For decades, American manufacturers have struggled against the flood of low-cost imports from China, undercutting domestic businesses and threatening job security. While fair trade is essential for a competitive economy, a major loophole in U.S. customs law—the de minimis exemption—has allowed foreign companies, particularly those based in China, to ship millions of products to the U.S. duty-free and with little oversight.
Under the current de minimis threshold, any package valued at $800 or less can enter the U.S. without paying tariffs or undergoing rigorous customs inspection. This has enabled Chinese e-commerce giants like Shein, Temu, and Alibaba to dominate the American retail market by shipping millions of small parcels daily, all while circumventing trade laws that U.S. businesses must follow.
To combat this abuse, Rep. Gregory Murphy (R-NC) introduced the End China’s De Minimis Abuse Act (H.R. 7979) in April 2024. The bill seeks to prevent companies from using de minimis to bypass trade enforcement measures and level the playing field for American manufacturers. This paper examines how the de minimis loophole has been exploited, the key provisions of H.R. 7979, and why closing this loophole is critical for restoring American manufacturing.
Understanding the De Minimis Loophole
The de minimis exemption was originally implemented under the Tariff Act of 1930 as an administrative efficiency measure. The intent was to allow low-value goods to enter the U.S. without significant customs processing, reducing paperwork for small imports. However, this exemption was dramatically expanded in 2016, when Congress raised the de minimis threshold from $200 to $800.
This change, while well-intended, opened the floodgates for foreign sellers to directly access the U.S. market without facing tariffs or import restrictions. The primary beneficiaries of this loophole have been Chinese companies, which manipulate customs declarations, split shipments, and mislabel products to qualify for de minimis treatment.
By leveraging this exemption, China-based retailers have gained a massive price advantage over U.S. businesses, which must:
- Pay import duties on bulk shipments.
- Follow strict labor and environmental regulations.
- Adhere to consumer safety laws that foreign de minimis shipments often evade.
The sheer volume of de minimis imports is staggering—over 2 million packages arrive in the U.S. daily under this exemption, with the vast majority originating from China. As a result, the de minimis loophole has become a primary driver of unfair competition, counterfeit imports, and trade imbalances.
Key Provisions of the End China’s De Minimis Abuse Act
The End China’s De Minimis Abuse Act aims to rein in this unchecked flow of duty-free imports by implementing stricter regulations on what can qualify under the de minimis rule. The bill includes several major reforms:
1. Blocking De Minimis for Products Subject to Trade Remedies
- Imports that fall under U.S. trade enforcement measures—including antidumping duties, Section 301 tariffs on China, and Section 232 national security tariffs—will no longer qualify for de minimis treatment.
- This ensures companies cannot evade tariffs imposed to counteract unfair trade practices or national security risks.
2. Strengthening Customs Oversight
- Shipments from certain high-risk countries (such as China) must provide enhanced product descriptions and a 10-digit HTS classification to improve tracking and enforcement.
- This change will help Customs and Border Protection (CBP) identify potential trade violations, counterfeit products, and illicit goods.
3. Introducing Penalties for De Minimis Fraud
- Companies that falsify shipment values to stay under the $800 threshold will face civil penalties of $5,000 for the first violation and $10,000 for repeat offenses.
These provisions directly target the core tactics that foreign sellers use to bypass U.S. trade laws. If passed, H.R. 7979 would make it significantly harder for companies like Shein and Temu to flood the U.S. market with duty-free goods.
How The Loophole Harms American Manufacturing
Unfair Competition Against Domestic Businesses
American manufacturers are required to pay tariffs on imported raw materials, follow strict labor and environmental laws, and adhere to consumer protection standards. Foreign companies, however, face none of these restrictions under de minimis, creating a massive price gap that domestic producers cannot compete with.
For example, a U.S. textile manufacturer must pay tariffs on imported cotton, whereas a Chinese factory using subsidized labor can ship finished garments duty-free under de minimis. This tilts the playing field in favor of foreign producers, leaving American businesses and workers at a severe disadvantage.
Massive Job Losses in Key Industries
The National Council of Textile Organizations (NCTO) has stated that de minimis loopholes have contributed to the decline of American textile manufacturing, with thousands of U.S. textile jobs lost due to the unfair advantage given to foreign competitors.
Other industries impacted include:
- Steel and aluminum (undercut by foreign metals shipped duty-free).
- Electronics (cheap, unsafe products flooding the market).
- Toy and consumer goods manufacturing (counterfeit imports replacing domestic brands).
Counterfeit and Unsafe Goods Flooding the Market
CBP has reported a sharp increase in counterfeit and unsafe products entering the U.S. via de minimis shipments. With limited customs inspection, these packages often contain:
- Counterfeit electronics (posing fire hazards).
- Toxic children’s toys (with unsafe lead levels).
- Illicit drugs (such as fentanyl, hidden in duty-free shipments).
Without stronger enforcement, American consumers remain exposed to dangerous goods, while legitimate businesses lose revenue to counterfeit competitors.
Who Supports and Opposes the Act?
As with most trade and economic policy reforms, the End China’s De Minimis Abuse Act has drawn strong support from some sectors while facing intense opposition from others. The debate over this legislation largely reflects a broader conflict between American manufacturers and foreign-based e-commerce giants, as well as between policymakers prioritizing national security and those advocating for unrestricted global trade.
Supporters: U.S. Manufacturers, Labor Unions, and National Security Advocates
American manufacturers have been among the strongest proponents of closing the de minimis loophole, arguing that it has enabled an uneven playing field that favors foreign competitors, particularly in China. Organizations such as the National Association of Manufacturers (NAM) and the National Council of Textile Organizations (NCTO) have long advocated for reforms to prevent Chinese companies from evading U.S. tariffs and import regulations.
For domestic producers, the ability of foreign retailers to ship millions of low-cost goods directly to consumers while bypassing import duties represents an existential threat. U.S. businesses that manufacture clothing, electronics, steel, and other goods have repeatedly raised concerns that Shein, Temu, and similar retailers are undercutting American companies by flooding the market with artificially cheap imports. Because Chinese companies face no import duties under de minimis, they can sell goods at significantly lower prices than American manufacturers, who must comply with tariffs, higher labor costs, and stringent safety regulations.
Beyond manufacturers, organized labor groups have also thrown their weight behind the legislation, viewing it as a necessary step to protect American jobs. Organizations such as the AFL-CIO and the United Steelworkers argue that the de minimis rule has contributed to offshoring, factory closures, and stagnant wages for American workers. When companies choose to produce goods overseas and then ship them to the U.S. tariff-free under de minimis, they eliminate the incentive to invest in domestic production, resulting in job losses across multiple industries.
National security advocates have also expressed strong support for restricting de minimis imports, citing concerns over illicit goods, counterfeits, and potential risks from Chinese companies. Reports from Customs and Border Protection (CBP) have shown that millions of de minimis shipments contain counterfeit electronics, unsafe consumer products, and even illegal substances such as fentanyl. Because these shipments receive minimal inspection, they serve as a potential entry point for unauthorized surveillance devices, compromised electronic components, and other security threats. Lawmakers focused on national security, particularly those wary of China’s growing influence in global supply chains, see de minimis reform as a critical measure to tighten import enforcement and reduce vulnerabilities in America’s trade policies.
In Congress, the Act has received bipartisan backing, particularly from lawmakers concerned about trade imbalances, manufacturing job losses, and the integrity of U.S. import regulations. While trade policy is often a contentious issue split along party lines, both Republicans and Democrats have found common ground in the need to rein in China’s trade practices and protect American industries.
Opponents: E-Commerce Giants, Retail Industry, and Free Trade Advocates
On the opposing side, major e-commerce platforms and multinational retailers have fought aggressively against the bill, fearing that it could disrupt their supply chains and increase costs for consumers. Companies like Amazon, eBay, Shein, and Temu have heavily lobbied against de minimis reform, arguing that raising import restrictions would slow down global trade, limit product variety, and increase prices for American consumers.
For Shein and Temu, the de minimis loophole is central to their business model. These platforms rely on the ability to ship individual packages directly to U.S. consumers from overseas factories while avoiding tariffs. Unlike traditional brick-and-mortar retailers, who must import goods in bulk and pay applicable duties, Shein and Temu split large orders into thousands of smaller shipments, each valued under $800, to ensure they qualify for de minimis. By bypassing import costs that U.S. retailers must pay, these companies maintain an artificial price advantage, making it nearly impossible for domestic brands to compete.
Amazon and eBay, while not directly reliant on the de minimis loophole to the same extent as Shein and Temu, also benefit from unrestricted low-value imports. Many third-party sellers on these platforms import their goods duty-free, passing on the savings to customers while undercutting American-made products. As a result, these companies have opposed efforts to close the loophole, arguing that it would limit competition and reduce consumer choice.
Large retail associations, such as the National Retail Federation (NRF), have also pushed back against the bill, warning that restricting de minimis would disrupt supply chains and force businesses to pay higher import costs, potentially leading to higher prices for consumers. The NRF has argued that de minimis helps keep costs low for small businesses and online shoppers by reducing customs delays and administrative burdens.
However, this argument largely ignores the broader economic consequences of unchecked foreign imports. While eliminating de minimis may raise prices on some imported goods, it would also strengthen domestic manufacturing, create more high-paying jobs, and reduce reliance on Chinese supply chains.
The Free Trade vs. Fair Trade Debate
The debate over de minimis reform also falls within the larger ideological divide between free trade advocates and those who push for fair trade policies. Proponents of unrestricted global trade argue that eliminating de minimis would create unnecessary barriers to commerce, slowing down imports and making international shipping more expensive.
However, fair trade advocates counter that a truly competitive market cannot exist when foreign companies operate under an entirely different set of rules than American businesses. The current system penalizes domestic producers while rewarding companies exploiting loopholes and evading tariffs, creating an uneven economic playing field.
Ultimately, the battle over the End China’s De Minimis Abuse Act is a conflict between short-term economic interests and long-term industrial policy. While e-commerce giants and free trade advocates push for unrestricted imports, American manufacturers, labor unions, and national security experts argue that fair competition requires stronger trade enforcement.
The outcome of this legislative fight will have lasting implications for the future of U.S. manufacturing, labor markets, and trade policy. If passed, H.R. 7979 would mark a significant shift toward a trade system that prioritizes American industry over unchecked foreign competition. If it fails, China’s dominance in global e-commerce will only continue to expand, further weakening U.S. manufacturing and economic independence.
The Economic and Trade Implications of Ending De Minimis Abuse
A Necessary Correction to an Unfair Trade System
For decades, the United States has promoted global trade under the assumption that open markets benefit all participants equally. However, the unchecked expansion of the de minimis exemption has created a dangerously lopsided playing field, where foreign companies—especially those based in China—exploit U.S. trade policies while American manufacturers struggle under the weight of tariffs, regulations, and unfair competition.
Eliminating de minimis abuse is not about limiting trade or isolating the U.S. economy. Rather, it is about restoring balance to an imbalanced system, ensuring American businesses and workers are not disadvantaged by policies allowing foreign competitors to circumvent trade rules. The economic and trade implications of closing this loophole extend beyond tariff revenue collection—they touch on domestic job creation, supply chain resilience, national security, and the long-term competitiveness of American industry.
Boosting Federal Revenue and Reducing Trade Deficits
One of the most immediate effects of ending de minimis abuse would be a significant increase in tariff revenue for the federal government. According to a Congressional Budget Office (CBO) estimate, closing the de minimis loophole could generate at least $24 billion in additional revenue over a decade.
Currently, millions of duty-free shipments enter the U.S. each day, representing billions of dollars in lost tariff collections. Many of these goods would otherwise be subject to import duties, trade remedies, or enforcement actions, which are designed to prevent unfair competition and protect domestic industries. By preventing companies from using de minimis to evade existing tariffs and regulations, the government would collect billions in revenue that could be reinvested into infrastructure, education, and U.S. manufacturing incentives.
Beyond tariff revenue, closing the loophole would also help reduce the U.S. trade deficit with China. In 2023, the U.S. trade deficit with China exceeded $300 billion, largely due to America’s overreliance on low-cost Chinese imports. Because de minimis allows foreign sellers to directly ship to consumers without customs oversight, it exacerbates the trade imbalance, making it easier for foreign firms to dominate key consumer markets. A more level playing field—where imports are properly taxed and regulated—would encourage greater investment in domestic production, reducing reliance on Chinese-made goods over time.
Restoring Competitive Fairness for U.S. Manufacturers and Retailers
American businesses have long voiced concerns that de minimis exemptions have tilted the marketplace in favor of foreign competitors. Under the current system, U.S. companies must:
- Pay tariffs and import duties on raw materials and finished goods when bringing products into the U.S. for sale.
- Comply with strict labor, safety, and environmental regulations, which add to production costs.
- Invest in domestic infrastructure, workforce training, and compliance programs that foreign competitors can ignore.
Meanwhile, Chinese sellers using de minimis avoid nearly all these costs. They ship directly to consumers with zero tariffs, no regulatory compliance burden, and minimal oversight, allowing them to offer products at artificially low prices. This has crippled American manufacturing and retail, forcing many U.S. companies to either offshore their production to compete or go out of business entirely.
By ending de minimis abuse, the End China’s De Minimis Abuse Act would restore a level playing field, ensuring that U.S. manufacturers and retailers are no longer at a built-in disadvantage. Domestic businesses could once again compete based on quality, innovation, and fair pricing—rather than being undercut by foreign sellers who exploit trade loopholes.
Strengthening Domestic Supply Chains and Reducing Overreliance on China
One of the most dangerous consequences of unrestricted de minimis imports has been the erosion of U.S. supply chain resilience. Over the past two decades, critical industries—including textiles, electronics, and pharmaceuticals—have become overwhelmingly dependent on China for production. This was painfully evident during the COVID-19 pandemic when supply chain disruptions led to shortages of medical supplies, semiconductors, and essential consumer goods.
Allowing millions of de minimis shipments per day only deepens America’s reliance on foreign manufacturing. Because these imports undercut domestic production, they disincentivize companies from investing in U.S.-based supply chains. Instead of strengthening domestic infrastructure, the current system reinforces offshoring, making America more dependent on foreign suppliers.
By closing the de minimis loophole, the U.S. can encourage greater investment in domestic production, particularly in industries where supply chain security is a national priority. Reducing reliance on Chinese-made goods—especially in sectors like electronics, textiles, and medical supplies—would make the U.S. economy more resilient to future crises and reduce the risks associated with geopolitical tensions.
Protecting American Consumers from Counterfeit and Unsafe Goods
De minimis shipments have also been a major avenue for counterfeit, defective, and even hazardous products entering the U.S. Because these imports bypass traditional customs scrutiny, they often contain unsafe materials, mislabeled ingredients, or intellectual property violations.
A 2023 Customs and Border Protection (CBP) report found that a significant portion of counterfeit goods seized at U.S. ports arrived via de minimis shipments, including:
- Counterfeit luxury goods designed to deceive consumers.
- Fake electronic devices with safety risks, such as battery explosions and fire hazards.
- Toys and children’s products containing toxic lead, phthalates, and other harmful substances.
- Pharmaceutical counterfeits, including knockoff medications that lack proper active ingredients.
Because these packages aren’t subject to the same safety inspections as traditional imports, consumers are left vulnerable to defective and dangerous products. By ending de minimis abuse, the U.S. would close a major gap in consumer protection enforcement, ensuring that imported products meet the same safety and quality standards that domestic manufacturers must follow.
Long-Term Competitiveness and National Security Implications
Beyond its immediate economic effects, closing de minimis abuse also has critical national security implications. The unrestricted flow of duty-free imports from China has given foreign adversaries greater influence over U.S. supply chains, technology infrastructure, and consumer markets.
De minimis shipments have been linked to:
- Unauthorized surveillance devices, including Chinese-made smart home products that could pose data security risks.
- Potential military and aerospace technology leaks, with unchecked imports bypassing export controls.
- Fentanyl trafficking, with illicit drugs entering the U.S. through poorly regulated small packages.
A trade system that prioritizes national security must include stricter oversight over de minimis imports. Ending the abuse of this loophole would allow the U.S. to better regulate sensitive supply chains, reduce economic reliance on China, and enhance border security measures.
Policy Recommendations and Next Steps
Closing the Loophole is Just the Beginning
While the End China’s De Minimis Abuse Act (H.R. 7979) is a critical step toward fixing a broken trade system, it does not fully resolve the larger structural issues that have allowed foreign competitors, particularly in China, to dominate key U.S. markets.
Policymakers must view this legislation as a foundation upon which further trade reforms can be built. The United States cannot afford to passively react to trade abuses as they arise—it must take a proactive approach that protects American manufacturers, strengthens enforcement mechanisms, and reduces reliance on foreign supply chains.
Moving forward, the next phase of U.S. trade policy must include additional legislative reforms, enforcement measures, and industrial strategies to ensure that the country does not continue losing ground to foreign competitors who exploit weak trade enforcement.
Expand De Minimis Reform Beyond China
While the End China’s De Minimis Abuse Act specifically targets China, it is important to recognize that other countries are also using the de minimis loophole to bypass U.S. trade laws.
For instance, Vietnam and Mexico have increasingly been used as alternative manufacturing hubs for Chinese firms, allowing companies to re-route their supply chains to avoid direct trade restrictions. In 2023, U.S. import data showed a surge in de minimis shipments from Vietnam, raising concerns that Chinese companies are using Vietnam as a secondary channel to access the U.S. market without tariffs.
To prevent this kind of loophole exploitation, policymakers should extend de minimis restrictions beyond China and apply them to any country or region that engages in similar trade practices. This could be accomplished by:
- Establishing a tiered de minimis threshold that applies stricter import limits to high-risk countries that have a history of tariff evasion.
- Requiring proof of origin for de minimis shipments, ensuring that goods truly come from the country listed on the shipment, rather than being repackaged or rerouted from China.
Without these measures, Chinese manufacturers could simply shift their supply chains to third-party nations, continuing to exploit U.S. trade loopholes through indirect means.
Strengthen Customs and Border Protection (CBP) Enforcement
A key reason why the de minimis loophole has been so widely exploited is a lack of effective enforcement mechanisms at U.S. ports of entry.
Because de minimis shipments are not subject to the same rigorous screening as traditional imports, millions of packages enter the U.S. each day with minimal oversight, overwhelming Customs and Border Protection (CBP) and creating a border security blind spot.
To close this enforcement gap, Congress should:
- Increase CBP funding for de minimis inspections, allowing for greater staffing and technological upgrades to handle the volume of low-value shipments.
- Require digital tracking and data submission for all de minimis imports, making it easier for CBP to detect patterns of tariff evasion and counterfeit goods.
- Use artificial intelligence and machine learning algorithms to automatically flag high-risk shipments based on country of origin, product type, and historical compliance records.
- Conduct random physical inspections of de minimis shipments, rather than allowing them to pass through unchecked.
These enforcement enhancements would ensure that foreign sellers cannot simply mislabel or undervalue shipments to avoid detection, making it significantly harder for companies like Shein and Temu to continue gaming the system.
Introduce Reshoring Incentives to Rebuild U.S. Manufacturing
Closing the de minimis loophole is a necessary defensive measure, but it does not automatically bring back the manufacturing jobs that have already been lost due to years of unfair trade policies.
For the U.S. to truly regain its competitive edge, it must pair trade enforcement with aggressive reshoring initiatives—incentivizing companies to build and expand their operations within the United States rather than relying on cheap foreign production.
Policy measures that could accelerate manufacturing reshoring include:
- Expanding tax credits for U.S.-based manufacturing investments, encouraging businesses to move production out of China and back to American factories.
- Providing low-interest loans for manufacturers investing in domestic production facilities, reducing the financial burden of transitioning supply chains back to the U.S.
- Creating a federal reshoring grant program that helps companies offset the costs of moving their operations away from foreign suppliers.
- Strengthening Buy American requirements, ensuring that federal procurement policies prioritize U.S.-made goods over imports.
By combining de minimis reform with aggressive manufacturing investment, the U.S. can not only stop the flood of unfair imports but also actively rebuild its industrial base, ensuring that more products are made in America, by American workers.
Implement Targeted Consumer Awareness Campaigns
One of the biggest challenges in addressing de minimis abuse is consumer awareness. Many Americans unknowingly support foreign e-commerce giants like Shein and Temu because they do not realize the extent to which these platforms benefit from unfair trade loopholes.
Unlike traditional U.S. retailers, which must comply with import duties, labor laws, and safety standards, foreign-based e-commerce companies are not held to the same rules—allowing them to sell cheap goods at the expense of American businesses and workers.
A national consumer education initiative could help shift consumer behavior by:
- Launching public awareness campaigns explaining how foreign e-commerce platforms exploit trade loopholes to gain an unfair advantage.
- Encouraging consumers to look for Made in the USA alternatives by promoting domestic brands and highlighting the economic impact of supporting local manufacturers.
- Requiring transparency in online marketplaces, so consumers can easily see where a product is coming from before purchasing it.
By educating consumers about the real costs of de minimis abuse, policymakers can help drive greater demand for American-made products, ensuring that U.S. businesses are not at a disadvantage simply because foreign competitors are gaming the system.
Establish a National Manufacturing Strategy to Reduce Dependence on Foreign Supply Chains
De minimis abuse is just one symptom of a much larger issue—the decline of U.S. manufacturing and overreliance on foreign supply chains.
For decades, policymakers have failed to create a long-term strategy to support domestic manufacturing, allowing critical industries to be outsourced to China and other low-cost production hubs.
To ensure that America does not remain vulnerable to foreign economic manipulation, the U.S. must develop a comprehensive national manufacturing strategy that includes:
- Strategic investment in key industries, such as semiconductors, medical supplies, and defense manufacturing, reducing dependence on foreign producers.
- A permanent reshoring tax credit, making it financially advantageous for companies to keep production within the U.S. rather than seeking cheaper labor abroad.
- Infrastructure upgrades to support industrial growth, including modernizing ports, roads, and energy grids to accommodate domestic manufacturing expansion.
- Stronger export promotion policies, helping American manufacturers expand their reach into international markets rather than relying solely on domestic sales.
A strong industrial policy is necessary to ensure that de minimis reform is not just a short-term fix, but rather a turning point for rebuilding America’s economic independence.
Reclaiming Fair Trade: The Urgent Need to End De Minimis Abuse
The End China’s De Minimis Abuse Act is more than just a trade reform—it is a critical step toward restoring fairness, strengthening national security, and rebuilding the foundation of American manufacturing. For too long, foreign companies—especially those in China—have manipulated the de minimis loophole to flood the U.S. market with duty-free goods, undercutting American businesses and workers in the process.
By allowing millions of low-cost, minimally inspected imports to enter the country daily, the current system encourages offshoring, weakens domestic supply chains, and places U.S. manufacturers at a severe competitive disadvantage. The result has been job losses, factory closures, and an increased reliance on foreign economies, particularly China, for essential goods.
Closing the de minimis loophole will level the playing field for American manufacturers, restore lost tariff revenue, and ensure that all companies—foreign and domestic—play by the same rules. However, this bill alone is not enough. It must be part of a larger, long-term strategy that includes stronger trade enforcement, reshoring incentives, consumer awareness campaigns, and a comprehensive national manufacturing policy.
America cannot afford to continue allowing foreign competitors to exploit its trade laws to their advantage. If the U.S. is serious about economic independence, job creation, and long-term industrial leadership, it must act decisively to close this loophole and take bold steps to protect its manufacturing sector. The End China’s De Minimis Abuse Act is not just about fixing a broken trade rule—it is about reclaiming control over America’s economic future.
