House Lawmakers Implore President Biden to Close the De Minimis Loophole
Amid interminable stagnation in Congress that has precluded legislation from passing, a majority of House Democrats have come together to press President Joe Biden to use his executive authority to close the de minimis “loophole” and stop the free flow of cheap, China-made goods into the U.S. market.
On Thursday, U.S. Representatives Rosa DeLauro (D-Ct.), Earl Blumenauer (D-Or.) and Tom Suozzi (D-N.Y.) released an open letter to the Commander in Chief signed by 126 of their Congressional contemporaries asking that the administration update the policy, which they said is undercutting American manufacturing and imperiling the jobs of workers across the country.
More from Sourcing Journal
At a press conference about the matter, the legislators, along with members of impacted industries, spoke to the unmanageable deluge of 4 million packages from “mass direct-to-consumer e-commerce” that are pummeling the country’s ports on the daily.
The trade provision, which allows parcels hailing from overseas worth under $800 to enter the country duty free, has given exporters—mainly from China—a workaround for the punitive tariffs on many of the country’s products. Packages that enter under the de minimis provision are also the perfect vehicle for counterfeits, fentanyl precursors and other illicit products, they argued.
“Congress provided the executive branch with broad discretion to designate what products may qualify for de minimis treatment in Section 321 of the Tariff Act of 1930,” the Members wrote to President Biden. “In the absence of a legislative solution at this time, we urge you to use the full range of your authorities to disqualify commercial shipments from de minimis treatment, so that packages entering the United States no longer evade inspection, information disclosure requirements, or the requisite tariffs and taxes.”
Disqualifying commercial shipments from de minimis treatment would slash the volume of small-package imports, and “instead of millions of individual packages arriving daily in express air delivery centers and via international mail, legitimate goods ordered online would arrive at formal ports aggregated in shipping containers with detailed information about the goods submitted in advance online,” they added. “This would make it possible for Customs and other regulatory agencies enforcing product safety, labor rights, drug interdiction, and other policies to target shipments that need inspection and seize violating imports.”
Rep. DeLauro told the press and industry leaders on Wednesday that the de minimis exception has created economic incentives that encourage foreign entities to produce mass amounts of cheap products simply for the purpose of taking advantage of tax-free sales into the U.S. market.
The Congresswoman asserted that beyond the economic ramifications, the trade exception makes it “almost impossible” to enforce the ban on goods made with forced labor. “This is a multifaceted problem. It requires strength, a capable enforcement plan to be able to fix it, and the plan needs real teeth, and it must be implemented quickly,” she added.
While lawmakers would rather see the de minimis issue dealt with legislatively, the Democrats on the call said their patience was wearing thin. Despite the fact that the concept of de minimis reform has engendered broad bipartisan support, politicking has precluded a concrete resolution.
Rep. Blumenauer’s Import Security and Fairness Act, introduced for the first time in 2022, presented such an opportunity, proposing that products from non-market economies and other countries of concern be excluded from de minimis benefits.
“You see this broad bipartisan coalition on Earl’s bill that negotiated very heavily. You see the people speaking on this call…that represent families that are suffering in the fentanyl crisis, textile companies that are closing, law enforcement that sees this happening on a regular basis, trade experts that see consumers and companies in America getting ripped off,” said Rep. Suozzi.
“This is a practical, everyday solution that will have an impact on real people’s lives. And much like the Senate bipartisan bill on the southern border, we’ve got the bill, we’ve got the legislation, but we can’t get it off the dime because of politics,” the New York Congressman added. “Not because of policy—because of politics. And we’ve got to instead seek executive orders.”
Whether the solution comes from Congress or straight from the president’s desk, there’s no time to lose, according to National Council of Textile Organizations (NCTO) president and CEO Kim Glas.
“I can’t amplify this enough: the U.S. textile industry is facing a five-alarm fire,” she said, noting that the sector has seen 18 textile plants shutter in recent months as a result of lost business.
“Eighteen plants that converted their operations literally overnight during Covid-19, when the country didn’t have life-saving PPE and nurses were wearing garbage bags, and medical technicians were reusing N-95 masks,” she added. “When a U.S. textile plant goes down, it is a strategic industry. We are here to be part of the front lines.”
“I worry about the next day. I know more textile plants will be shuttered,” she lamented, calling textiles “the most impacted manufacturing industry.”
“There’s other manufacturers who are also impacted, as well as American retailers, and we are with you in this fight,” Glas said. “There’s a sense of urgency right now to get this done.”