Congress, Industry Leaders Launch Coalition to Close the De Minimis Loophole
The issue of de minimis reform has gained palpable momentum on The Hill in recent weeks, culminating in the launch of an advocacy group pushing for decisive action against the controversial trade provision.
The Coalition to Close the De Minimis Loophole, launched Wednesday, includes members of Congress, labor unions, manufacturers and law enforcement groups.
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“De minimis is not just a textile issue, it’s an issue impacting us all, which is why this broad, diverse coalition has been formed to amplify our collective voices in the fight to get immediate, substantial and consequential change,” National Council of Textile Organizations (NCTO) president and CEO Kim Glas said, kicking off the Wednesday press conference.
Spearheaded by Rep. Earl Blumenauer (D-Ore.), ranking member of the House Ways and Means Trade Subcommittee, the Coalition intends to raise awareness for the role de minimis trade plays in facilitating the free flow of dangerous products, counterfeits and goods made with forced labor, as well as the smuggling of narcotics like fentanyl.
“The group we’ve gathered here today is a small sample of a bipartisan movement; you don’t see much of that in Congress anymore, but this is something that is critical,” Rep. Blumenauer said. The rallying of multi-industry support is “testimony to the mounting pressure for Congress to act.”
Nearly half a billion packages have entered the country under de minimis to date in 2024, with the majority hailing from China. “They are uninspected, they don’t pay any tariffs, we know for a fact that many of these products are made with forced labor and intellectual property theft, and they do not meet our consumer safety standards,” the congressman added.
Under Section 321 of the Trade Facilitation and Trade Enforcement Act, packages valued at under $800 can enter the country duty free, and they often make their way into the hands of shoppers without being inspected by Customs and Border Protection (CBP). Rep. Blumenauer, alongside Rep. Neal Dunn (R-Fl.), Senators Sherrod Brown (D-Oh.) and Marco Rubio (R-Fl.) last June introduced the Import Security and Fairness Act with the goal of stopping non-market economies from exploiting the de minimis trade rule.
“America needs a trade regime that helps our country and also protects our national security,” Rep. Dunn said Wednesday afternoon. “Our current de minimis tariff actually incentivizes the gaming of American import laws.”
Rep. Dan Bishop (R-N.C.), who recently held two hearings in the House Homeland Security Subcommittee on Oversight that examined de minimis’ role in circumventing U.S. trade laws like the Uyghur Forced Labor Prevention Act (UFLPA), said the provision is in “very significant need of reform.”
“Because of the evolution of commerce, the de minimis exception has swallowed the rule,” he said.
Coalition member Rep. Rosa DeLauro (D-Ct.), who has led the charge in pushing for protections for U.S. textile businesses against illegal customs practices, said de minimis reform requires a “robust enforcement plan that has teeth and that can be deployed expeditiously.”
“We must crack down on the de minimis trade loopholes that allow cheap fast fashion products to flow into the U.S., and we must stop the drug cartels and criminals who are exploiting these loopholes to facilitate the importation of deadly drugs like fentanyl into the U.S.,” she said. “The scale and the scope of illegal customs practices that are undermining the competitiveness of our manufacturers is daunting.”
“It is time to get to work to protect the U.S. supply chain and the nearly 550,000 workers who depend on a resilient textile production chain,” she added.
“The de minimis loophole means that our own trade laws are granting bad actors like Shein and Temu an outrageous advantage over American manufacturers,” added Alliance for American Manufacturing (AAM) President Scott Paul. “These Chinese companies have built billion-dollar businesses by exploiting de minimis, hooking American consumers on below-bargain-basement prices and supercharging a retail race to the bottom.”
Meanwhile, “There’s a very real cost hidden behind these cheap wares, and it’s paid by the men and women on the factory floor both here and abroad,” he said. “The de minimis provision invites importers to cheat the system and to exploit their workers.“
The daily deluge of de minimis shipments is impossible for CBP to contend with, according to Michael Stumo, CEO of the Coalition for a Prosperous America, which represents U.S. producers across a number of sectors. “Customs officials want to—and know how to—protect Americans from unlawful goods imports and illicit drugs,” but goods entering the country through direct mail can’t be searched effectively, he explained.
“Congress capitulated to FedEx and UPS to create high-volume lawlessness enabling Shein, Temu and foreign criminal organizations to ship goods to U.S. customers and drug dealers,” Stumo added. “Both Congress and President Biden have the power to close this loophole, save an estimated 20,000 lives per year and protect U.S. workers and businesses who obey our laws.”
Asked by Sourcing Journal about the state of play for de minimis legislation, and the likelihood of seeing concrete action during the lead up to a presidential election, Rep. Blumenauer said he believes that “within the next month or two, we will have a majority in the House of Representatives co-sponsoring [the Import Security and Fairness Act].”
“I take my legislation with me in my back pocket, and when I encounter somebody, I sit down and people are stunned when they find out the facts,” he added. “It’s just a matter of us doing our job with our fellow members of Congress, and the various advocacy groups. There are amazing people who have picked up this drum and are beating it. It’s a matter of execution.”
“I think we have an excellent chance of moving this to a work session in the House Ways and Means Committee and coordinating with our friends on the Senate side,” he added. “The momentum that is building is remarkable, and it’s just getting started.”