The Biden-Harris Administration has recently introduced a series of trade actions to address a surge in small packages entering the U.S. without paying taxes or duties, utilizing a practice known as the “de minimis” exemption. This rule permits imported goods valued under $800 to bypass tariffs, but it has increasingly been exploited, particularly by overseas e-commerce platforms, including those based in China. Many of these small shipments contain unsafe or illegal goods, such as counterfeit products or dangerous drugs like fentanyl, posing significant risks to American consumers, workers, and businesses.
To mitigate these issues, the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) are set to enforce new rules to enhance the monitoring and regulation of these shipments. The focus will be on increasing transparency by gathering more information on incoming goods, preventing the misuse of the exemption, and blocking unsafe products from entering the U.S. market. As a result, importers will face stricter requirements and need to provide more detailed documentation for low-value shipments.
The Administration is also calling on Congress to pass further reforms to close existing loopholes that allow certain products to enter the U.S. duty-free and to bolster the resources available to border officials to combat illegal activities. These changes particularly aim to prevent the entry of illicit opioids and products made with forced labor. These actions aim to safeguard American safety, promote fair competition for businesses, and ensure that all imports adhere to U.S. laws and standards. DHS and CBP are leading this initiative to maintain a secure and fair trade environment amid the growth of global e-commerce.
In other recent trade news, the United States Trade Representative (USTR) has issued modifications related to the ongoing Section 301 investigation into China’s trade practices concerning technology transfer, intellectual property, and innovation. After a comprehensive four-year review, the USTR, following the President’s directive, has decided to impose new tariffs and increase existing tariffs on several key products from China. This move aims to pressure China into eliminating harmful trade practices that have adversely impacted U.S. businesses and economic security.
The increased tariffs target several key products, with new rates scheduled to take effect in stages from September 2024 through 2026. Some of the notable tariff increases include:
- Battery parts (non-lithium-ion batteries): 25% in 2024
- Electric vehicles: 100% in 2024
- Facemasks: No less than 25% in 2024
- Lithium-ion electric vehicle batteries: 25% in 2024
- Lithium-ion non-electrical vehicle batteries: 25% in 2026
- Medical gloves: No less than 25% in 2026
- Natural graphite: 25% in 2026
- Other critical minerals: 25% in 2024
- Permanent magnets: 25% in 2026
- Semiconductors: 50% in 2025
- Ship-to-shore cranes: 25% in 2024
- Solar cells (whether or not assembled into modules): 50% in 2024
- Steel and aluminum products: 25% in 2024
- Syringes and needles: No less than 50% in 2024
These tariff increases are part of a broader strategy to secure U.S. supply chains, protect domestic industries, and address national economic security concerns as China continues to dominate critical global production sectors. Certain goods, such as solar manufacturing equipment, will be temporarily excluded from these tariffs to support domestic manufacturing efforts. Additionally, the USTR will launch a public comment process to seek input on further tariff adjustments, particularly for tungsten, wafers, and polysilicon.
The modifications are based on findings that, while earlier actions have prompted China to make some changes, many of its practices, such as forced technology transfer and cybertheft, persist and have even intensified. While the economic impact of these tariffs has been mixed, they have helped diversify U.S. supply chains by reducing dependence on Chinese imports. The latest measures aim to strengthen these efforts and ensure a resilient and secure U.S. trade environment.
For companies engaged in international trade, staying informed and prepared is essential. At Edward J. Zarach & Associates, we are committed to helping our clients understand these evolving trade dynamics and navigate the complexities of new regulations and tariffs. Contact us today to learn how we can support your business in managing these changes effectively.