News / Postal de minimis loophole means US is losing 'billions' in customs duty

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Chinese shippers are exploiting “a very clear customs loophole” in the US postal system to get their goods in under the de minimis exemption, losing “hundreds of millions, or even billions, of dollars” of revenue for the CPB.  

In May, the US removed its de minimis exemption for China and Hong Kong exports to the US valued at $800 or less. These low-value shipments going through postal services must pay 120% duty on the value of the goods, or a $200 flat fee. 

However, Hugo Pakula, CEO of automated customs compliance company Tru Identity, told The Loadstar there was a “very clear loophole” that has resulted in Chinese shippers “using post in a big way that they weren’t before”.  

“With postal shipments, there’s a customs declaration form to file called a CN22. It has a country-of-origin area on it, but it’s optional. It’s always been optional,” he explained. 

“So, if you just don’t provide the country of origin, you get de minimis exemptions – no duty, no tax, and it’s not illegal.” 

Mr Pakula claimed there were “very large name brands doing this right now, definitely of China origin”.  

And to avoid duty applied if a postal shipment enters the US direct from China, crafty shippers are using transhipment.

“If they send it anywhere other than from Hong Kong or China, they can use the loophole. Singapore is used, and a lot go to the UK using Jersey Post or Royal Mail,” Mr Pakula explained.  

And he claimed: “These postal companies know it is happening, but they just don’t care. Why would they? They get more volume, and they make more money.” 

Customs, however, does care, he said. 

“It is a huge loophole that is losing meaningful revenue to the government, so it’s probably a loophole people would like to close.” 

Mr Pakula estimated that “hundreds of millions, or even billions, of dollars of duties” were being avoided.

“But customs have this very big stick. They can do whatever they want, anytime they want. It’s an enforcement agency, and they run the border. So, if they want to stop things from coming here from, say, Jersey Post, they can. But they’ve not done that.”  

Mr Pakula explained that the CBP were instead “looking for real solutions that actually solve the problem”.  

But he said that would be no mean feat, as those using this loophole had technically broken no rules. He added: “It is illegal if you’re knowingly doing it… but the burden is quite high to prove that.”

Mr Pakula revealed that the CBP was now looking for private sector solution. 

“Because of the ‘One Big Beautiful Bill’, the agency has money to spend on private sector solutions to buy their way out of this problem,” he said.  

“They don’t have [the solution] yet, but they’re actively looking.”