Aligning with the concept of using tariffs to fund government operations, President Trump has announced his intention to create the External Revenue Service. It appears to be a collection and enforcement mechanism to gather income from tariffs, duties and other sources that will pay for access to the U.S. consumer market.
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One of the issues the External Revenue Service will likely address is the de minimis loophole.
The de minimis loophole comes from back in the 1930s. The idea back then was, say you went on a vacation to Paris, you shouldn’t have to file customs paperwork or pay taxes if you decided to ship some little Eiffel Tower statues to your friends back home.
Congress in 2015 then raised the de minimis threshold from $200 to $800. However, the e-commerce world exploded, and Chinese companies began using the de minimis loophole to ship cheap goods (ex. Temu and Shein) into the USA direct to consumers without paying any customs duty.
It was reported last year that the U.S. was on track to receive a billion packages through the de minimis loophole that aren’t taxed and don’t have customs slips saying what they are. Making matters worse, illegal items are slipping through the cracks, including, knockoffs, unsafe items and even chemicals used to make fentanyl. The worst abuser that exploits this de minimis loophole is, by far, China.
President Trump can require a customs and duty declaration stating what is in every package and subsequently collect tariffs and duties.
Something tells me shutting down the de minimis issue is part of the background for this “ERS” announcement.
