Lawmaker blames FedEx pressure, Trump bungling for de minimis U-turn
Rep. Rosa DeLauro says the Trump administration has retreated from removing a lucrative tariff exemption for low-value e-commerce goods made in China. In its haste to crack down on duty evasion and fentanyl smuggling, the White House made the situation worse, she says. The post Lawmaker blames FedEx pressure, Trump bungling for de minimis U-turn appeared first on FreightWaves.
Democratic U.S. Rep. Rosa DeLauro on Wednesday criticized President Donald Trump for flip-flopping on canceling import benefits for inexpensive e-commerce products shipped from China and suggested that Fred Smith, chairman of express delivery giant FedEx Corp., played a role in last week’s sudden reversal.
The Connecticut congresswoman and the National Council of Textile Organizations called on the Trump administration to go further and entirely ban de minimis – a mechanism that allows goods under $800 in value to enter the country free of duty, with a simplified customs release process and virtually no inspection – for all e-commerce shipments.
During a virtual news conference, DeLauro implied that FedEx’s founder and chairman influenced Trump to relax his executive order against special treatment for low-value shipments from China when they met at the White House on Feb. 6.
“The pressure is coming from FedEx, UPS and DHL – the express shippers. Why is it that the President moved back on Feb. 7 [the day after] he met with the chair of the FedEx board?” she said. “Shipping companies profit tremendously off non-tax de minimis packages, and we cannot let them continue to put their profits ahead of really protecting American jobs and families from dangerous substances like fentanyl.”
Smith discussed a number of subjects during meetings at the White House, a FedEx (NYSE: FDX) spokesperson said in a statement to FreightWaves.
Trump on Feb. 1 used emergency powers to close special treatment for low-value goods from China, saying the ability to bypass the formal entry process prevented U.S. Customs and Border Protection from assessing parcels for risk of fentanyl smuggling and avoiding tariffs. Three days later, the U.S. Postal Service, a relatively small conduit for e-commerce shipments, suspended acceptance of packages. The Postal Service changed its mind on Feb. 5, saying authorities needed more time to set up an effective mechanism for collecting duties without disrupting deliveries. Finally, Trump on Feb. 7 said he would pause eliminating the de minimis exemption until border agencies can figure out how to collect and process single parcels without backing up the import clearance system.
An update to Section 321 of the Tariff Act a decade ago made it easier for small online sellers to import goods, but after the COVID crisis large e-commerce marketplaces in China took advantage of the program to fulfill orders directly from the factory. E-commerce volumes from China, which primarily enter the country by air, exploded from 134 million parcels per year to 1.36 billion parcels in fiscal year 2024, according to CBP figures. The agency clears about 4 million packages per day.
Trump bungled the rollout of his enforcement action by acting quickly without carefully establishing an implementation plan, a pattern of behavior that has frequently resulted in whipsaw policy measures during his second term in office, said DeLauro.
She called on the president “to fully close the de minimis loophole once and for all. I am frustrated by the Trump administration’s recent half measures and reversals on de minimis this past week. It has been the equivalent of taking one step forward and two steps back.”
Limiting de minimis eligibility likely won’t reduce the volume of products originating in China, but could change how they enter U.S. commerce. Instead of using air cargo, Chinese marketplaces and other e-tailers might switch to ocean shipping and fulfill orders from U.S. warehouses.
It makes sense that CBP, the Postal Service and industry need a transition period while establishing procedures for collecting duties and extra data elements, selecting suspicious packages for inspection and adding necessary personnel. But the White House should have considered that before announcing its plan, the congresswoman said.
“It doesn’t appear that anything these days is well thought out. They just throw it out there. And then, you know, see what the consequences are. And then we pull back, or there’s a half measure. That’s no way to move forward,” DeLauro said.
She said Congress should remove the de minimis exemption from trade law if the president isn’t able to. Legislation introduced last session that would have prohibited goods from nonmarket economies and other countries of concern from taking advantage of the Section 321 is a good template to follow, she added.
Express carriers, including FedEx, and other interest groups pushed Congress to raise the de minimis threshold to $800 from $200 in 2016 with the goal of allowing small businesses and individual consumers to engage in e-commerce without needing to fill out cumbersome forms or employ the services of a customs broker. Promoting de minimis is a key agenda item for the Express Association of America, which represents FedEx, UPS and DHL. The companies were founding members of a CBP pilot project to collect additional information on low-value shipments.
“The Administration should be applauded for taking action to amend the executive order once it quickly became clear that limiting de minimis eligibility increases prices on everyday products for low-income Americans and significantly strains government resources at the border without a clear enforcement benefit,” said John Pickel, senior director of supply chain policy at the National Foreign Trade Council, via email.
Kim Glass, president of the National Council of Textile Organizations, has previously supported the total elimination of de minimis because it is a conduit for cheap products, many made with forced labor, that undermine U.S. manufacturers.
On Wednesday, she blamed de minimis for contributing to the closure of 27 plants across the United States during the past 20 months, because manufacturers can’t compete with ultra-low-cost imports, some of which are made with forced labor.
Although Trump’s suspended de minimis order applies to Chinese goods shipped to the U.S. from any country, Glass said a complete ban is needed because CBP won’t be able to detect transshipment schemes or hold anyone accountable for the contents of the package without a formal entry requirement.
Pickel dismissed the transshipment argument, saying the profit margin is so low on individual de minimis products “that it doesn’t seem economical to send a $54 shipment (the average value of de minimis) to another country just to send it to the U.S.”
Click here for more FreightWaves/American Shipper articles by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
RECOMMENDED READING:
Air cargo industry jolted by Trump tariffs on Chinese e-commerce
US Customs tightens enforcement on low-value e-commerce trade
The post Lawmaker blames FedEx pressure, Trump bungling for de minimis U-turn appeared first on FreightWaves.
