Ahead of the expiration of the de minimis loophole for imports from China and Hong Kong, the Information Technology and Innovation Foundation (ITIF) has addressed the implications of such a change. ITIF's policy analyst, Eli Clemens, expressed concerns that while closing the loophole is a necessary reform, it brings significant costs to U.S. competitiveness and the benefits of cross-border commerce.
Beginning May 2, new duties will be imposed on low-value postal shipments from China and Hong Kong as their de minimis eligibility ends. These shipments will now be subject to a 120 percent ad valorem tariff or a flat fee of $100 per package, increasing to $200 in June. This measure represents a significant federal effort to challenge Chinese e-commerce platforms, like Temu and SHEIN, which have utilized de minimis policies to capture U.S. market share without incurring duties.
"This enforcement shift may curtail some abuse of a regulatory loophole, but it is only one step in addressing Chinese e-commerce platforms’ many unfair advantages," Clemens notes. He further points out that Chinese platforms might continue to thrive due to government-backed industrial policies by adapting to new logistics and warehousing models domestically.
Clemens also calls on Congress to modernize the de minimis statute in line with the current global e-commerce landscape. He highlights the need for technological upgrades at Customs and Border Protection and the U.S. Postal Service to handle enforcement adequately. He emphasizes, "Executive action alone cannot provide the predictability or legal durability that is needed."
Nicole Hinojosa is provided as the contact for further information at [email protected]