De Miminis Rules Proposed

Lingerie on the Temu website.

On September 13 the White House announced a group of actions to “protect American consumers, workers and businesses by cracking down on de minimis shipments with unsafe, unfairly traded products.” 

Many in the intimate apparel industry, including Christopher Scharff, a former owner of Dreamgirl, have applauded the moves.

The announcement explained that currently a “shipment is eligible for the de minimis exemption if the aggregate fair retail value of the articles imported is $800 or less.” These shipments “enter the United States with less information than other imports and are not subject to duties and taxes.” As a result, “huge volumes of low-value products such as textiles and apparel into the U.S. market duty-free.” It added that “over the last ten years, the number of shipments entering the United States claiming the de minimis exemption has increased significantly, from approximately 140 million a year to over one billion a year.”

The White House pointed to increased abuse by, “in particular, China-founded e-commerce platforms” and stated new rule making will strengthen “efforts to target and block shipments that violate U.S. laws.” It also called “on Congress to pass legislation this year to reform the de minimis exemption comprehensively to further protect American consumers, workers, and businesses.”

The new rules will “exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962.” The Administration explained that “Section 301 tariffs currently cover approximately 40% of U.S. imports, including 70% of textile and apparel imports from China. Some e-commerce platforms and other foreign sellers circumvent these tariffs by shipping items from China to the United States claiming the de minimis exemption. If finalized, these goods would no longer be eligible for the de minimis exemption. It would also ensure that de minimis exemption eligibility for products covered by trade enforcement actions is consistent across U.S. trade laws. Products covered by antidumping or countervailing duty orders are already excluded from de minimis exemption eligibility.”

Other new rules will “strengthen information collection requirements to promote greater visibility into de minimis shipments.”

A final newly proposed rule will require importers of consumer products to file certificates of compliance with Customs and Border Protection and the Consumer Product Safety Commission.

Christopher Scharff, an apparel executive and a previous owner of the Dreamgirl lingerie brand, has for years argued for the end of de minimis shipments, and pointed to their negative impact on the intimate apparel industry. 

“The loophole has led to a significant increase in low-cost imports, often from countries with lower production costs,” he He told BODY. “This has put immense pressure on domestic manufacturers of intimate apparel, who struggle to compete with the flood of cheap imports. Shein, Temu and even Amazon sellers are shipping billions of packages annually from China skirting the same duties which Canadian, Mexican and U.S. (USMCA) importers must pay to enter” the North American markets

“Many U.S. companies are facing declining sales and are being forced to cut jobs or even shut down,” Scharff continued. “For instance, small businesses that produce high-quality, ethically-made intimate apparel can’t match the prices of imported goods that benefit from the de minimis threshold. The loophole undermines American jobs and manufacturing. It also leads to a loss of revenue for the government, which could be used to support domestic industries and workers. Additionally, it encourages a race to the bottom in terms of labor and environmental standards.”

Scharff also argued that de minimis shipment threaten consumer health and safety. “Imported goods that bypass customs inspections may not meet U.S. safety and quality standards. This is particularly concerning for intimate apparel, which comes into direct contact with the skin. Consumers may unknowingly purchase products that contain harmful chemicals or are poorly made. The de minimis loophole also poses significant public safety risks. Due to the minimal information required for de minimis shipments, Customs and Border Protection has limited visibility into the contents of these packages. This lack of oversight has facilitated the entry of illegal narcotics, counterfeit goods, and unsafe products into the USMCA market. 90% of all illegal narcotics and counterfeit seizures by customs are linked to de minimis shipments. Closing this loophole would enhance the ability of Customs and Border Protection to inspect and regulate imports, thereby improving public safety.”

Scharff praised the Administration move “to create a fairer playing field for American businesses and ensure that all products entering the U.S. meet our standards.”

Asked to comment on the fact that closing the de minims loophole could lead to higher prices for consumers,” Scharff replied: “While there may be some price adjustments, the long-term benefits of supporting domestic industries and ensuring product safety outweigh the short-term costs. Moreover, a level playing field can lead to innovation and better quality products for consumers.”

He added that consumers and businesses can “support efforts to close the de minimis loophole” in a variety of ways. “Consumers can support domestic brands and be mindful of the origins of the products they purchase. Businesses can advocate for policy changes and collaborate with industry groups to push for reforms. Public awareness and pressure can drive meaningful change.”

Scharff concluded with a message to American workers and manufacturers in the intimate apparel industry: “We are committed to protecting American jobs and ensuring fair competition. Your hard work and dedication are vital to our economy, and we will continue to fight for policies that support and strengthen domestic manufacturing.