While there is mounting concern over the high-value Chinese exports flooding global markets, late last week, the US flagged a crackdown on China’s rapidly rising tide of low-value, small-package goods.

On Friday, even as US Treasury Secretary Janet Yellen was raising the issue of excess industrial capacity with Chinese leaders during her latest visit to China, the US Department of Homeland Security (DHS) announced it was increasing its targeting of “unscrupulous individuals and entities who create an unfair market by circumventing the operation of our nation’s free trade agreements”.

Shein and Temu last year accounted for more than a third of over a billion small package imports, a Congressional report found.Credit: Bloomberg

The department’s statement specifically mentioned the “de minimus exception”, which allows small packages with a value of less than $US800 ($1218) to be imported duty-free.

That exception, which dates back to 1938, matches the value of items that Americans can bring home duty-free after travelling abroad.

The rationale for the exemption from tax is the prohibitive cost of administering and policing any effort to impose and collect duties on the more than a billion small parcels now imported to the US each year.

The DHS announcement was ostensibly focused on textile imports, which represent the majority of small parcel imports, where there have been concerns that Chinese exporters have used forced labour, notably the Uighurs in Xinjiang, one of the world’s major cotton-growing regions. The US banned imports from Xinjiang in 2022.

There’s also concern that the de minimus regime has enabled the importing of the synthetic opioid, fentanyl, with usage of the drug at crisis levels in the US.

There’s been little scrutiny – or, at least there hasn’t yet been – of small parcel imports. The DHS said on Friday that it will increase screening and testing of packages, expand customs audits and verifications and conduct “special operations” ensure compliance.