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WASHINGTON, D.C. — As first reported by the Wall Street Journal, Chairman Mike Gallagher (R-WI) of the House Select Committee on the Chinese Communist Party issued the below statement after the Customs and Border Protection Agency (CBP) disclosed data to the committee on the sharp increase in de minimis imports entering the United States during FY23 and FY24.
“According to CBP, more than 485 million de minimis shipments have already entered the United States in FY24, on top of the 1.05 billion shipments that entered tax-free under de minimis rules in 2023, itself a shocking 53% increase from 2022. No less than 94% of all import transactions now enter the U.S. through De Minimis rules, accounting for 90% of all illegal narcotics, agricultural goods, and counterfeit seizures by customs.
“Exploitation of the de minimis exemption is accelerating the export of American jobs and giving Chinese companies using Uyghur forced labor a complete pass. We can’t expect American companies to compete with foreign companies that don’t have to pay taxes. Unless Congress takes urgent action, American retail will be forced to shift US operations and jobs to China.”
Background:
The de minimis exemption provides admission of products free of duty if the fair retail value of the product does not exceed $800. The overwhelming volume of small packages and lack of actionable data limit CBP’s ability to identify and interdict high-risk shipments that may contain narcotics, merchandise that poses a risk to public safety, counterfeits, or other contraband. Foreign companies like Shein and Temu have built their business models around the de minimis exemption, paying no import duties and limited scrutiny on products potentially made with forced labor.
Prior to 2016, the de minimis threshold for a product was $200. In 2016, President Obama signed legislation that raised the de minimis threshold to $800. Since then, de minimis imports have sharply increased and foreign businesses have built entire sales models to take advantage of the de minimis exemption to avoid taxes and scrutiny while undercutting American companies that play by the rules.
In the Spring of 2023, Chairman Gallagher and Ranking Member Raja Krishnamoorthi (D-IL) launched an investigation into foreign fast-fashion companies Shein and Temu. Gallagher and Krishnamoorthi released interim findings, where they found that the two companies paid $0 in import duties to the United States, while American companies comparatively spent millions. The lawmakers also discovered that Temu did not possess due diligence mechanisms to verify its products were not tainted by forced labor in China.
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