Finance News

Republican Lawmakers Request USPS Data on Retailers' Shipments from China, Highlighting Concerns Over De Minimis Rule

U.S. Representative Mike Gallagher (R-WI) walks to a House Permanent Select Committee on Intelligence meeting on Capitol Hill in Washington, U.S., February 7, 2023. REUTERS/Elizabeth Frantz/File Photo

Republican leaders of two House committees have raised concerns about retailers’ shipments from China and their eligibility for an exemption known as the de minimis rule. This exemption allows certain packages worth $800 or less to be excluded from tariffs. The lawmakers have specifically focused on Chinese retail companies, Shein and Temu, alleging that they have benefited from this rule. Seeking transparency and accountability, the lawmakers have sent a letter to the Postmaster General of the United States Postal Service (USPS) requesting data and records related to goods from China shipped to the United States.

The de minimis rule, as part of U.S. trade law, has garnered attention in recent months due to concerns over its perceived unfair advantages for Chinese-founded retail companies. The rule exempts packages valued at $800 or less from tariffs, allowing them to enter the United States without duty fees or investigation by authorities. This exemption was intended to facilitate small-scale shipments and e-commerce purchases by individuals, but critics argue that it has been exploited by large-scale retail operations.

Republican representatives, Mike Gallagher and James Comer, have expressed particular concern over the alleged advantage gained by Shein and Temu, two prominent Chinese retail companies. Shein, in response to inquiries, stated that it does not use USPS for its shipments from China to the United States and emphasizes its commitment to import compliance. However, their significant market presence has raised questions about the use of commercial shipping companies and USPS by Chinese companies to bypass tariffs and scrutiny.

In their letter to Postmaster General Louis DeJoy, Gallagher and Comer seek documents, information, and data pertaining to goods shipped into the United States from China. Their specific focus is on de minimis shipments from fiscal years 2021 and 2022. The lawmakers express concerns that Chinese companies can exploit the de minimis rule, avoiding duties, fees, and investigations. By shipping products directly to U.S. consumers, these companies may evade the scrutiny imposed on goods shipped via traditional channels.

Gallagher’s select committee released a report estimating that Shein and Temu accounted for over 30% of all de minimis shipments received in the United States. This significant market share has intensified concerns about the fair application of trade laws and the potential for economic distortions. To address these concerns, there are bipartisan bills currently under consideration in Congress that aim to prohibit e-commerce shipments from China and other non-market economies.

The ongoing bipartisan efforts in Congress highlight the seriousness of the concerns surrounding the de minimis rule and its implications for the retail industry. The proposed legislation specifically targets e-commerce shipments from China and non-market economies. These bills aim to impose stricter regulations and potentially ban or limit the entry of goods from these regions. The intention is to level the playing field for domestic retailers, ensure fair competition, and safeguard national interests.

Republican lawmakers are actively seeking transparency regarding retailers’ shipments from China under the de minimis rule. By requesting USPS data and records, they hope to shed light on any potential unfair advantages and loopholes. The outcome of these efforts, along with the proposed legislation, will have significant implications for the future of trade relations and the retail industry.