On March 1, 2024, Chairman of the House Select Committee on the Strategic Competition between the United States and the Chinese Communist Party ("CCP") (the "Select Committee"), Mike Gallagher (R-WI-8), issued a statement responding to the US Customs and Border Protection Agency ("CBP") release of data that demonstrate a sharp increase in de minimis imports entering the US during fiscal years 2023 and 2024.
The US de minimis import rule is an exemption that allows articles valued at no more than $800 to enter the US free of duty and of any tax imposed on or by reason of importation. However, there are limits on how the de minimis rule is used: "the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800."1 Chairman Gallagher's statement highlighted that, according to the CBP:
more than 485 million de minimis shipments have already entered the United States in FY24, on top of the 1.05 billion shipments that entered tax-free under de minimis rules in 2023, itself a shocking 53% increase from 2022. No less than 94% of all import transactions now enter the U.S. through De Minimis [sic] rules, accounting for 90% of all illegal narcotics, agricultural goods, and counterfeit seizures by customs.
The CBP has publicly released statistics for de minimis volume and values from fiscal year 2020 through an estimated 2024 "mid-year." These statistics are based on the number of bills of lading and their declared value at the time of import. The statistics mirror those cited by Chairman Gallagher and show that the total de minimis imports have increased from 636.7 million in 2020 to 1 billion in 2023, and are at an estimated 705.1 million for 2024 "mid-year." However, while the total de minimis volume has increased, the total de minimis value decreased from $67 billion in 2020 to $54.5 billion in 2023.
Chairman Gallagher asserted that the above data demonstrates an "exploitation of the de minimis exception" and called upon Congress to take "urgent action" as "American retail will be forced to shift US operations and jobs to China." In its March 2024 Monthly Update, CBP reported that it was "intensifying its targeting and enforcement efforts to increase and expedite the prosecution of illegal customs practices," which include enforcing de minimis compliance. Chairman Gallagher's statement did not mention CBP's recent efforts.
The Select Committee's statement on de minimis imports demonstrates US lawmakers' continuing, critical view of China-related imports, in particular concerns relating to China's increased imports into the US and the corresponding effect such imports may have on US domestic industries. Interested parties should continue to monitor US actions relating to de minimis imports, and assess how potential changes, e.g., making Chinese imports ineligible for the program or the duty-free treatment thereunder, may affect its business operations.
Footnote
1. 19 U.S.C. § 1321(a)(2)(C); Section 321 Programs | U.S. Customs and Border Protection (cbp.gov).
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