Biden Administration Targets Shein and Temu in Crackdown on Trade Loophole Abuse

The Biden administration unveiled a series of measures on Friday aimed at curbing the “overuse and abuse” of the de minimis trade loophole, which allows low-value shipments to enter the U.S. without import duties or extensive scrutiny. A new proposed rule would block shipments subject to U.S.-China tariffs from using this exemption, a move that directly impacts Chinese e-commerce giants like Shein and Temu.

The de minimis loophole permits packages valued at less than $800 to bypass import fees and has seen a dramatic rise in usage, growing from 140 million to over a billion shipments in the last decade, according to White House estimates. The surge has been largely driven by companies like Shein and Temu, which ship low-cost clothing and household goods from China to U.S. consumers.

Officials argue that the increased volume of such shipments has made it harder to regulate and block unsafe or illegal imports. “The drastic increase in de minimis shipments has made it increasingly difficult to target and block illegal or unsafe shipments,” said Daleep Singh, deputy national security advisor for international economics.

The proposed rule would particularly affect products subject to tariffs under Section 301, Section 201, and Section 232, which apply to many Chinese imports, especially textiles. According to Singh, this change could significantly reduce the number of Chinese shipments using the de minimis exemption, impacting around 70% of textile and apparel imports from China.

Additionally, the administration plans to implement stricter reporting requirements for these shipments, including the need for more detailed data like tariff classification numbers. The White House also urged Congress to pass legislation to further overhaul the de minimis rules.