President Donald Trump has removed a duty-free exemption worth $800 for imports from China, potentially crippling small businesses that rely on the loophole to sell goods at competitive prices. The move could lead to higher prices and delays in shipments for consumers.
The de minimis exception, established by Congress nearly a century ago, allowed low-value packages shipped directly to buyers in the US with a value of less than $800 to be exempt from import taxes and customs procedures. Critics argue that this provision has been exploited by e-commerce giants like Shein and Temu to sell cheap goods to American consumers.
Economists warn that withdrawing the exemption could cause prices to rise for consumers and small businesses, as tariffs will increase shipping costs. Small companies that rely on drop-shipping to keep prices low may be particularly affected, undoing a critical competitive advantage. The rise of e-commerce has been beneficial for small businesses, including those owned by women and minorities, as it has democratized globalization.
The National Foreign Trade Council estimates that the price of an imported $50 package could double without the exemption, while packages will take longer to clear customs. Customs brokers have already warned customers of expected delays.
While some argue that the exemption is a “loophole,” economists say it’s perfectly legal and allows companies to keep costs down. The move may also lead to an increase in illegal items slipping through customs due to lack of scrutiny on low-value packages.
The removal of the exemption comes as US businesses increasingly rely on imports from China, with many manufacturing there. Critics warn that this dependence has led to problems, including allowing fentanyl and forced labor into the country.
Source: https://www.inc.com/jennifer-conrad/trump-just-eliminated-the-800-duty-free-exemption-for-imports-from-china-it-could-be-a-disaster-for-small-businesses/91143261