Bill Ending All Commercial de Minimis Introduced in House
Rep. Linda Sanchez of California, the top Democrat on the House Ways and Means Trade Subcommittee, criticized President Donald Trump's executive actions, predecessor Joe Biden's rulemaking and a past bill that moved through Ways and Means that aimed to curtail de minimis in various ways. She called them all "half-measures or simply playing Whac-A-Mole with specific countries."
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The Trump administration planned to remove Chinese goods from de minimis eligibility as part of its recent hike on tariffs on Chinese goods, but had to abandon it because CBP couldn't yet collect duties on millions of low-value packages that arrive each day. It also was going to remove Canadian and Mexican goods from eligibility, as part of its tariff actions against those countries, but also delayed the action.
The Biden administration issued a proposed rule to remove Chinese goods subject to special trade remedies from de minimis -- at the time, it would have covered 77% of imports, but now, no Chinese goods are subject to normal most favored nation rates.
The Ways and Means bill also applied to goods targeted by trade remedies. At that time, nearly all of those goods were those subject to Section 301 tariffs.
"The problem isn't just about China," Sanchez said at a press conference March 4 announcing a bill she introduced to curtail de minimis. "The root cause is the loophole in the system."
Sanchez invited other stakeholders who want de minimis to end for purchases to speak at the press conference.
Parkdale Mills CEO Anderson Warlick, who has spoken on this issue in Congress before, said, "The entire [U.S. textile] industry is facing a severe economic decline, and nearly every textile facility in our country is now running at significantly reduced run rates, and some lines are completely idle." He said that at least half of de minimis imports are apparel, and the fact that those clothes aren't subject to duties undercuts domestic textile manufacturers, who supply yarn and fabric to apparel factories in free trade agreement partner countries.
Sanchez was asked how she could propose such a broad prohibition when the Trump administration found CBP could not enforce a carve-out for Chinese goods, and asked if she would push for more CBP funding, so the agency could manage the change.
"They announce things, and then realize that they're unworkable, and they walk them back. So my bill would have a transition period where we would work with Customs and Border Patrol [sic] and the Postal Service to make sure we have the systems in place to handle the volume of packages that come in, so that they don't come into our economy unregulated and without paying duties on those goods."
Her bill does provide a 120-day period for Treasury to promulgate a rule on how to ensure effective enforcement of the laws and efficiently collect duties, "including by requiring entities making entry of an article under any of chapters 50 through 63 of the [Harmonized Tariff Schedule (HTS)] to provide an HTS [code] including at the 10-digit level if applicable." That rule should make sure that penalties for informal entry "are sufficient to deter unlawful or fraudulent activity and to ensure the exercise of reasonable care" for those making the entries, the bill text says. It also would need to find a way to ensure consistency between packages coming by mail and other shipments.
However, that 120-day period only applies to packages with goods that don't originate in China. The prohibition on goods from China would begin with only a three-day in-transit exception when passed, the bill text says.