Washington: A U.S. tariff exemption for low-value imports is set to end this week as U.S. President Donald Trump signed an executive order last month to suspend the "de minimis" rule for shipments worth US$800 or less. Created in 1938, the de minimis provision is set to expire on Friday - a setback to e-commerce companies that have relied on the rule to send small parcels to U.S. customers duty-free. In May, Trump already suspended the tariff exemption for inexpensive packages from China and Hong Kong.
According to Yonhap News Agency, with the suspension of the rule, low-value imports will be subject to tariff rates based on their country of origin. For the next six months, carriers handling shipments through the international postal network can also opt to pay a flat duty of US$80 for countries with a tariff rate of less than 16 percent, $160 for those with rates between 16 and 25 percent, and $200 for those with a rate above 25 percent.
In his July 30 executive order, Trump cited negative consequences of the de minimis rule, such as "risks of evasion, deception, and illicit-drug importation." "For example, many shippers go to great lengths to evade law enforcement and hide illicit substances in imports that go through international commerce. These shippers conceal the true contents of shipments sent to the United States through deceptive shipping practices," he said.
"Some of the techniques employed by these shippers to conceal the true contents of the shipments, the identity of the distributors, and the country of origin of the imports include the use of re-shippers in the United States, false invoices, fraudulent postage, and deceptive packaging," he added.
In an online press briefing, Trump's trade adviser Peter Navarro said that Trump's ending of the de minimis "loophole" will save thousands of American lives by restricting the flow of narcotics and other prohibited items, add up to $10 billion a year in tariff revenues, and create thousands of jobs. He also called on foreign post offices to "get their act together" when it comes to monitoring and policing the use of international mail for smuggling and tariff evasion purposes.