China’s entry into the World Trade Organization in 2001 kick-started a flood of exports to the U.S. While China’s market is virtually closed to U.S. exports, they continue to find ways to dramatically increase their penetration of the U.S. market. The most recent example of this is their targeted use of the ‘de minimus’ exception.
The ‘de minimus’ exception – no duty on goods valued at less than $800 – was initially implemented to allow tourists to bring souvenirs back home from abroad duty- and hassle-free. Chinese fast-fashion companies have ruthlessly utilized the 1930s-era trade rule in recent years to aggressively ramp up their exports of low-value items. Cheap exports soared to $66 billion in 2023, up from $5.3 billion in 2018, according to a report released earlier this year by the Congressional Research Service.
Thank goodness, the duty on de minimus products will rise from 30% to 90% under Trump’s retaliatory measures.