Cracking the Code: How Chinese Retailers are Revolutionizing American Fashion

Have you ever wondered how those trendy items from across the Pacific manage to be so affordable? Well, it turns out there’s a trade rule at play here called the de minimis exception. This nifty little rule allows packages valued under $800 to enter the U.S. duty-free per person per day. However, a recent move by 40 lawmakers is aiming to change that. They’ve called on Homeland Security Secretary Alexander Mayorkas to tighten the reins on the de minimis trade, citing concerns about the influx of dangerous substances like fentanyl into the country.

Leading the charge is Oregon’s very own Rep. Earl Blumenauer, the top Democrat on the House Ways and Means trade subcommittee. He’s introduced legislation that would exclude non-market economies such as China from benefiting from the de minimis rule. Companies like Shein, now based in Singapore, have emphasized their commitment to complying with customs and import laws, including those related to de minimis packages in the U.S.

The de minimis exception has been around since 1938, originally designed to ease the flow of small packages valued at no more than $5 (equivalent to roughly $106 today). Fast forward to 2023, and the number of de minimis packages passing through U.S. customs has skyrocketed. In fact, over 1 billion such packages made their way into the country, a massive increase from just 134 million packages back in 2015. China stands out as the primary source of retail packages entering the U.S., with nearly 3 million small parcels flowing in daily under the de minimis rule.

LaFonda Sutton-Burke, the director of field operations for Custom and Border Protection in Chicago, highlighted the staggering 646% surge in de minimis parcels over the past eight years. A report by the House Select Committee on China’s Communist Party revealed that online retailers like Shein and Temu contributed significantly, accounting for more than 30% of all daily packages entering the U.S. under the de minimis exemption.

While China’s overall exports saw a modest 0.6% growth last year, cross-border e-commerce, which encompasses de minimis packages, emerged as a standout performer. The challenge lies in accurately gauging the dollar value of these direct online retail sales, especially since the U.S. import figures do not explicitly capture them. In response to concerns about unfair trade practices, including the de minimis rule, the National Council of Textile Organizations and the National Association of Police Organizations have voiced their grievances.

With the spotlight on the impact of de minimis exceptions on the influx of goods and substances, the discussion around tightening regulations to safeguard national interests is gaining momentum. It’s a complex landscape where economic interests intersect with security concerns, underscoring the need for a balanced approach to trade policy.