Biden targets Shein, Temu for alleged ‘abuse’ of U.S. trade loophole

The Biden administration announced new steps on Friday to curtail what it calls the “overuse and abuse” of a longstanding trade law that permits low-value shipments to enter the United States without paying import duties and processing fees.

The steps include a new rule proposal, which would bar overseas shipments of products that are subject to U.S.-China tariffs from being eligible for the special customs exemption.

Known as the de minimis loophole, the trade provision allows packages with a value of less than $800 to enter the United States with relatively little scrutiny. Over the past decade, the number of de minimis shipments has exploded, from roughly 140 million to more than a billion, according to a White House estimate.

“The drastic increase in de minimis shipments has made it increasingly difficult to target and block illegal or unsafe shipments coming into the U.S.,” Daleep Singh, deputy national security advisor for international economics, told reporters on a Thursday call to preview the actions.

Officials say the explosion in de minimis shipments is largely driven by a few Chinese-linked online retail giants like Shein and Temu, which use the exemption to ship millions of dollars worth of clothing and inexpensive household goods from factories in China directly to American customers.

Each individual package is typically worth far less than $800, and thereby qualifies for the de minimis exemption.

But new eligibility restrictions for products that are subject to tariffs under Section 301, Section 201, and Section 232 — like the ones proposed Friday — could upend this business model.