Trump eliminates small loophole for China and Canada in de minimis trade policy – Bicycle Retailer
The U.S. marketplace will no longer allow e-bikes and lithium-ion batteries valued at under $800 from China and Canada to enter without scrutiny as the de minimis exemption, which permitted duty-free entry, is closed. This move will impact online retailers like Alibaba and Temu who benefitted from selling these products below market cost without paying duties or taxes. Patrick Cunnane, an industry veteran, highlighted that while de minimis may not be completely eliminated yet, the recent actions indicate it is being addressed. He emphasized the potential short-term nature of these changes as seen with the recent tariff pause with Mexico, noting that the revenue from de minimis could be used to enhance inspection processes.
Cunnane has been actively advocating for the reduction of the de minimis threshold, suggesting it should be as low as $10 or even completely eliminated. The Consumer Product Safety Commission regulations are bypassed by offshore retailers selling products like e-bikes and batteries, raising concerns about product safety and oversight. The Trump administration’s decision to impose duties was driven by the need to address the flow of opioids and other drugs from Canada and disrupt the China supply chain.
In 2018, Cunnane testified in front of the Section 301 Committee, proposing a reduction in the de minimis threshold, and now supports lowering it to $10 or eliminating it altogether. The U.S.-China Economic and Security Review Commission recommended eliminating the de minimis exemption and granting the Consumer Product Safety Commission mandatory recall authority over products from unresponsive Chinese sellers. The commission also suggested repealing Permanent Normal Trade Relations for China to address unfair trade behaviors and intellectual property theft.
The closure of the de minimis exemption will have significant implications for online retailers and vendors who have leveraged this loophole to sell products at reduced prices and bypass regulatory requirements. The focus on revenue generation from de minimis to enhance inspection processes reflects a broader shift towards stricter oversight and regulation in the import industry. The need to address the influx of opioids and drugs from Canada and disrupt the supply chain from China underscores the importance of these changes in safeguarding consumer safety and addressing unfair trade practices.