US President Donald Trump’s decision to impose tariffs on cheap Chinese goods has been put on hold due to a massive backlog of packages at New York’s John F. Kennedy International Airport. The executive order, which took effect just three days ago, aimed to crack down on de minimis rule, allowing low-value goods from China to enter the US duty-free.
The policy change proved unworkable on short notice, leaving officials scrambling to implement it without crippling America’s efficient import system. Logistics experts say that overhauling operations in a matter of days is impossible, and changes typically take months to implement.
The de minimis rule has been criticized for allowing cheap Chinese products to flood into the US, undercutting American industries and potentially serving as cover for smuggling contraband. The sheer volume of packages entering through this tax-free channel means that any changes need to be well considered and implemented on a time frame that gives shippers and customs officials time to adjust.
The US Postal Service (USPS), which accounts for only 5% of last year’s total de minimis shipments, is seen as the Achilles heel of any policy to remove tariff exemptions. USPS lacks the infrastructure to assess and process duties on packages of electronics and other goods coming from abroad.
Express carriers like FedEx, UPS, and DHL have in-house customs brokerage divisions that can handle tariffs, but they often handle every step of a delivery. The Trump administration is now considering reinstating the ban on de minimis rule, which could lead to another rocky rollout due to global shipping routes being complex and challenging to track.
The Commerce Department will be responsible for figuring out how to make the policy work, with experts warning that it will likely be chaotic regardless of the outcome.
Source: https://ca.finance.yahoo.com/news/trump-closed-minimis-import-loophole-110203635.html