toys and bags in small packages directly to American buyers.
The number of such shipments has risen from 140 million annually to more than a billion last year, according to a White House statement. The U.S. government says the waiver also makes it harder to block banned imports such as fentanyl and synthetic drugs, raising fears that unsafe and illegal products will slip through.
The White House’s move comes at a sensitive time for the world’s two largest economies. The U.S. has sought to reduce its dependence on Chinese products, protect emerging industries such as electric vehicles from Chinese competition and limit China’s access to sophisticated computer chips.
China, in turn, views manufacturing and exports as key factors for economic growth as the country struggles with deflation as a result of pandemic-related lockdowns.
Biden’s proposal comes in the same week that the U.S. House of Representatives targeted China in a largely bipartisan series of billswhich shows the extent of Washington’s efforts to compete with Beijing in a global race for dominance and the impact this has on the average American in areas of Healthcare for shopping.
The House of Representatives failed this week to bring a bill to a vote to significantly restrict the de minimis exemption, prompting 126 Democrats to call on Biden to use his executive powers to close a loophole in the law that they say poses a growing danger to American workers, manufacturers and retailers and “threatens our health and safety.”
Democratic Reps. Earl Blumenauer and Rosa DeLauro said Friday they welcomed Biden’s announcement but called it a first step that “does not negate the need for a comprehensive solution by Congress.” The White House called for legislative action.
China is the country with the largest number of retail packages coming into the United States. According to Customs and Border Protection data, the majority of packages valued at $800 or less go to the United States.
Homeland Security Secretary Alejandro Mayorkas acknowledged that it would be impossible to inspect the four million packages that enter the U.S. every day under the customs exemption. Mayorkas said the exemption was based on the false assumption that low value meant low risk.
Speaking at the Center for Strategic and International Studies in July, Mayorkas said customs officials have seized narcotics, counterfeit weapons and other contraband in these small packages. He suggested that changes to the law could give the Department of Homeland Security more authority to address the problem.
Leah DeVere, a mother from Georgia, has been fighting the exemption since her son, Cory, was sent a counterfeit pill laced with fentanyl two years ago. He died after taking the drug, she said.
“By tracing the package the pill came in, my family learned that the shipment had come from abroad and passed through U.S. Customs without a second glance,” she wrote in an opinion piece for the Atlanta Journal-Constitution in May. “My son’s life was worth more than $800.”
Such concerns led several U.S. groups, from law enforcement to industry, to form a coalition to pressure lawmakers and the government to take action.
But the National Foreign Trade Council – whose members include international freight forwarders FedEx, UPS and DHL and retailers Amazon and Walmart – defended the exemption, saying it was “an essential component of America’s economic health and supply chain efficiency.”
Without the exemption, costs for American consumers and small businesses would rise, they say.
The U.S. government stressed that Chinese e-commerce sites had abused the exemption to sell cheap clothing and textiles to Americans, potentially harming domestic workers and businesses.
The lifting of the tariffs could be a blow to Chinese companies such as Temu and Shein, which compete on low prices and may now face greater scrutiny. The administration said its tariffs affect about 40 percent of U.S. imports, including 70 percent of textile and apparel imports from China.
Temu said it was considering the proposal. The company has managed to sell its products at affordable prices “through an efficient business model that eliminates unnecessary middlemen and allows us to pass savings directly on to our customers,” Temu said in a statement. “Temu’s growth does not depend on the de minimis policy.”
Shein said it complies with all import regulations, including for de minimis packages. The company also said it supports “responsible reform” of the exemption to create a “level, transparent playing field” where the same rules apply “regardless of where a company is based or where it ships from.”
The proposed regulatory changes would also include new standards for smaller shipments, such as a 10-digit tariff number and information about the person requesting the exemption.
Biden’s upcoming bill will undergo a public comment period before it is finally passed, a process the Biden administration will likely need to complete before the end of its term.
