What do Chinese cross-border e-commerce companies such as SHEIN, Temu, Wish, and others use to ship items to US customers? An in-efficient customs/trade regulation called “de minimis.”
So what is de minimis? The value is so small in the trade sector that it does not impose taxes or duties. Customers have an $800 de minimis daily, which means that customers will only incur duties and taxes for items that cost more than $800.
The de minimis rule in international trade law can refer to a few things. First, it can refer to the fact that items below a certain value do not attract taxes or customs duties. Second, it can refer to a rule regarding determining the country of origin of a good. Items made with an amount of material from a specific country that is below the de minimis level (often 7% of the item as a whole) will not be defined as originating from that country. Source: Curtis
So how big is the current impact of the current policy?
According to the US Chamber of Commerce,, the U.S. Customs and Border Protection (CBP)– reports the global value of de minimis goods, including China, was nearly $40 billion in 2021 (the most recent publicly available numbers). There are 800 million shipments annually entering the US as de minimis imports which could indicate that large US retailers might be using this as a strategy for online fulfillment from Chinese factories.
The History of the US de minimis - then and now
It is important to recognize that in 2016 the US increased its de minimis from $200 to $800. The reason for the increased de minimis was to lessen the burden on U.S. Customs and Border Protection (CBP), which was being hamstrung by increased volumes of packages. Since then, e-commerce has become more mainstream, and companies have used a combination of bonded warehouses and de minimis to pay less taxes and customs costs.
In 2016 the increased de minimis occurred as US and China relations were more stable; offshoring of manufacturing was the norm, and free trade and a global village were spoken about more often. Fast forward to 2023, there is increasing distrust between US and China, investment in US manufacturing and an easing of free global trade all point to decreased de minimis.
Global de minimis fees showcase the US is an outlier as other markets with higher values have additional conditions for importing goods.
The Hill is paying attention to de minimis
U.S. Senators Marco Rubio (R-FL) and Sherrod Brown (D-OH) introduced the Import Security and Fairness Act to end de minimis treatment for goods from China and Russia, and to require CBP to obtain more information about de minimis packages entering the country.
U.S. Senators Bill Cassidy, M.D. (R-LA) and Tammy Baldwin (D-WI) introduced the De Minimis Reciprocity Act of 2023 to stop China and other countries from abusing U.S. trade laws that allow small dollar imports into the U.S. duty-free. The bill would bar Chinese exports from entry via the expedited “de minimis” channel and reduce the threshold for duty-free imports into the U.S. to an amount that matches the threshold our trade partners use, ensuring reciprocity and increasing transparency at our borders.
This bill if passed, will have a significant impact on companies such as SHEIN and Temu, who would then need to build local warehousing and pay additional taxes for imports of goods made in China.
To be clear - this is not a free trade deal for Chinese companies but an opportunity for US regulators to redraw and modernize outdated customers and taxes.