Two US Senators, Sherrod Brown and Rick Scott, are advocating for a significant crackdown on the influx of duty-free packages from China into the United States.
They have called upon President Joe Biden to take executive action to address what they perceive as an unfair advantage given to Chinese products.
In a letter to President Biden, the senators emphasised the challenges faced by US manufacturers who find it difficult to compete with low-cost competitors from China. The senators argue that these competitors often rely on forced labor and state subsidies in critical sectors.
This push for action echoes a similar situation that unfolded in India in 2019 when the government implemented a major crackdown on online purchases of goods from Chinese ecommerce platforms. These platforms were exploiting loopholes to evade customs duty and goods and services tax. Chinese ecommerce platforms were labeling goods ordered by Indian consumers as “gifts,” taking advantage of the exemption from customs duties on gifts of up to Rs 5,000, as per Indian domestic laws.
The clampdown in India was prompted by reports that Chinese retailers like Club Factory, AliExpress, and Shein were exploiting the exemption from customs duties. The Indian government, in response to these practices, banned several Chinese shopping apps, including the aforementioned platforms, in June 2020.
In the United States, the issue revolves around the “de minimis” threshold, a provision in US trade law that allows packages valued below a certain threshold to enter the country tariff-free. Currently set at USD 800 per person per day, this threshold is similar to the Rs 5,000 limit in India. Lawmakers in the US have expressed concern about the surge in such shipments from China and have introduced legislation to alter how the US treats imports valued below USD 800.
Senators Brown and Scott, in their letter to President Biden, specifically named Chinese companies Temu, Shein, and AliExpress as entities that unfairly benefit from duty-free treatment. They highlighted the adverse impact on American manufacturing and retail sectors, asserting that the situation is reaching a tipping point where the livelihoods of many Americans are at stake.
The senators are calling for an end to duty-free treatment for these products, emphasizing that the issue has become a significant problem that jeopardises American industries. They argue that such unchecked imports not only outsource manufacturing but also impact the retail sector, essentially transferring economic benefits to China and contributing to practices such as slave labor, which undermine the US economy.
As the senators seek the attention of President Biden to address this issue, it reflects broader concerns about fair trade practices, protecting domestic industries, and ensuring that international trade is conducted on a level playing field. The outcome of this call for executive action will likely have implications for the US-China trade dynamics and set a precedent for addressing similar challenges in the future.
