Stock image: In this photo illustration, the Temu logo is displayed on a laptop in San Anselmo, California, on February 26, 2024. (Photo Illustration by Justin Sullivan/Getty Images)
[People News] In recent years, the volume of small packages imported into the United States from China has surged, with two out of every three parcels originating from China. These packages, often containing low-cost goods, benefit from duty-free trade incentives. U.S. lawmakers have pointed out that this practice contributes to trade imbalances and poses national security risks. In response, proposals have been made to restrict or even eliminate the tariff exemptions for small packages. Opponents of these measures caution that removing the duty-free benefits could raise costs for consumers, particularly impacting low-income households and increasing their cost of living.
According to a report by Radio Free Asia, millions of small parcels are flown from China to the United States daily by e-commerce platforms and then delivered to American consumers' homes via local postal services. These packages include low-cost goods potentially produced with forced labor, counterfeit fashion items, dangerous products such as fake botox injections, and tools for manufacturing the drug fentanyl.
Diane Henderson, an avid shopper on Temu, spends an average of $30 to $50 per month on the platform. Recently, she purchased home goods and fashion items, including earrings for just $1.25, shipped directly from China without any additional shipping fees.
"I went on Temu and bought a few sweaters for only $7 each," Diane Henderson shared. "Now I have outfits to match my new boots. The shopping process is simple and convenient, and the prices are incredibly cheap. I know there’s some controversy around Chinese online shopping goods, but honestly, with the current economic situation, deals like these are hard for anyone to resist."
Data from U.S. Customs and Border Protection shows that imports of small parcels exceeded 1 billion items in 2023 for the first time, representing a 646% increase since 2015. China remains the largest source, accounting for over 60% of the nearly 3 million small parcels entering the United States daily.
Current regulations allow imported goods valued under $800 to enter the United States duty-free without detailed declarations, as the paperwork for processing tariffs often exceeds the actual cost of the duties. While this rule benefits small importers, it has enabled Chinese e-commerce platforms to significantly impact the U.S. market, particularly undermining the competitiveness of local retailers.
Reports indicate that Temu now holds 17% of the U.S. market, posing a challenge to traditional discount stores like Dollar Tree and Five Below. Temu also competes with e-commerce platforms like Amazon, where consumers must pay subscription fees and shipping costs for similar Chinese goods. Temu, in contrast, offers free shipping services.
The U.S. Congress is currently considering multiple bills to significantly lower the minimum declaration value for small packages. These measures aim to combat misuse and illegal activities. Additionally, the U.S.-China Economic and Security Review Commission (USCC) has recommended, for the first time in its 2024 report to Congress, ending China’s "Permanent Normal Trade Relations" to address trade imbalances and national security concerns.
Regulatory Changes Could Raise Costs for Americans
Conservative consumer advocacy groups have raised concerns that removing trade benefits for small packages could lead to higher costs for consumers.
Jacob Jensen, a data analyst at the American Action Forum, warned that U.S. consumers would face an additional $5 billion annually in tariff costs alone, excluding the administrative costs that could follow. Jensen noted that low-income families often rely on inexpensive Chinese goods, and removing these trade benefits would increase their cost of living.
Current rules also help small businesses compete with larger corporations by reducing administrative, tariff, and regulatory costs. If the minimum declaration value is eliminated, businesses may have to absorb additional expenses or pass them on to consumers.
Jensen estimated that if small package exemptions are removed, parcels valued at approximately $51 would be subject to an additional 14% to 55% in taxes.
Temu shopper Diane Henderson said, "I might buy less and spend less. I would probably shop at local stores or on platforms like Amazon or Walmart. If a $50 purchase only costs an extra $5 in fees, that’s acceptable. But if the fees are much higher, it would deter me."
The "De Minimis Exception," which exempts small-value packages from declaration requirements, was first introduced in the U.S. in 1938, with a threshold of $5. The limit was raised to $200 in 1994, and in 2015, the Trade Facilitation and Trade Enforcement Act increased it to $800. At the time, South Dakota Republican Senator John Thune stated that the law would "allow more Americans to participate in global commerce."
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