Biden Admin Targets Temu, Shein and Alibaba Over 'Abuse' of Trade Loopholes

The Biden-Harris Administration has unveiled new regulations to address the growing misuse of the de minimis exemption by Chinese e-commerce platforms such as Shein, Temu, and Alibaba.

These companies have been exploiting the loophole to flood the U.S. market with low-cost goods, often bypassing tariffs and regulations, which has raised concerns about consumer safety and trade fairness. The proposed changes are part of a broader effort to rein in China’s influence over U.S. markets and ensure compliance with trade laws.

Key Facts:

The de minimis exemption allows shipments valued at $800 or less to enter the U.S. duty-free.
The volume of these shipments has surged from 140 million a year to over one billion in a decade.
The administration aims to close this loophole to prevent tariff evasion and combat counterfeit and dangerous goods, including illicit drugs.
New regulations will require more detailed data, such as a 10-digit classification number and the identity of the filer.
The administration is urging Congress to pass additional reforms to further protect U.S. consumers and businesses.

The Rest of the Story:

The Biden-Harris Administration is tightening its grip on Chinese e-commerce giants by revising the rules around the de minimis exemption, a provision that permits low-value shipments to enter the U.S. without paying duties.

Over the past decade, the number of these duty-free shipments has grown from 140 million annually to over a billion. According to the White House, Chinese platforms like Shein and Alibaba have taken advantage of this loophole to introduce inexpensive goods into the U.S., often evading tariffs and health regulations.

The influx of these goods has raised alarms about the safety of American consumers and the integrity of U.S. markets. The White House noted that some of the shipments include counterfeit products and dangerous items such as synthetic drugs like fentanyl. This has made it increasingly difficult to enforce trade laws and ensure that unsafe products are kept out of the U.S.

The administration’s proposed regulations aim to close this loophole by enhancing data collection and tightening control over which products can claim the de minimis exemption. For instance, shipments that contain goods subject to existing penalties will no longer be able to dodge tariffs. Additionally, new rules will require more detailed shipment information, improving oversight and enforcement.

Beyond these administrative changes, the White House is also pushing Congress to enact further reforms. One proposed measure would exclude certain sensitive products from qualifying for the exemption, ensuring that they face the full weight of tariffs and regulatory scrutiny.

Commentary:

The Biden administration’s move to curb the misuse of the de minimis exemption is a necessary step in addressing the trade imbalance with China. By flooding the market with low-cost goods, Chinese platforms have put American manufacturers, especially in industries like textiles, at a disadvantage. The proposed regulations strike a balance between ensuring consumer safety and promoting fair competition.

Some argue that these measures are long overdue. Congressman Dan Bishop (R-NC) discussed this very issue on the house floor months ago, calling for an end to the loophole.

End the de minimis loophole. pic.twitter.com/3I73geTDuO

— Rep. Dan Bishop (@RepDanBishop) April 18, 2024

The timing of this move is obvious. Congressional Democrats sent a letter to the administration encouraging this move just two days after the presidential debate between Vice President Kamala Harris and former President Donald Trump. Biden responded the following day, a mere 8 weeks prior to the election.

The Bottom Line:

The Biden administration’s new rules targeting Chinese e-commerce platforms designed to improve enforcement, safeguard consumers, and protect U.S. businesses from unfair competition by loopholes in the de minimis exemption, which has allowed a massive influx of low-cost goods into the U.S.

While this is a positive and necessary step, there is no question it was taken at this time to bolster a lagging record for Kamala Harris in her election bid for president.