De Minimis Reform Done Wrong Grows Government, Inflates Consumer Costs
Congress will consider legislation to change the rules on how to treat imports of products from overseas that are considered low-value.
The idea is to expand tariffs and other duties on imported goods to make them ineligible to be considered "de minimis" or small minor imports is a bad one.
This idea, if done wrong, is a bad one.
One approach is being pushed by Sens. Ron Wyden, D-Ore.,Cynthia Lummis, R-Wyo., Sherrod Brown, D-Ohio, Susan Collins, R-Maine, and Bob Casey, D-Pa.
These senators all market this as a way to fight the import of illicit drugs like fentanyl, yet the group primarily supporting the effort is pushing this as a protectionist measure to force consumers to shift from the imported products they have chosen to more expensive domestic products.
As it is, we already burden the U.S. Customs and Border Protection (CBP) with too much responsibility to handle.
One responsibility they have is to inspect incoming packages for items that violate Intellectual Property Rights (IPR), counterfeits and containing drugs. Last year, the CPB seized 19,522 shipments that violated IPR and 23 million counterfeit goods.
The cost is a great deal of taxpayer resources.
The agency already provides some inspection to shipments under $800 and processed over 1 billion de minimis shipments in FY 2023.
Any effort to increase the work CBP has to do with small shipments will require more taxpayer money and will not end up increasing the numbers of seized goods to make it worthwhile.
Remember during the time of COVID-19, when Americans relied on imported goods which ended up clogging up supply chains from overseas?
Expect that very problem to increase with already clogged up ports having to collect and inspect a huge number of incoming packages.
This idea will slow the supply chain for all goods, because our ports are a choke point when it comes to imports.
Americans want our border agents to protect the border from several challenges.
Increasing the workload to include the inspection of small packages is a terrible idea.
It will divert resources from border security and will make it easier to sneak through large packages of banned goods, because our CPB agents will be overloaded.
Unless if we think it a good idea to hire an army of new agents to leave the border to inspect small packages, this idea should be abandoned today and seen as something that will divert resources from protecting America at the border.
Tariffs are taxes on American citizens.
Some spin tariffs as a way to tax foreign governments, yet the truth is that tariffs are collected from companies importing the goods then that tax is passed on to American consumers.
A tariff is a sneaky way to increase taxes on American citizens and a terrible idea when Americans are already hit with high taxes and a high rate of inflation over the past three years that has hammered families.
A coalition of groups, including the National Taxpayers Union (NTU), has put out a fact sheet that points out that this idea would be a big money loser for the federal government because the revenues collected from Section 301 tariffs would cost "significantly higher than the tariff revenue that would be collected."
They also point out the current CPB is already overworked and there is “a gap of over 4,800 Officers between what the agency has determined is necessary and what Congress has appropriated funds for.”
In other words, that gap would increase with this new law if passed.
It is likely that packages will be shifted over to the U.S Postal Service (USPS) that has been notorious in a lack of inspection in imported packages.
In October of 2018, the STOP Act was passed requiring electronic data to be used with all incoming packages to prevent the import of fentanyl and other drugs.
According to Paul Steidler writing at National Interest, “since then, the leadership of U.S. Customs and Border Protection (CBP), in two administrations, has done everything conceivable to blunder enforcement, thereby ensuring international drug cartels maintain reliable use of one of their proven shipping and distribution channels."
Shifting more small shipments to the USPS will make it easier to use that supply chain to get drugs into the U.S.
Another angle to this important story is that this is merely a way to protect American textiles, because it purportedly targets importers of clothing and ignores companies like the Chinese competitor to Amazon.com, Temu.com, who import clothing and other goods not covered by the new proposed law.
Still, the authors of this legislation need to go back to the drawing board to either fix the flaws or scrap it.
Jared Whitley is a longtime politico who has worked in the U.S. Congress, White House and defense industry. He is an award-winning writer, having won best blogger in the state from the Utah Society of Professional Journalists (2018) and best columnist from Best of the West (2016). He earned his MBA from Hult International Business School in Dubai. Read Jared Whitley's reports — More Here.