Two months ago, The Information reported on how overseas companies were taking advantage of high de minimis rates to ship packages directly to US consumers without having to collect duties. This week, the publication reported that the US was cracking down on the practice, and on Friday, a government agency confirmed its report.
The Information said the U.S. Customs and Border Protection (CBP) suspended several custom brokers from participating in Entry Type 86 in recent weeks, allegedly including Seko Logistics,* which processes millions of parcels at airports in New York, California, and Illinois.
Today, the CBP’s Acting Commissioner issued a statement confirming that it was enhancing its enforcement efforts to ensure compliance and minimize the exploitation of the small package, de minimis, environment. “To date, CBP has suspended multiple customs brokers from participating in the Entry Type 86 Test after determining that their entries posed an unacceptable compliance risk.”
The CBP estimates nearly 90% of shipments coming into the US are entering through the small package environment, attributing the fact to the growth in ecommerce.
The agency said that in 2015, it processed 134 million de minimis transactions. By 2023, that number had grown to 1 billion. (Also a contributing factor: in 2016, the de minimis threshold was raised from $200 to $800.) Every day, over 2.5 million low-value, de minimis shipments arrive at CBP facilities for targeting, review, and potential physical examination.
As we noted in March, eBay and Etsy have been in favor of higher de minimis thresholds, since they on cross-border trade. But now they find themselves competing with Temu and Shein, which have exploded in popularity due to their ability to offer extremely low prices for their goods.
*Updated 6/4/2024: The CBP reinstated Seko Logistics, which is reportedly seeking action against the agency.
The real question is why does the US Government accept the UN’s opinion that China is still a 3rd World country and we, the American taxpayers, should subsidize shipping mail and packages from China into America. China has the world’s largest economy, so why continue to classify them as an emerging economy?
Also lobbying at the time for the higher deminimis levels were the courier / express delivery companies (FedEx, DHL, UPS), who wanted to minimize any customs delays for the small items they handle. The lower levels were perhaps well intended, but since they have become a loophole for mass imports by China firms like Temu, Shein, etc., the level needs to be lowered drastically or better yet, eliminated. This would level the playing field for US sellers. Like in Germany where even $5 imported items are subject to a value added tax by German customs. Free trade was an interesting idea, but has been a disaster for the US, its workers, small businesses, and many communities.