Biden wants to close a loophole that allows imports of clothing and illicit substances from China

WASHINGTON (AP) — The Biden administration is cracking down on cheap products sold from China by companies like Temu and Shein, saying the companies are no longer exempt from tariffs just by shipping goods they say are worth less than $800.

President Joe Biden would no longer exclude these “de minimis” imports from tariffs under a proposed rule released Friday to tax all imports if they are covered by Sections 201 or 301 of the Trade Act of 1974 or Section 232 of the Expansion Act trade. since 1962.

Importers mainly from China used the de minimis exemption for shipments of $800 or less to flood the US market. The number of these shipments has increased from 140 million annually to more than 1 billion per year, according to a statement from the White House.

The move comes at a delicate time for the world’s two largest economies. The United States has sought to reduce reliance on Chinese products, protect emerging industries such as electric vehicles from Chinese competition, and restrict China’s access to advanced computer chips. For its part, China has seen manufacturing and exports as key to boosting economic growth as it has battled deflation following pandemic-related shutdowns.

Because of the existing exemption, it is harder for the US government to block the importation of fentanyl and synthetic drug content that are prohibited. The government also pointed out that Chinese e-commerce sites have abused the exemption to sell cheap clothing and textiles to American consumers, potentially harming domestic workers and businesses.

Losing the exemption could be a blow to Chinese companies such as Temu and Shein, which compete by keeping prices low and may now face additional scrutiny. The government said its Section 301 tariffs currently cover about 40 percent of U.S. imports, including 70 percent of textile and apparel imports from China.

The proposed regulatory changes would also include new standards for de minimis shipments, such as a 10-digit tariff classification number and details of the person claiming the exemption.