Since closing this loophole that exempted low-value packages from tariffs, the United States government has collected over $1 billion in de minimis tariff revenue. This recent shift has greatly increased government revenues. In May 2020, President Donald Trump ended the exemption for items made in China and Hong Kong. This exemption previously applied to goods valued at less than $800. Eventually, the closure was expanded to all countries, affecting the influx of low-value goods into the country in a serious way.
Additionally, evidence collected by ALC indicates that almost 48% of de minimis packages were delivered to America’s most impoverished zip codes. By comparison, only 2.8% were rolled out to the richest communities. This trend, of course, underscores the incredible reach of e-commerce. American consumers are suddenly doing more shopping than ever on Chinese owned platforms including Temu, Shein and Alibaba. These sudden and drastically different tariff policies have thrust businesses and consumers alike into a confusing and complicated landscape.
Since the closure of the de minimis loophole, U.S. Customs and Border Protection (CBP) has reported an 82% increase in the seizure of unsafe and non-compliant low-value goods. The tariff rates for these packages differ widely—10% to 50% based on what country they’re coming from. By late August, the U.S. was averaging 1 million de minimis packages per day! This increase demonstrates how the demand for cheap, quick goods remains, despite new measures being implemented.
The loophole’s closure under the International Emergency Economic Powers Act is a critical step toward improving consumer safety. It ensures that companies are held to strict American standards. At the same time, it has produced headaches for big and small companies, making getting products where they need to go harder and more expensive. Individual consumers are left holding the bag with added burdens. Now they have to pay equivalent duties on small-value packages that were formerly free of duties.
Many American consumers who paid these duties on low-value packages would be eligible for refunds. This would only be the case if a court accepts the argument that this amendment is intended to prohibit the closing of the de minimis loophole. For some de minimis packages, a flat fee of between $80 and $200 kicks in. That fee will expire in February—setting up a potentially inconvenient and costly scenario for consumers.