Sens. Brown, Scott urge Biden to close “de minimis” loophole

U.S. Sens. Sherrod Brown (D-OH) and Rick Scott (R-FL) are urging the Biden administration to close a loophole that would keep foreign competitors from paying duties and fees.

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This loophole, known as the “de minimis” rule, allows packages under $800 in valuation to be exempt from U.S. duties, taxes, and fees. Further, these packages are allowed to enter the country with little or no inspections.

The lawmakers said the number of packages using this loophole to avoid duties has soared recently to more than three million packages per day. In a letter to President Joe Biden, the senators said urgent action is needed to prevent unfair competition and exploitation of U.S. manufacturers.

“[T]he Chinese Communist Party (CCP) — one of the worst trade and human rights abusers — directly benefits from duty-free access to the U.S. market for shipments valued under $800. This generous gift comes with no rule of origin requirements, reciprocal market access, or labor or environmental standards. Simply put, the CCP and others utilizing de minimis can get rich while getting away with a host of trade infractions that undermine U.S. manufacturing, harm American workers, and expedite the flow of fentanyl and other harmful goods into our communities,” the senators wrote in the letter.

They explained that foreign competitors will often split large shipments into many small packages to cheat the rules and evade the duties they owe. Further, these shipments often include counterfeit items and items made with slave labor. In addition, drug traffickers, aware of this loophole, ship drugs like fentanyl precursor chemicals in these small packages to evade detection.

“The situation has reached a tipping point where vast sections of American manufacturing and retail are at stake if de minimis is not immediately addressed — including a large portion of U.S. textile production and employment. Swift, effective executive action is necessary to safeguard U.S. jobs and communities against the economic sabotage of the CCP.”

They are urging Biden to use his executive authorities under the Tariff Act of 1930 to end the abuse of the de minimis loophole.