Biden and Harris Implement New Tariffs on Temu, Shein

On the same day that Vice President Kamala Harris criticized Donald Trump's proposal to introduce new tariffs on foreign products, branding it a "Trump sales tax," the Biden administration announced similar tariffs.

New Tariffs Introduced

On Thursday, the White House revealed new tariffs primarily targeting Chinese e-commerce platforms such as Temu and Shein. The aim is to limit the number of low-value imports that are exempt from duty and tax. These new tariffs build on those implemented during Trump's tenure, which the Biden administration has maintained, according to SCMP. In 2018, Donald Trump, then president, imposed tariffs ranging from 7 to 25 per cent on US$300 billion worth of Chinese imports under Section 301 of the Trade Act of 1974, due to alleged “unfair” trade practices. Joe Biden, his successor, has kept most of these tariffs and extended them to include Chinese solar panels, electric vehicles, and batteries – with tariffs on electric vehicles reaching up to 100 per cent.

Addressing the 'de minimis rule'

US deputy national security adviser for international economics, Daleep Singh, stated that the measures would tackle the 'de minimis rule,' which exempts shipments valued at less than $800 from import duties, taxes, and rigorous screening. Singh explained that as approximately 70 per cent of Chinese textile and apparel imports are subject to section 301 tariffs, this move will significantly reduce the number of shipments entering through the de minimis exemption. The aim is to "curtail de minimis overuse and abuse."

Existing Measures and New Tariffs

The new tariffs are based on existing measures under Section 201 of the Trade Act and Section 232 of the Trade Expansion Act of 1962, which addresses industry, national security, and human rights concerns. The now-closed de minimis exemption has long been seen as a "loophole" that lets Chinese e-commerce companies and fentanyl traffickers avoid tariffs and pose a threat to public safety. A House Select Committee report on the CCP from June last year concluded that Temu and Shein alone are probably responsible "for more than 30 per cent of all packages shipped to the United States daily under the de minimis provision."

Increasing Shipments and Safety Concerns

According to a fact sheet released by the Biden administration, the number of annual shipments entering the US under the de minimis rule has risen from about 140 million a decade ago to over 1 billion last year. A senior Biden administration official expressed concern over the high volume of shipments, stating it is too much for officials to effectively target and block shipments that are unsafe, illegal, or violate other laws, or are unfairly traded. The official also voiced concern about large foreign companies exploiting the de minimis loophole on an unprecedented scale, creating a volume that they believe constitutes abuse.

Proposed New Requirements and Standards

To ensure better visibility into de minimis shipments, the US government has proposed new information collection requirements and stricter safety standards. Products that fail to meet these standards will be prevented from entering the market. Singh stressed that the Biden administration will always act to protect Americans and enforce laws to level the playing field for American workers, retailers, and manufacturers.

Legislation to Reform the de minimis Exemption

Singh also proposed that Congress should pass legislation to comprehensively reform the de minimis exemption. In August, a bipartisan group of lawmakers targeted textiles and clothing in a new bill. A senior official stated they would be specific about textiles and apparel, as they make up a significant percentage of the de minimis shipments currently seen. The official added that they would like to work with Congress to ensure any changes made to de minimis take into account how trade volumes might shift in the future.

Bottom Line

It appears that the so-called "Trump sales tax" may be more effective than initially thought. What are your thoughts on these new tariffs and their potential impact? Do you think they will be effective in curbing abuse of the de minimis rule? Share this article with your friends and let's get the conversation started. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.