The controversial customs rule is dubbed de minimis. Under this Latin expression meaning “pertaining to minimal things” or “with trifles,” low-priced goods are free from customs inspection in both the European Union and the US, up to €150 and $800, respectively. The exemption allows Chinese e-commerce companies to export millions of individual parcels and escape duties.

Both Brussels and Washington are now moving to end the loophole. The Biden administration announced an executive action in September to close the de minimis eligibility for many Chinese imports, including most clothing items. The European Commission wants to start collecting duties on low-priced goods in a major customs reform.

But reform is not straightforward. It risks hurting small American and European sellers, not only Chinese marketplaces. And it is technically challenging to suddenly collect duties on several billion packages per year.

The motivation for cracking down is clear: Chinese e-commerce players such as Shein and Temu undercut Amazon and other Western marketplaces by sending individual parcels from individual sellers in China to US and European customers. High duties hit retailers who ship their products in bulk. In 2023, the EU imported 2.3bn packages and the US one billion parcels under the de minimus exemption. That represents a sharp increase from 140m just 10 years earlier.

Since individual packages avoid customs inspections, law enforcement blames the de minimis exemption for a rise in synthetic drugs such as fentanyl entering the US. The EU says it has seen a sharp uptick in products entering the market that do not conform to the bloc’s safety standards. The European Commission has opened an investigation into Temu for facilitating the sale of illegal products.

Although they share a similar goal, the allies risk a confrontation. While the new US rules would specifically target China, new European rules would end the de minimis exemption for all non-EU countries. That means American and British goods would also be hit with new tariffs. This could exacerbate protectionism on both sides of the Atlantic, which has been on the rise.

Nor is it clear that the rules would help consumers. The main target of the legislation, Shein and Temu, both Chinese e-commerce platforms for ultra-cheap items, make up one-third of all de minimis imports into the US. Counterintuitively, the companies welcome imminent restrictions, at least on paper, confident they can adapt to the new rules and that their growth is not dependent on the sale of individual packages.  

Instead, these regulations could hurt small sellers the most. Ending de minimis makes it harder for them to compete with well-oiled e-commerce giants. Small domestic businesses and low-income consumers will face the hit. E-commerce platforms such as Etsy, which enables small retailers to sell directly to consumers, could suffer. UPS and other delivery companies have voiced support for increasing, not decreasing, the de minimis exemption on the grounds that it would lower costs for consumers and support small businesses. Rather than combat unfair competition, scrapping the exemption might exacerbate existing problems.

Another question is practical: ending de minimis would require immense funding to catalog and screen incoming packages. More than two million packages enter the US each day under the de minimis exemption, almost all from China. Even though Congress wants to directly target Chinese e-commerce, it instead risks derailing the postage ecosystem. In Europe, member states have complained that removing de minimis would put an undue burden on customs authorities, requiring them to screen an additional 2.3bn items.

The US plans to announce concrete new rules in early December, before Donald Trump takes office again. While consequential, the current proposal does not include all products coming from China. The incoming administration itself strongly supports tougher measures against China.

The EU proposal, in contrast, has stalled. Planned announcements, first in July, then in September, have been canceled. Experts close to the negotiations in Brussels suggest changes will have to wait for the adoption of the overall customs reform. Both the US and the EU are hawkish toward Beijing and want to crack down on the wave of individual packages from China coming into their markets. It’s another sign of how the tide is turning against globalization.

Clara Riedenstein graduated from Oxford University where she is now studying for a master’s degree in political theory while working as a research assistant with the Digital Innovation Initiative at the Center for European Policy Analysis (CEPA).

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

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