U.S. Representative Mike Gallagher (R-Wis.) has issued a statement concerning the rise in de minimis (tax-free) imports into the U.S., highlighting how this allows Chinese companies to exploit Uyghur forced labor. Gallagher also cautioned that U.S. firms may be "forced" to relocate American jobs to China.
"Exploitation of the de minimis exemption is accelerating the export of American jobs and giving Chinese companies using Uyghur forced labor a complete pass," said Rep. Mike Gallagher, Chairman of House Select Committee on the CCP, according to Select Committee on the CCP.
According to a press release from the House Select Committee on the Chinese Communist Party (CCP), there has been an increase in de minimis shipping imports in FY23 and FY24. Gallagher, who chairs the committee, said, "According to CBP, more than 485 million de minimis shipments have already entered the United States in FY24, on top of the 1.05 billion shipments that entered tax-free under de minimis rules in 2023, itself a shocking 53% increase from 2022. No less than 94% of all import transactions now enter the U.S. through De Minimis rules, accounting for 90% of all illegal narcotics, agricultural goods, and counterfeit seizures by customs."
The committee explained that the "de minimis" international rule permits duty-free admission of products valued below $800. The threshold was originally $200 but was raised in 2016, leading to an influx of foreign imports using this rule. However, tracking illicit shipments like narcotics or illicit material becomes challenging for CBP when small packages are used. Gallagher identified Shein and Temu as foreign companies that take advantage of this loophole and allegedly use cheap forced labor in China, putting American companies at a disadvantage. "We can’t expect American companies to compete with foreign companies that don’t have to pay taxes," said Gallagher while forecasting that American firms might start shifting labor to China if Congress does not address this issue.
A research report from the America First Policy Institute (AFPI) stated that Shein and Temu have grown exponentially due to their exploitation of Uyghur labor in China, with their value now in the billions. The report suggested that the 2021 Uyghur Forced Labor Protection Act (UFLPA) is insufficient to halt this forced labor. It advocated for decoupling from China in this context and addressing the "de minimis loophole that allows hundreds of millions of packages annually to enter the country free from tariffs or customs inspections."
According to a report by AFPI and Adam Savit's China Policy Initiative, Shein's market share in the U.S. has grown from 18% to 40% between 2020 and 2022. Shein sources "cheap" cotton from Xinjiang, China, where Uyghur minorities are subjected to "forced labor" under the CCP. The de minimis loophole is one method these companies use to circumvent the Uyghur Forced Labor Protection Act (UFLPA). Furthermore, both Shein and Temu have been accused of evading compliance with the UFLPA, with allegations that Shein failed to disclose its use of Xinjiang cotton and Temu openly admitting it does not prohibit third-party sellers from sourcing products from Xinjiang. To address these issues, recommendations include enhancing enforcement of the UFLPA, closing the de minimis loophole, and considering bans on the Shein and Temu apps to cut ties with forced labor supply chains.
Gallagher serves Wisconsin's 8th District according to his biography on his website. Elected in 2017, he also chairs the House Armed Services Subcommittee on Cyber, Information Technologies, and Innovation besides being a member of the Permanent Select Committee on Intelligence.
