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Last week’s announcement delaying closure of the de minimis tariff exemption shines a spotlight on what has become a significant problem for U.S. customs enforcement and more close-to-home, American furniture retailers. Within days of President Trump’s signing of an executive order eliminating the exemption, it became apparent that the massive volume of goods currently flowing into the U.S. under the exemption would require a much more robust enforcement solution than is currently available.
The de minimis exemption, originally an amendment to the Tariff Act of 1938, was intended to reduce the expense and inconvenience of tracking imports considered too small to warrant the effort. Originally it applied to gifts valued at $5 or less or $1 for other situations. Today, it applies to goods valued at less than $800, an amount that has allowed foreign factories, particularly in China, to ship a massive amount of goods direct to U.S. consumers through Temu, Shein and Amazon’s marketplace.
In announcing its effort to tighten the de minimis exemption, U.S. Customs and Border Protection indicated that the number of shipments entering the U.S. claiming the exemption has increased by more than 600% in the past 10 years, from 139 million a year in 2015 to over 1 billion by 2023. In 2024, that number again rose to 1.36 billion.
Since the imposition of 25% tariffs on China’s exports in 2018, the exemption has increasingly been used as a strategy to avoid those tariffs. According to a 2023 report from the House Select Committee on the Chinese Communist Party, “Temu and Shein alone are likely responsible for more than 30% of all packages shipped to the United States daily under the de minimis provision, and likely nearly half of all de minimis shipments to the U.S. originate in China.”
This trend has become a particular sore point with U.S. furniture retailers that rely on container shipments either coming from China and subject to the tariff or from countries that find it difficult to match the prices of factories in China that are selling direct to consumers and do not need to contend with the added logistical, marketing and support costs that are part and parcel of brick-and-mortar retail.
The issue is now widely acknowledged with both the previous and current administrations taking steps to close the exemption. However, the most recent effort, which entailed the immediate elimination of the loophole quickly resulted in goods backing up and overwhelming customs inspectors, post offices, online retailers and delivery companies.
At this point, it’s unclear exactly how long it will take to build the necessary customs infrastructure to deal with more than 1 billion packages a year that were previously not subject to any inspection or customs oversight. According to a recent CNBC report, Temu has “been surfacing more products on its app that can be shipped from warehouses in the U.S.” since the Trump administration’s effort to close the exemption.
Furniture Today will continue to follow these developments.
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