For a number of years now, the US has been awash with dirt-cheap goods imported from China. Not imported by stores or manufacturers, but directly imported by millions of ordinary consumers. People place orders via web sites like Temu, eBay, AliExpress, Alibaba and many more. These web sites are stuffed with every conceivable product, mostly sold at prices that are far lower than one would reasonably expect to pay for products manufactured in a developed nation. The items are shipped directly from China and arrive in your mailbox, days or weeks later, with no taxes or duties owed. No sales tax, no import tax, nothing. Sure, in some states – like mine – you’re supposed to file a form with your state at the end of the year and pay the sales tax on things you bought, but half the people don’t know it and the other half, I suspect, largely ignores it. Are you going to keep a ledger of everything you bought online during the year, then voluntarily pay more the following April? I thought so.
So, how is it that I can order dozens or hundreds of low-dollar items from China and get them in my mailbox for next to nothing? Or even larger or more expensive things, hundreds of dollars at a time, with no fees or import taxes? It’s called the “de minimis value”, a dollar value below which no import duty is collected. The de minimis value was $200 in 1994; it’s $800 as of today. That’s per person, per day. So, I can legally import $292,000 worth of foreign goods per year, without paying a penny in taxes or import duty. Double that if half the packages are addressed to my wife; multiply it by some unknown large number if the shipper falsifies the value on the customs declaration form and, for example, says that the made in China $20 “USA” hoodie and sweat pants I just bought cost, say, $1. Wink, wink.
Many countries have de minimis values for goods imported from the US. China’s is $7. Yes, that’s $7.00. Canada’s is $20. Some countries have no de minimis value, collecting 20% or more on all shipments from the US regardless of value. Want to send your friend in England or Australia a sweet new sweater – sorry, jumper? They’re going to have to pay up to get it.
The de minimis value serves a couple of purposes. It lets Customs focus more attention on larger, higher value shipments. And yes, it does stimulate international trade. Unfortunately, when the US effectively eliminates import duties on most goods shipped directly to consumers, and foreign companies enjoy large subsidies from their governments to make shipping dirt cheap and outgoing Customs enforcement effectively nonexistent, the results are sadly predictable – a flood of foreign produced goods into the US with little oversight, no revenue, and no enforcement of any consumer safety, trademark, copyright, or intellectual property regulations. This can and does also have an impact on some US industries and many US companies, who are now competing with Chinese companies with much lower operating costs. You can browse Alibaba or Temu and find countless ripped-off trademark goods, produced and sold illegally. It’s difficult to argue that shutting off the flow of these things will have anything but a positive effect for American businesses and consumers.