Biden Aims to Close Loophole Allowing Imports of Clothing and Drugs from China

WASHINGTON (AP) — The Biden administration is stepping up its efforts against low-cost products imported from China, particularly from companies like Temu and Shein. Under a new proposal, these companies will no longer enjoy tariff exemptions simply by claiming their goods are valued at less than $800.

President Joe Biden has announced that the de minimis exemption, which previously exempted certain low-value imports from tariffs, will be eliminated. This change was detailed in a proposed rule released on Friday. It aims to impose tariffs on imports that fall under specific sections of the Trade Act of 1974 and the Trade Expansion Act of 1962.

Importers, especially those from China, have taken advantage of the de minimis exemption, leading to a dramatic increase in shipments categorized as $800 or less. According to a statement from the White House, this number jumped from 140 million shipments annually to over 1 billion in recent years.

This regulatory action is being implemented during a sensitive period for both the United States and China, the world’s two largest economies. The U.S. has focused on reducing its dependency on Chinese goods, promoting local industries like electric vehicles, and limiting China’s access to advanced technology such as computer chips. On the other hand, China attempts to drive its economic growth through manufacturing and exports, especially as it faces deflation challenges following pandemic-induced lockdowns.

The current exemption has made it increasingly difficult for the U.S. government to control the importation of synthetic drugs like fentanyl, which are banned. Officials have pointed out that Chinese e-commerce platforms have exploited this exemption to flood the U.S. market with inexpensive clothing and textiles, potentially damaging domestic manufacturers and workers.

The loss of the de minimis exemption is expected to impact Chinese companies such as Temu and Shein, which thrive on low pricing strategies. They will likely face increased scrutiny moving forward. Currently, Section 301 tariffs apply to around 40% of all U.S. imports, encompassing about 70% of textile and apparel imports from China.

The proposed changes to regulations will also introduce new criteria for de minimis imports. This includes requirements for a 10-digit tariff classification number and detailing the individual claiming the exemption, making the process more transparent and controlled.