WASHINGTON, Feb 2 (Reuters) - President Trump's new policies towards Canada, Mexico, and China all include provisions that suspend a duty-free exemption for low-value shipments under $800, which has been exploited to allow shipments of fentanyl and its precursor chemicals into the United States.
A key aim behind Trump's decision to impose extensive import tariffs on these major trading partners was to prevent the influx of fentanyl. However, the effectiveness of this strategy in curbing fentanyl smuggling remains uncertain without a complete global abolition of the "de minimis" exemption.
The suspension of this exemption will coincide with the duration of Trump's tariffs and could pose challenges for Chinese e-commerce companies like Shein and PDD Holdings' Temu, which have utilized the exemption to circumvent previous U.S. tariffs.
Small shipments, taking advantage of ports of entry, have facilitated the illicit transportation of drugs and their components into the U.S. Recent findings illustrated how Chinese traders exploit the de minimis exception to smuggle precursor chemicals into the U.S. for use in fentanyl production in Mexico.
Fentanyl overdoses claimed nearly 75,000 American lives in 2023, according to the U.S. Centers for Disease Control and Prevention.
The White House officials announced punitive tariffs of 25% on Canadian and Mexican goods and an additional 10% on Chinese imports. The halt of de minimis specifically targeted Canada, with officials blaming Canada for not taking sufficient measures against fentanyl trafficking.
Although the executive orders for all three countries reference the cessation of the de minimis exemption, Trump's directives do not propose a global or permanent suspension, raising concerns that fentanyl shipments could still evade detection if they do not originate from China, Canada, or Mexico.
A White House spokesperson did not respond immediately to requests for comments on the exemption.
Tim Brightbill, co-chair of Wiley Rein's trade practice, highlighted the potential widespread impact of the elimination of de minimis entries for all three countries and recognized the history of abuse of these provisions by various importing industries.
While China and Mexican criminal organizations have long been accused of trafficking fentanyl into the U.S., the order against Canada emphasized the rising drug trafficking activities from Canada.
The order underscored the growing threat posed by criminal networks involved in human trafficking, smuggling, and drug synthesis operations, particularly fentanyl and nitazene, across the northern border.
Nitazenes are substances similar to fentanyl.
The order also cited the role of de minimis shipments in fueling a public health crisis in the U.S.
De minimis shipments to the U.S. have surged since 2015 when the duty-free threshold was raised to $800 per shipment from $200, with Customs and Border Protection estimating over one billion such shipments annually.
During the previous administration, there were efforts in January to restrict the de minimis exemption globally, applying it to goods subject to other punitive tariff measures, and mandating detailed identification of package contents by their 10-digit tariff codes.
The final implementation of these rules remains uncertain under the current Customs and Border Protection leadership.