U.S. May Consider Lowering De Minimis Duty Exemption Threshold, Lighthizer Says
Source
American Shipper
Post Date
06/19/2020
U.S. Trade Representative Robert Lighthizer said June 17 that the Trump administration may consider a change to a policy that has facilitated the expansion of e-commerce and yielded lower costs for many importers. U.S. customs laws and regulations provide for a duty exemption for goods manifested at less than $800 fair retail value in the country of shipment if imported by one person on one day. This exemption applies to not only base MFN tariffs but also section 301 tariffs such as those currently in place against imports from China. Use of this exemption has skyrocketed alongside the growth of direct-to-consumer (B2C) e-commerce, which has further accelerated as more consumers shop from home due to the COVID-19 pandemic. Trade groups have asserted that the 2016 increase in this de minimis threshold from $200 to $800 facilitates faster border clearance for imports of low-value goods that small businesses use for assembly and value-added manufacturing operations, thus boosting their bottom lines. It also benefits high-technology component manufacturers and apparel, textile, and other retailers that import samples as well as consumers who gain faster, less-expensive access to a wider range of goods.
However, in testimony before the House Ways and Means and Senate Finance committees, Lighthizer said the White House may consider lowering this threshold, which he said ¡°far exceeds¡± the amounts allowed by major trading partners such as the European Union, China, Canada, and Mexico. This disparity ¡°results in massive numbers of shipments to the U.S. receiving duty-free treatment and virtually no screening,¡± he said. For instance, there were a combined 1.2 billion de minimis imports into the U.S. in fiscal years 2018 and 2019 (about 60 percent of which were from China) compared to 68 million formal entries (with less than 11 percent from China). According to Lighthizer, this ¡°disproportionately high volume ¡ indicates China and others are likely exploiting the high U.S. de minimis threshold to avoid paying duti
