Despite Tariffs, 800M Chinese Shipments Enter U.S. Annually Via Loophole

New York, NY, June 17, 2022-American politicians and economists have obsessed over the U.S. trade deficit with China for years, reports the Wall Street Journal.

“Lowering the deficit was one of former President Donald Trump’s goals in imposing tariffs on the majority of Chinese imports. President Biden’s administration is debating whether to peel them off to alleviate inflation or keep them on to pressure China. After all, they did appear to achieve one of Mr. Trump’s purposes: reducing the bilateral deficit between the U.S. and China, which according to the official U.S. trade statistics topped $400 billion a year in 2018.

“But here’s the catch: When it comes to China, official U.S. trade statistics miss a big part of the story. They don’t include the value of roughly 800 million shipments a year that arrive in the U.S. under a set of rules known as de minimis, a Latin phrase meaning items too small to be bothered with, that applies to individual imports entering the U.S. valued under $800. Correcting for that suggests the deficit with China might have barely budged, and possibly grown, since the trade war.

“‘The whole idea of ‘de minimis’ is you send in packages, and Customs isn’t checking the values,’ said Jeff Ferry, an economist at the Coalition for a Prosperous America, a trade group that supports tariffs as a tool to help U.S. firms compete with China.

“‘This has implications for whether we can trust the figures on imports from China’ where such shipments have become especially common, said Mr. Ferry, who in a study earlier this year determined U.S. trade statistics omit the value of such shipments.”