China low-value package tariff exemption ends but questions remain over US collections

Hindustan Times

02-05-2025

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US Customs says it is prepared to handle new inspection volume
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Airlines, ocean vessel operators to collect new duties on parcels
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Duties to be collected before goods are shipped out of China and Hong Kong
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Shipping industry concerned about renewed delays, disruptions
WASHINGTON/LOS ANGELES, - The Trump administration ended U.S. duty-free access for low-value shipments from China and Hong Kong on Friday, removing the "de minimis" exemptions availed of by Shein, Temu and other e-commerce firms as well as traffickers of fentanyl and other illicit goods.
The action restores an executive order from President Donald Trump in February that was quickly suspended due to a lack of screening procedures for sub-$800 shipments that sparked chaos at airports and caused millions of packages to pile up.
U.S. Customs and Border Protection has "a massive task at hand" but is ready to handle the enforcement and collection of Trump's tariffs on small Chinese shipments, a spokesperson for the agency said.
"We are prepared and equipped to carry out enhanced package screening and enforce orders effectively as outlined" in Trump's executive order ending de minimis treatment for China, the spokesperson added.
The new procedures should not affect passenger wait times at airports and ports of entry, the spokesperson said. The packages are handled in the cargo section of airports, even when they arrive in the bellies of passenger planes.
Under CBP's latest guidance, shipments from China and Hong Kong regardless of size will now be subject to Trump's new tariffs of 145% plus any prior duties, except for products such as smartphones which were excluded last month. These will largely be handled by express shippers such as FedEx, United Parcel Service or DHL, which have their own cargo handling facilities.
Items valued at up to $800 and sent from China via postal services are treated differently. They are now subject to a tax of 120% of the package's value or a flat fee of $100 per package - an amount that rises to $200 in June.
COLLECTIONS AT TAKE-OFF
The U.S. Postal Service said it would not be involved in any duty collections. Instead, a USPS spokesperson said, airlines and vessel operators would need to work with shippers and Chinese postal authorities to pay the import taxes and show proof before the goods are transported out of China or Hong Kong.
Although de minimis is a Latin term referring to matters of little importance, low-value shipments from China to the U.S. reached an estimated $5.1 billion in 2024, according to U.S. Census Bureau data. That made it the seventh-largest U.S. import category from China, behind video game consoles, but just ahead of computer monitors.
Shippers were bracing for more package chaos, and some questioned whether airlines were prepared to handle duty collection from China Post and Hongkong Post.
"We have the same worry about bottlenecks," said Kate Muth, executive director of the International Mailers Advisory Group , whose members include Amazon.com, eBay and divisions of United Parcel Service, FedEx and DHL.
"I don't think we're ready for the change because we're still awaiting some clarification around the rules," including how to define Chinese origin for goods that are shipped from other countries, Muth said.
FORMAL ENTRY SHIFT
A late change in the CBP's guidance took away a major complication for shippers, but created a potential new hurdle to enforcement as CBP temporarily suspended a rule that would have required formal customs entry for all shipments valued at over $250 containing goods that are also subject to punitive tariffs.
Formal customs entry, normally associated with larger, containerized cargo, requires full 10-digit tariff codes for all items, advance electronic transmission of entry data and a bond to cover for customs liability.
And it would have applied to many other countries now subject to U.S. tariffs imposed by Trump, creating a potential new crush of administrative paperwork for shippers.
Instead, the suspension allows the use of informal entry procedures for shipments from China and Hong Kong valued at up to $800 and up to $2,500 from elsewhere, requiring no tariff codes and a less detailed contents description.
Lori Wallach, director of Rethink Trade, which has advocated an end to the de minimis exemption, said the use of informal entry would make it harder to screen packages.
"Without it being electronic or having an HTS code, the whole system that's used to inspect and to prioritize things that should be pulled for inspection doesn't work," Wallach said.
Trump ended the de minimis exemption for China largely because it was being used for largely unscreened low-value shipments containing fentanyl precursor chemicals into the U.S., a phenomenon documented in a Reuters series about fentanyl.