capitol © Joseph Gough |
© Joseph Gough

US lawmakers have international e-commerce in their sights: both houses of Congress face proposed legislation that seeks to curb the flow of e-commerce imports by eliminating exemption from duties and taxes for shipments valued less than $800, the de minimis regime.

Two bills, introduced in the House of Representatives and the Senate, are not co-ordinated but share the same aim: to erect hurdles for e-commerce imports, particularly from China.

Online platforms like Shein, founded in China but based in Singapore, have been accused of “exploiting de minimis to avoid duties and import illegal items, like goods made in China’s Xinjiang region with forced labour, an allegation Shein has vigorously denied.

Brian Bourke, CCO of Seko Logistics, said the legislative initiatives went “against the grain of US customs policy” in recent years, which has sought to ease trade restrictions. The threshold for exemption from tariffs was raised in 2016 from $200 to its current level.

While there is a legitimate concern about counterfeit products, health and safety concerns for consumers and illegal traffic like drugs, barriers to trade were not the adequate answer, he explained. Instead, data requirements should be refined to give Customs better visibility of goods entering the US, he said, adding that the initiatives could actually prove counterproductive.

A similar initiative a year ago failed to find traction, but this time there is a higher chance that the proposed changes advance, warned Rick Watson, CEO of RW Commerce Consult.

These days US politicians want to be seen to take a strong stance against China and to be supportive of American manufacturing, he added.

The proposal before the House of Representatives suggests countries other than China and other non-market economies could continue to enjoy the US de minimis exemption if they were to lift their own threshold to the same level. Most nations have significantly lower de minimis exemptions than the US and Mr Watson does not think many would agree to a considerable hike, thus this aspect could sink the proposed legislation.

This proposal further envisages that traffic which qualifies for de minimis exemption should be moved only by commercial carriers, not a postal service and Mr Bourke thinks there would be repercussions from this too. For instance, US firms that have set up warehouses in China and Hong Kong might be affected.

However, he added: “There’s still a lot of negotiating that will happen before this legislation gets passed. There is room for industry associations and trade groups to join the discussion.”

One point seems to be clear, however, the move adds fuel to the rising interest in near-shoring.

“Near-shoring comes up in conversations with clients,” Mr Bourke noted. “Companies that have always sourced in China are adopting a China-plus-one [other source nation] strategy.”

This has been a factor in Seko’s decision to open branches in Vietnam, Taiwan and Thailand, but companies are also looking increasingly to Canada, Mexico and Latin America, he said.

Mr Watson expects the focus on Mexico to intensify. One possible scenario would be for companies to have components produced in China and assembly in Mexico, he suggested.

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