Trump has signed three Executive Orders affecting the ‘de minimis’ exemption, which includes products that are from Mexico, Canada or China.
US President Donald Trump has signed three executive orders (EOs) affecting the so-called de minimis exemption in US trade policy, by which goods imported into the US of a value of $800 or less are exempted from customs duties and certain other taxes. As we have reported, de minimis has enabled e-commerce specialists like Shein and Temu to sell at low cost on the US market – although not without controversy. Other companies, like Amazon, also benefit.
The effects of two of the EOs in question have since been paused. All three were issued on Feb. 1 and subjected “all articles that are products of” Mexico, Canada or China to additional ad valorem rates of duty, while also removing the de minimis exemption for the same. Mexico and Canada have come to terms with Trump, at least for now, but China has taken a different tack.
China
For starters, it has filed a complaint with the World Trade Organization (WTO), although probably just to show that it is going through proper channels. The WTO’s Appellate Body has been unable to muster a quorum since late 2019, because the US has been blocking the appointment of new judges, charging the body with judicial activism, among other things.
To no doubt greater effect, China is also set to impose, as of Feb. 4, a 15 percent tariff on US coal and liquified natural gas (LNG), a 10 percent tariff on crude oil and greater export controls on 25 products made from rare metals.
In addition, as many have reported, China’s State Administration for Market Regulation has opened an antitrust investigation into Google.
According to US Press Secretary Karoline Leavitt, Trump will be speaking with China’s President, Xi Jinping, sometime in the next few days.
So far, then, the US will be applying a tariff of 10 percent to Chinese products. The reason, says the Trump administration, is that Chinese Communist Party (CCP) has “subsidized and otherwise incentivized PRC chemical companies to export fentanyl and related precursor chemicals that are used to produce synthetic opioids sold illicitly in the United States” and “provides support to and safe haven for PRC-origin transnational criminal organizations (TCOs) that launder the revenues from the production, shipment, and sale of illicit synthetic opioids.”
Mexico
Mexican goods were to get a tariff of 25 percent. For the Trump administration, Mexico had failed to “arrest, seize, detain, or otherwise intercept Mexican drug trafficking organizations, other drug and human traffickers, criminals at large, and illicit drugs” to the detriment of the US.
Mexico’s response, on Feb. 2, has met Trump’s terms, and obtained a pause in the tariffs until March 4. President Claudia Sheinbaum Pardo has announced the dispatching of 10,000 national guardsmen to the border to quell drug trafficking and some kind of commitment to quell the traffic in weapons.
Canada
Canada was to get a tariff of 25 percent on goods and 10 percent on energy products. The northern neighbor, for the administration, had permitted “gang members, smugglers, human traffickers, and illicit drugs of all kinds” to cross the northern border of the US” and Mexican cartels to operate “fentanyl and nitazene synthesis labs” on its territory.
Canada responded the same day with tariffs of its own – 25 percent on $155 billion in US goods as of Feb. 4. On Feb. 3, however, it too met Trump’s terms and obtained the same pause as Mexico – until March 4.
According to Prime Minister Justin Trudeau, Canada will be implementing a $1.3 billion border plan, with a staff of 10,000 to work the border; appointing a Fentanyl Czar; declaring cartels to be terrorist organizations; and putting into effect an intelligence directive with $200 million in funding.
