In a flurry of reporting on President Donald Trump’s tariff announcements, it appeared that the trade loophole enabling sellers on online marketplaces to import cheap goods into the United States without facing formal customs procedures and taxes might finally be closed. However, as Lori Wallach, Director of Rethink Trade at the American Economic Liberties Project, penned in Compact today, dangerous products will still be able to slip through the cracks.
What is the de minimis trade loophole?
The de minimis is a trade loophole that allows low-cost items to bypass taxes and customs procedures. In 1938, Congress authorized the Secretary of Treasury to waive or reduce duties, fees, and other taxes on certain imported products with a value of $1 or less, under Section 321(a)(2)(c) of the Tariff Act of 1930. Over time, the threshold for de minimis shipments increased; in 2016, the limit rose from $200 to $800 under the Trade Facilitation and Trade Enforcement Act. Today, the U.S. has one of the highest de minimis thresholds in the world.
How does the de minimis trade loophole impact consumer product safety?
Under the de minimis exemption, products valued under $800 enter the U.S. with minimal inspection or processing by Customs and Border Protection (CBP). These shipments are effectively free from tariffs and taxes, and their contents are often not fully assessed for safety risks. By contrast, shipments processed through formal entry must provide detailed information about the goods being imported, which allows officials to assess the potential danger of a product.
Since the de minimis threshold was raised, the number of such shipments has skyrocketed, from 153 million in 2015 to more than 1 billion in 2023. The exponential growth has overwhelmed CBP and the Consumer Product Safety Commission (CPSC), hindering their ability to screen and prevent dangerous products from entering American homes.
Will this week’s tariff announcements impact consumer product safety?
A recent CBP Federal Register notice described efforts to protect U.S. revenue and align with Executive Orders aimed at excluding certain products from de minimis exemptions, especially from China. However, this new measure relates to mail shipments from China only. But, as Lori Wallach identifies in her Compact article, most de minimis shipments arrive in the U.S. by air cargo or express shippers, and those shipments will not be affected by the new formal entry requirements.
Furthermore, a CBP message this week states that “the filer/importer has the option of filing an appropriate formal or other informal entry and paying all applicable duties, taxes and fees.” This means that, while tariffs might apply, many packages can still face minimal customs inspection and processing.
What more must be done to protect consumers from unsafe imported products?
The conversation this week regarding de minimis shipments again underscores the urgent need to strengthen consumer safety measures and hold online marketplaces accountable for the unsafe products sold through their platforms. As e-commerce continues to expand, so too does the challenge of ensuring products sold online meet U.S. safety standards and don’t pose a risk to consumers.
To address these concerns, Congress must act to require online marketplaces to vet thoroughly the sellers using their platforms to reach American consumers. There should be enhanced requirements for higher risk product classes, such as children’s products, safety focused products (like helmets and CO alarms), and products that can cause fire (like lithium ion batteries). Additionally, online marketplaces and the sellers using such platforms must also be required to act swiftly when dangerous products are identified. The current recall process must be re-envisioned to protect consumers and ensure that unsafe products are removed from the market.
In short, while recent tariff changes may slightly shift the landscape, more needs to be done to address the flow of unsafe products into the U.S. Only through stronger regulations and better accountability for online platforms can we ensure that consumers are protected from harmful products.