House Lawmakers Debate ‘End China’s De Minimis Abuse Act’
Kate Nishimura
5 min read
Washington legislators on Wednesday debated a bill that would limit China’s access to the de minimis trade provision—and consequently, restrict its access to the U.S. market.
During a markup session held by the House Ways and Means Committee, lawmakers discussed H.R. 7979, otherwise known as “End China’s De Minimis Abuse Act,” introduced by Congressman Greg Murphy (R-N.C.) earlier this week. Under the bill, Section 321 of the Tariff Act—which allows foreign shipments worth less than $800 to enter the U.S. market duty free— would be modified to exclude any good subject to Section 301 tariffs.
The punitive duties on China-made goods were imposed by former President Donald Trump in 2018 and 2019, and have remained in place throughout President Joe Biden’s presidency. Under H.R. 7979, restricting goods subject to Section 301 tariffs from utilizing de minimis would eliminate more than half of the entries currently coming in from China under the provision. The law also restricts the use of de minimis for other imports that are subject to U.S. trade actions.
The End China’s De Minimis Abuse Act adds a new Harmonized Tariff System (HTS) classification requirement for all de minimis entries from countries subject to Section 301 tariffs to ensure duties are being properly collected. This will also aid law enforcement in addressing illegal trade practices, the bill said.
Notably, the legislation imposes a new civil penalty for individuals who violate U.S. de minimis law, charging them a $5,000 fine for a first violation and $10,000 for each subsequent offense. Currently, de minimis abuses generally result in a forfeiture of the shipment. Most de minimis shipments are worth $55 or less, so there’s little deterrence for bad actors, the bill said.
The House Ways and Means Committee, which passed the bill, will next send it to the House floor to be voted upon. A companion bill will be introduced in the Senate via the Senate Finance Committee.
While H.R. 7979 addresses China’s outsized usage of the de minimis trade rule, some don’t think it goes far enough.
“I appreciate the notion this is a first step. We don’t have to settle for a first step,” said Rep. Earl Blumenauer (D-Ore.), ranking member of the House Ways and Means Trade Subcommittee and lead sponsor of the recently launched Coalition to Close the De Minimis Loophole.
“Over three million packages a day enter the United States untaxed, uninspected, and they undercut American business,” he added. “They undercut the provisions dealing with forced labor, product safety violations, and are increasingly a source of fentanyl and fentanyl precursors.”
Under Rep. Murphy’s proposal, “the volume of packages continuing to come into the United States under de minimis will be so large that Customs and Border Patrol will be outmatched and overwhelmed,” he said.
Rep. Blumenauer, who introduced the Import Security and Fairness Act last June, advocates for broader de minimis reform. Under his bill, goods from non-market economies and goods subject to enforcement actions like Section 301 would be prohibited from utilizing de minimis, as would any countries on the U.S. Trade Representative’s (USTR) Watch List. Offshore distribution or processing facilities would also be barred from exploiting the trade rule, and Customs and Border Protection (CBP) would be tasked with collecting more information on all de minimis shipments from anywhere in the world.
“We have had some constructive conversations, but we don’t have to settle for a third of a loaf or a quarter of a loaf,” Blumenauer said Wednesday. “This committee has the opportunity to close the de minimis loophole.”
Kim Glas, CEO and president of the National Council of Textile Organizations (NCTO), characterized the de minimis issue as “a crisis of disproportionate impacts.”
“Today’s markup is an initial step, but we underscore with urgency that a comprehensive solution is desperately needed now,” she said. “We are strongly committed to working with the committee and with members on both sides of the aisle to urgently close this disastrous loophole once and for all.”
Calling the conversation about de minimis reform “long-overdue,” Glas warned that “congressional action on de minimis must not result in half-measures that do not adequately address the complex aspects of this multifaceted issue and the many unique challenges it poses.”
Specifically, NCTO’s stance is that the bill doesn’t go far enough in restricting China’s privileges. “In addition, we strongly believe the bill, at the very least, should preclude de minimis treatment for trade-sensitive sectors, such as textiles and apparel, which according to U.S. Customs and Border Protection accounts for a full 50 percent of all de minimis entries,” Glas said.
The deluge of de minimis shipments hitting U.S. shores each day has cut the American textile sector off at the knees, she explained. Fourteen manufacturing plants have shuttered in recent months, “citing the overwhelming and growing flow of direct-to-consumer, duty-free fast fashion products from Chinese e-commerce retailers like Shein and Temu as a major contributing factor.”
“Beyond exploiting U.S. manufacturing and our free trade partners, these products have also been shown to contain materials made with Uyghur slave labor,” Glas said. “As a result, U.S. textile manufacturing is experiencing a historic economic downturn which can only be described as a five-alarm fire.”
Glas said now is a critical moment for action. “Congress must not let this moment—when comprehensive reform is within reach—slip by.”
