How to close loopholes on Chinese e-commerce and boost US retailers
On Feb. 5, President Trump signed an executive order suspending the planned closure of the de minimis loophole, a move that will temporarily spare Chinese e-commerce giants Temu and Shein from new trade restrictions. His administration had previously moved to eliminate de minimis eligibility for imports from China, targeting a rule that allows shipments under $800 to enter duty-free with minimal inspections.
This loophole has given these platforms an unfair advantage over U.S. retailers, with a 2023 House Select Committee on the Chinese Communist Party report finding that both companies deliberately structured their international expansion strategies around de minimis to bypass duties.
Although this reversal delays needed reforms, Congress and the administration should still take further action to ensure U.S. e-commerce platforms remain competitive against Chinese rivals.
De minimis shipments from China have increased steadily in recent years. According to new data from a Congressional Research Service report, in 2018 China exported $5.3 billion in low-value single packages globally. By 2023, that number ballooned to $66 billion, with nearly $20 billion being imported to the U.S.
Between 2018 and 2021, two-thirds of all de minimis imports into the U.S. came from China, highlighting just how disproportionately the exception benefited Chinese sellers.
The rapid growth of these direct-to-consumer imports has put U.S. e-commerce platforms — particularly Amazon and Walmart — at a competitive disadvantage, as Chinese sellers using platforms like Shein and Temu avoid import duties and benefit from lax regulatory oversight.
Congress passed a law in 2016 raising the de minimis threshold from $200 to $800, unintentionally giving Chinese online sellers greater latitude. The law states that the purpose of raising the threshold was to “provide significant economic benefits to businesses and consumers in the United States and the economy of the United States.”
With nine years of hindsight, it is true that U.S. consumers have benefitted from better trade facilitation, but CRS’s data shows that China’s economy and businesses have been the primary beneficiaries of de minimis.
Chinese sellers will likely explore workarounds to export goods duty-free directly from China to the United States. These workarounds could include transshipping goods through other countries or making small alterations to make them appear as originating from a country that still qualifies for the de minimis exception.
This type of practice would mirror China’s practice of dumping products in the United States via circumvention through countries like Thailand and Vietnam. U.S. officials should prepare to counter Chinese sellers’ attempts to evade the new restrictions, whether through transshipment or misrepresenting the origin of goods.
Congress should direct Customs and Border Protection to dedicate resources, including investment in artificial intelligence solutions, to strengthen enforcement against these tactics.
Still, President Trump and Congress can do more to boost U.S. e-commerce platforms. After all, the real issue is not Americans buying low-cost goods shipped directly from China (as opposed to buying those same goods in stores), but that these Chinese apps are undercutting U.S. platforms while engaging in questionable tactics, such as potentially violating intellectual property rights, forced labor laws and product safety standards.
Moreover, as Congress has made clear with its restrictions on TikTok, Chinese-owned apps present security and privacy risks for American users because, absent extraordinary controls, the Chinese government can obtain access to data held by private companies.
To stay tough on China while not hurting U.S. companies, Congress should create a carve-out allowing Chinese sellers on U.S. e-commerce platforms — such as Amazon’s Amazon Haul, which sells low-cost overseas goods — to continue using the de minimis exemption on Chinese imports.
Unlike Temu and Shein, U.S. platforms like Amazon provide better consumer protection and vet their sellers more rigorously, reducing risks associated with counterfeit or unsafe products.
In short, if Chinese online sellers want the benefit of the de minimis exemption, they must use a trusted U.S. platform. This change would make U.S. firms more competitive than their Chinese counterparts while still allowing consumers access to affordable goods, albeit with greater safeguards.
However, Temu and Shein should not receive the same carve-out. Instead, Congress could create a trusted shipper program for Chinese e-commerce platforms to enable Customs to process packages from these companies more efficiently. Such a program would allow select platforms that implement higher vetting standards to ship a capped amount of certain product categories from Chinese vendors with fewer inspections.
This approach would encourage Temu and Shein to better comply with U.S. laws. These platforms would be subject to verification audits from Customs and Border Protection, with violations — such as those related to product safety, forced labor, trademarks or sanction evasion — resulting in the suspension of their eligibility.
Eliminating de minimis for Chinese sellers was the right move and Trump should follow through on it, but policymakers should take further action to boost the competitiveness of U.S. e-commerce firms.
A well-calibrated approach — one that prevents Shein and Temu from exploiting loopholes while incentivizing compliance and supporting vetted sellers on U.S. platforms — would best serve the United States’ economic and strategic interests.
Daniel Castro is vice president of the Information Technology and Innovation Foundation and director of its Center for Data Innovation, where Eli Clemens is a policy analyst specializing in e-commerce and retail technology policy.
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