THE NEWS

By Eric Kulisch of FreightWaves

The Trump administration this week rolled back the duty for small-dollar shipments from China and Hong Kong as part of tariff deescalation with China, while a House committee advanced legislation to permanently end the duty-free “de minimis” exemption from all countries. 

President Donald Trump’s executive order lowering new 145% tariffs on Chinese goods to 30% for 90 days represents a reprieve for popular Chinese shopping platforms and other e-tailers that ship parcels directly from the factory to individual shoppers. E-commerce orders and airfreight shipments plummeted after the U.S. government on May 2 rescinded duty-free treatment for low-value goods, subjecting them to the same duties imposed on all Chinese products.

Before then, U.S. trade law allowed an individual each day to import goods valued at $800 or less and use an informal entry process. The rule helped fuel cross-border shipping from Chinese shopping platforms direct to consumers. About two-thirds of all packages entering the country through the de minimis channel are from China. 

The executive order also proactively lowered fees for low-value shipments from China sent through the international postal system. Postal shipments under $800 are now subject to a 54% tariff instead of 120%. Carriers can opt instead to pay $100 per postal item containing goods. Monday’s order canceled a June 1 increase to $200 for the flat fee.

The revised fees still present a significant cost increase, but the pause provides retailers time to adjust operations.

Logistics professionals say shipping rates could rise as businesses rush to order goods before the next deadline. Trade publication Modern Retail reported that fast-fashion retailer Shein on Wednesday announced price reductions for U.S. customers following the relaxation of de minimis rules on Chinese imports. Shein had raised prices and cut U.S. advertising after the change in de minimis rules sharply increased delivery costs.

The publication also said that Temu had resumed selling nondomestic items to U.S. customers.

Momentum builds to turn off de minimis

Congress a decade ago increased the de minimis ceiling from $200 to $800 as a way of helping small businesses with an online presence take advantage of international trade. But attitudes began to change when huge Chinese sellers like Temu, Shein and Alibaba flooded the trade facilitation program to minimize costs, putting a strain on U.S. Customs and Border Protection’s ability to cross-check shipments for trade, consumer safety or security compliance. 

Critics say the exemption creates a conduit for criminals to smuggle goods with little scrutiny, gives overseas merchants an advantage over retailers that source domestic products and results in billions of dollars in uncollected tariff revenue. 

CBP last year processed an average of more than 4 million de minimis imports per day but says the minimal information supplied on the informal entry makes it difficult to identify and interdict illegal drugs such as fentanyl, as well as counterfeit products and other contraband. It also has found cases of importers misclassifying and undervaluing goods, and misdelivering goods before they are officially released from CBP custody.

The U.S.-China Economic and Security Review Commission in December recommended that Congress eliminate de minimis eligibility for imports sold through online marketplaces.

On Tuesday, the House Ways and Means Committee approved a massive tax bill, which includes Trump’s tax priorities and a provision that would permanently end de minimis for commercial shipments from all countries by July 1, 2027.

“As the bill makes its way through the legislative process, we strongly support a more aggressive timeline to implement a permanent ban on de minimis globally given its significant harm to manufacturers, retailers, and the fight against fentanyl and other illegal products. Express shippers have already transitioned to processing all Chinese imports through sophisticated logistics systems, demonstrating their ability to comply with the president’s executive orders and pivot quickly,” said Kim Glas, president of the National Council of Textile Organizations, in a statement. 

 Meanwhile, other efforts are in progress to curb the use of de minimis entries.

Customs and Border Protection is developing a new rule, proposed in the waning days of the Biden administration, that would require certain shippers to electronically submit additional data elements on low-value consignments prior to arrival and would remove de minimis eligibility for imports subject to certain tariffs.

The White House has said it plans to use emergency powers to delete the de minimis exception once systems are in place to collect duties from millions of parcels per day, including ones sent through postal channels.

Authored by Darlene McCormick Sanchez via The Epoch Times (emphasis ours),

LAKE VILLAGE, Ark.—On a breezy day, sun and shadow dance across Mencer farms, turning it into a patchwork of green in the fertile Arkansas Delta.

It is humid here in the deep South, where the clock seems to run slower and the temperature hotter than in other places.

Lake Village is a small town sitting along Lake Chicot, an abandoned channel of the Mississippi River. Over thousands of years, flooding deposited rich alluvial soil, making it ideal for crops such as rice, cotton, soybeans, and corn.

As a child, William Mencer’s grandfather handed him a cowboy hat and a garden hoe to dig up the pigweeds growing between the crop rows.

The 31-year-old farmer remembers spending long, sweltering days alongside the farmworkers, his hands growing rough and calloused with the effort.

“So I learned, you know, what it was like for these workers,” he told The Epoch Times.

He vowed to escape the sweat and toil of the fields by going to law school and working in an office. But the family farm drew him back like a love song.

Now he is partnering with his father, Joe Mencer, to keep the farm afloat with temporary agriculture workers through the H-2A visa program.

The fourth-generation family farm, which costs $4 million per year to operate, includes 6,000 acres that they own and lease.

While some may claim agriculture needs illegal immigrants to pick crops and work the fields, Joe Mencer told The Epoch Times that they’ve never had an illegal immigrant come looking for work.

They can’t get anyone local to work either, meaning that if they didn’t have the guest farm workers, they couldn’t stay in business.

What Is the H-2A Visa?

It costs more to bring in temporary legal workers than it would if they could find enough people locally to work. But without temporary migrant workers, William Mencer said local farms would go bust, affecting the nation’s food security.

The process has become much more complex since the Mencers began using the guest worker program back in the 1980s.

So much so that the younger Mencer started a small law practice helping other farmers obtain the labor they sorely needed.

He also shares his knowledge with other farmers as a member of the Arkansas Farm Bureau.

The process of hiring workers through the program, sometimes called a guest worker program, starts early in the year for the Mencer family.

The paperwork needs to be filed 60 to 75 days before their start date, which is mid- to late-February, he said.

It costs as much as $5,000 to bring in several guest workers from Mexico to the United States, he said, noting that the cost doesn’t include the housing and transportation provided to the workers.

Most return home in mid-December, but they are eligible to stay for up to three years in certain situations when agricultural work is available.

The program requires the Mencers to advertise their farm jobs locally before they can be given to guest workers.

Joe Mencer, 65, noted that the rules call for him to fire any foreign worker he’s brought over if an American shows up and wants the job.

Tangled in Red Tape

The process to petition for workers with the U.S. Citizenship and Immigration Service is antiquated, with all communications taking place via mail, according to William Mencer.

The government does not offer online services, email, or a phone number. If there’s a problem, then the farm’s labor source is jeopardized because of the lack of communication, he said.

“Sometimes things get lost in the mail. You know, literally,” he said.

One of his client’s petition paperwork didn’t arrive in the mail. So they filed a claim for the lost package and resubmitted the paperwork.

This time, the paperwork made it to the Dallas office, but the postal carrier found the original package and shipped it, too.

With both petitions filed with the government, it almost took an act of Congress to clear it up.

The younger Mencer sent a letter explaining what happened with the evidence to the government officials, just like he would in court, but the office didn’t respond.

He enlisted the help of his congressman to clear things up. By the time it was all done, his client was behind by a month in getting guest workers.

It makes him wonder if the difficulty and red tape is “by design.”

The workers are so important that the Mencers keep them busy even when the weather is bad, although it doesn’t help their bottom line.

When there’s no field work, they cut firewood for use in the winter months.

Joe Mencer said he realized a few years back that his son’s law degree would be helpful on the farm, especially given the increasing complexity of the H2A visa program.

Guest Worker Success

The Mencers said their farm couldn’t operate without H-2A visa workers, although the labor cost is higher than using local workers.

Farmers’ margins are already slim because of increased production costs for fertilizer, herbicides, seed, and fuel.

José Mondragon, who started as an H-2A visa worker, is now a green-card holder. He has worked for the Mencer family for nearly 30 years.

Others, such as Gabino Mondragon (no relation to José Mondragon) are H-2A visa holders who have only been working at the farm for a few years.

José Mondragon lives with his wife in a little house on the farm surrounded by flowers and trees. The 57-year-old has deep roots in the land, even serving as a pallbearer when Joe Mencer’s father passed away.

In late April, he operated a self-driving orange Case Magnum row crop tractor, which plowed the earth between the corn rows to improve irrigation.

José Mondragon said he’s seen American workers quit after two or three months, long before the crops are harvested in the fall. The lack of local workers can open the door for temporary visa workers, which is good for everyone, he said.

“The people [are] asking us if we have some opportunities to come with my boss, and we say we will ask him,” he said.

José Mondragon said some people come to the United States illegally because they get into trouble with the law back home or to escape the cartels. Others come to make more money to help support their families in their native countries.

Workers from Mexico make $14.83 per hour on the Mencer farm as legal workers, with the wage set by the government for each state.

José Mondragon said human smugglers, known as coyotes, charge people big money to cross the southern border illegally.

Gabino Mondragon has been working at the Mencer farm on a guest visa for two years. He is experienced at running a spreader for nitrogen fertilizer for corn. One truckload of fertilizer can cost $20,000, according to William Mencer, so having a skilled operator is critical.

Gabino Mondragon believes that more people in Mexico would like to apply for an H-2A visa. Still, if they are caught coming into America illegally, they won’t be eligible unless they get a waiver. It would depend on their record.

The Mencers brought Gabino Mondragon’s family over on an H-4 visa so they could live close by while he worked.

The H-4 nonimmigrant visa allows the spouse and unmarried children younger than 21 years of age to accompany the primary visa holder to the United States.

It’s also an excellent opportunity for Gabino Mondragon’s family because his children are going to school and learning English.

“If our people are happy, it just reinforces that it’s a good thing for everybody,” William Mencer said.

Hanging by a Thread

The high cost of labor, diesel, and chemicals is making it extremely difficult for family farms to stay in business, according to William Mencer.

“We’ve been in four or five really bad years now,” he said.

Some farmers are faced with losing their farms to foreclosure by banks over crop production loans, finding a different line of work, or selling out.

Read the rest here…