Several e-commerce sellers would lose a tariff exemption widely used to send orders from China to U.S. shoppers under a bill that a bipartisan group of lawmakers plans to introduce on Wednesday, one of its sponsors said. The de minimis rule exception exempts imports valued at $800 or less from duties if the items are shipped to individual consumers. The new law would ban such shipments from China immediately upon its enactment, sponsor Republican Senator Bill Cassidy said.
Companies like Shein and other fast-fashion retailers have used the de minimis to flood the American market with cheap clothes from China. They ship the goods directly to consumers, bypassing middleman retailers. The first-sale exemption allows the companies to avoid paying hefty tariffs, generally based on a percentage of the item’s price. The legislation would revoke the exemption for firms that make and sell clothing in the United States and for products made in China, such as shoes or handbags.
The proposal also would require that a company certify its products’ country of origin or marking and specify whether the firm’s products qualify for preferential tariff treatment or are subject to duties and taxes under Section 321 of the Tariff Act of 1930. The certifications could be submitted electronically using Electronic Trade Documents or through a downloadable PDF form that can be printed and applied to each shipment. Blanket certifications allowed under the previous tariff regime expired on June 30, 2020.
Under the bill, a company knowingly making and selling goods subject to a tariff could face penalties, including fines, forfeitures, or revocation of its export privileges. The measure, co-sponsored by several Republican and Democratic senators, is expected to face heavy opposition from some business groups, such as the U.S-China Business Council and the U.S Chamber of Commerce, which have lobbied against the measure.
Despite the rapid growth of e-commerce, United States Customs and Border Protection (CBP) still need complete visibility into most shipments that arrive at its ports, which can pose health, safety, and security risks. The agency needs more resources to inspect and prevent every package, and varying and inaccurate electronic data from various trade entities presents further challenges.
The agency has been working to address the issue since 2022 when it began to face a flood of low-value shipments from China. Earlier this year, CBP officials warned that the volume of such shipments is straining their ability to intercept unsafe or prohibited items, including products made with forced labor from China’s Xinjiang region. CBP’s National Commodity Specialist Division has scheduled a series of webinars on the issue this month and is posting recordings of previous webinars on its website.
