China e-commerce shipments would lose US tariff exemption under proposed law

By Katherine Masters

NEW YORK (Reuters) – A bipartisan group of U.S. lawmakers planned to introduce a bill on Wednesday to eliminate a tariff exemption widely used by e-commerce sellers to send orders from China to U.S. shoppers, one of the sponsors said.

The exception, known as the de minimis rule, exempts imports valued at $800 or less from tariffs if the items are shipped to individual consumers. The bill would ban such shipments from China immediately upon enactment, sponsor Republican Senator Bill Cassidy said.

Ecommerce sellers such as China-founded, Singapore-based Shein and Temu, a rival owned by PDD Holdings Inc that operates the Chinese ecommerce site Pinduoduo (NASDAQ:), are big beneficiaries of the exemption. A federal brief in April said the companies “exploit” de minimis to avoid duties and import illegal items such as those made in China’s Xingiang region with forced Uyghur labor.

A Shein spokesperson said Tuesday the company has no manufacturers in Xinjiang. Temu did not immediately respond to a request for comment.

De minimis shipments have drawn attention at least since 2019, when the U.S. Consumer Product Safety Commission reported it struggled to catch unsafe imports because of the heavy volume of low-value packages. Such shipments rose to 685.5 million in 2022 compared with 410.5 million in 2018, U.S. customs data showed.

The bill’s other sponsors are Republican Senator J.D. Vance and Democratic Senator Tammy Baldwin. It was unclear how much traction the proposal would gain. A separate but similar bill by Democratic Representative Earl Blumenauer failed to pass Congress last year.

Under the bill, countries other than China and Russia could keep the exemption by adopting the $800 threshold for their own tariff-free imports. The bill would only allow private shippers like FedEx (NYSE:), UPS and DHL to transport de minimis packages and exclude postal services.

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