The White House said on Thursday it is acting on Democratic lawmakers' demands to close what they see as a legal loophole that allows manufacturers — most from China — to dodge tariffs on low-priced goods and flood the U.S. with illegal and unsafe products.
The Biden administration is targeting the "de minimis" exemption, which allows parcels valued at less than $800 to enter the U.S. duty free. More than 1 billion such parcels entered the U.S. in fiscal 2023, U.S. Customs and Border Protection said.
White House officials attribute the more than fivefold increase from several years ago to the growth of Chinese e-commerce platforms such as Shein and Temu, and administration officials name-checked both of those popular fast-fashion retailers in a briefing with journalists on Thursday.
Daleep Singh, deputy national security adviser for international economics, said these moves to close the loophole would have a big effect on Chinese apparel and "will drastically reduce the number of shipments entering through the de minimis exemption."
This would likely hamper Americans' ability to score items like an $8 T-shirt — available in a range of colors — that features a gunslinging, pants-wearing cartoon cowboy duck who proclaims, "you just yee'd your last haw." Or a $6 crop top that reads, in English, LIVE LAUGH LOBOTOMY. Or an $8 bra made of two fuzzy, dead-eyed cat faces shorn of their noses, mouths, whiskers and facial expressions, strung together and tied halter-style around the neck. Or an $8 item that can only be described as a business-formal bra, as it is made entirely of ties. It is available in a patchwork of leopard, zebra and tiger prints, presumably for a formal office that is animal themed.
Singh added that the administration also seeks to tighten information collection requirements and consumer safety standards — and block products that don't make the cut. And further, he said, the White House is calling on Congress to pass a law this year to "comprehensively reform the de minimis exemption."
In a Wednesday letter, 126 House Democrats urged the president to use his executive authority, saying they could not act "amid interminable stagnation in Congress that has precluded legislation from passing."
"While lawmakers would rather see the de minimis issue dealt with legislatively, the Democrats on the call said their patience was wearing thin," the letter read. "Despite the fact that the concept of de minimis reform has engendered broad bipartisan support, politicking has precluded a concrete resolution."
Congresswoman Rosa DeLauro of Connecticut, one of the initiative's leaders, expressed concerns over fast fashion's documented use of forced labor to make their cut-rate clothing. Rights group Amnesty International has reported that Shein, in particular, upholds "questionable labor and human rights standards."
Shein's model, the group says, leans on subcontracting the making of garments, which leaves no room for transparency or accountability for worker conditions, and gives workers no right to unionize or assemble.
Navtej Dhillon, deputy director of the National Economic Council, also said the moves address concerns over fentanyl shipments and for declining U.S. industry.
"Some foreign companies are attempting to use this pathway to ship illegal and dangerous products for our health, avoid our health and safety and consumer protection laws, and evade tariffs to undermine American manufacturers," he said. "Textile and apparel manufacturing supports tens of thousands of jobs in key states like Georgia and North Carolina. These American workers and manufacturers deserve to compete on a level playing field."
The congressional group pushing the administration cited approval from law enforcement and industry groups.
"The de minimis loophole is severely exacerbating our nation's opioid crisis," said Bill Johnson, executive director of the National Association of Police Organizations. "Closing it would help staunch the flow of fentanyl and other narcotics coming across our borders and help safeguard the lives of our children, families and friends."
And Kim Glas, president and CEO of the National Council of Textile Organizations, said the industry group "strongly supports closing the de minimis loophole," noting the closure of 18 textile plants in the U.S. in the past year.
"De minimis is a free trade agreement for the world at the expense of U.S. manufacturers, retailers, and consumers," she said in a statement. "Shockingly, it has now become a black market for dangerous products facilitating fentanyl, precursors and pill presses. De minimis is destruction."
Shein said last year that they support "responsible reform" of the policy but did not give precise recommendations.
"The de minimis exemption needs a complete makeover to create a level playing field for all retailers," Shein Executive Vice Chairman Donald Tang said in a statement. "At the same time, American consumers deserve to know that the products they purchase are authentic and ethically produced. We believe de minimis reform can and should achieve both."
