President Trump’s decision to impose heavy prices in Canada, Mexico and China has included an inconsistent but important change in the way online purchases will be taxed when they enter the United States.
A provision of Mr. Trump’s decree will increase costs by more than 80% of American imports of electronic commerce. The decision could move the online sales landscape of Chinese sellers like Shein and Temu who quickly expanded their market share by sending cheap products to the United States.
The president’s order has erased a bypass solution, many companies that have benefited in recent years, in particular since Mr. Trump imposed prices on Chinese products during his first mandate. The provision, known as the exceptional minimis, has enabled certain products that have been sent directly to consumers online platforms to come to the United States without facing prices, a huge tax advantage.
This obscure provision of trade law underpins the main commercial models. Shein, TEMU and many sellers on Amazon used the minimis exemption to bypass the prices. The exemption allows you to ship packages from other countries without paying prices, as long as shipments do not exceed $ 800 per beneficiary per day.
But criticisms say that the minimis measure also contributed to fueling an American medication crisis. Importers who use minimis do not have to provide as much customs information and the protection of American borders as with other packages, to facilitate treatment. This means that drugs and precursors used to make them could be more easily shipped to the United States without the government catching them.
De Minmimis stems from a centenary commercial law which was originally intended for expeditions which would be too trivial to deserve the attention of customs. But the use of this provision has exploded in popularity.
A report published last week by the Congressional Research Service revealed that Chinese exports of low -value packages increased to $ 66 billion in 2023, compared to $ 5.3 billion in 2018. Although Mr. Trump’s decree Applies to China, Canada and Mexico, China is by far the greatest source for such packages. The country is responsible for about two thirds of them, sending more than all other combined countries, according to federal statistics.
Sculpture has given an advantage to Chinese companies like Shein and Temu, which send millions of low -value plans directly at the doors of consumers each year. This ability to bypass prices helped Shein and Temu offer cheap prices, increasing their popularity. According to the Congressional Research Service, the two companies together hold around 17% of the electronic commerce market at a reduced price in the United States for rapid fashion, toys and other consumer goods.
This has angry the traditional retailers, who generally bring large bulk expeditions to their warehouses for which they have to pay prices. Retailers like Walmart and Amazon had pressure to move more to the delivery model of TEMU and Shein directly to China consumers, which would have indicated that they created fewer jobs in American distribution centers.
Express delivery companies such as Fedex and UPS which manage many packages across the Pacific from China have also spoken in favor of the preservation of the exception of minimis.
But the Trump administration focuses on the targeting of minimis for another reason: its apparent links with the fentanyl trade. A White House official said during a call with a journalist on Saturday that the provision made the United States to lose a huge amount of pricing income and also prevent the efforts of customs agents to catch expeditions Fentanyl arriving in packages.
A group of law enforcement groups, trade and drug prevention has sent a Letter to Mr. Trump Last month, asking him to end the commercial exception, saying that he “flooded the United States of fentanyl, fentanyl precursors, pills and other illicit products from China and other countries ».
The problem has percolated for years, but the efforts to limit or put an end available have recently grown. The legislators considered legislation on the Minimis rule and the Biden administration proposed changes last year which would reduce the exception with regard to China, but they have not yet taken effect.
Congress proposals to change minimis would have preserved an exemption for international travelers who bring up to $ 800 of purchases abroad in the United States in their luggage, which allows them to avoid declarations of Customs and paying tasks in American airports and other entry points at the entrance to the United States.
On the other hand, Mr. Trump’s executive orders do not mention the preservation of minimis exemption for people entering the United States. Depending on how customs officials manage it, this could complicate entry to the United States from Tuesday for people traveling from Canada, Mexico or China.
Timothy C. Brightbirl, lawyer for Wiley Rein, said the change brought by the Trump administration “would have general impacts on many companies and industries”. He said that various important industries had “abused” minimis provisions, and that the elimination of the escape would comply with the president’s objective to tackle fetanyl expeditions.
The Chinese Commerce Ministry had no answers on Trump’s decision on Monday. Shein and Temu also did not respond to a request for comments. A spokesperson for the Chinese embassy said China firmly opposed the taxation of prices and that there is no winner in a trade war.
The Congress noted the exemption from Minmis in 2016 at $ 800 from $ 200 in response to the complaints of the American customs authorities which they already had difficulty examining all the packages. The United States has skyrocketed.
Since many Americans buy such plans, change will also include an economic cost. The search has found The fact that the elimination of the exception of minimis would fully lead to costs of $ 11 billion at $ 13 billion for American consumers and disproportionately injured poorer and minority households.
Amit Khandelwal, economist at the University of Yale who is the author of a study on the commercial provision, said that his research revealed that low -income Americans spent a disproportionate amount for minimis shipping and imports from China compared to richer consumers.
“Low-income people will be more injured,” he said. “National retailers, national producers, they would obviously benefit from the taxation of these imports, but there is a cost.”
Put an end to the exception of minimis will result in another interesting change: official American trade figures with China and the US trade deficit will increase immediately. Minimis shipments do not appear in typical commercial data published by the census.
The change will mean that perhaps up to $ 100 billion in commerce will no longer be absent from official statistics, said Brad W. Setser, economist at the Council for Foreign Relations. “This brings back the shadow of the shadow.”