An effort in Congress to lower the de minimis value for duty-free imports could get a boost from a recent International Trade Commission report finding that most de minimis shipments into the U.S. come from China.
Section 321 of the Tariff Act of 1930 allows for the informal entry of articles that have a retail value of $800 or less and are imported by one person in one day. These articles are free of duty and taxes and are subject to expedited clearance processing. The U.S. de minimis level was increased from $200 to $800 in 2016 and is one of the highest in the world; others of note include $6.50 in China, $111 in Canada, $50 in Mexico, $162 in the European Union, and $168 in the United Kingdom.
According to the report, Section 321 imports account for a substantial share of all U.S. e-commerce imports by quantity, increasing by 88 percent from 2018 to 2021 and constituting 83 percent of total U.S. e-commerce imports in fiscal year 2022. By value, de minimis imports were less than two percent of the total value of U.S. goods imports in 2021, but from 2018 to 2020 their value more than doubled from $29 billion to $67 billion.
The report also points out that China is the leading source of de minimis imports by a large margin, more than three times larger than the UK and Canada, the next leading foreign suppliers. From 2018 to 2021 nearly two-thirds of the 2.3 billion shipments imported under Section 321 were sourced from China, and while that percentage has declined recently as imports from other markets have increased, the shares of such imports from Canada (eight percent), the UK (seven percent), and Hong Kong (four percent) likely include transshipments originating from China.
The report states that the large volume of Section 321 imports from China in recent years has led to increased scrutiny. For example, because de minimis imports are subject to minimal documentation and inspection, concerns have been raised about product safety, the use of illicit cotton from Xinjiang and forced Uyghur labor, and violations of intellectual property rights.
In response, bipartisan legislation was introduced in the House and Senate earlier this year to exclude non-market economies (like China) from benefitting from the Section 321 program. Support for this legislation was evident at a June hearing before the House Ways and Means Trade Subcommittee, and in one of its first reports earlier this year the House Select Committee on the Chinese Communist Party recommended that Congress pass it.
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