Questions are swirling about the status of a trade rule that President Trump canceled and then reinstated earlier this month after it proved unworkable, leading to logistical confusion, an outcry from businesses and a huge pile of unprocessed packages at New York’s JFK airport.
Speaking to a governors’ conference at the White House on Friday, President Trump appeared to believe he had ended the “de minimis” exemption, a rule that allows packages valued at less than $800 to enter the U.S. without being taxed or inspected and that critics say helps to facilitate illegal shipments of synthetic opioid fentanyl into the U.S.
“We’re not doing that anymore,” Trump said in response to a question on the de minimis rule from South Carolina Gov. Henry McMaster. Trump then spoke at length about how advertising campaigns were an effective measure against drug abuse, recommending that McMaster implement such a policy in South Carolina.
However, the U.S. is still accepting shipments under the de minimis exemption until “adequate systems are in place” to get rid of the rule and collect tariff revenues from the imports, according to a Feb. 5 executive order that has yet to be updated.
“Duty-free de minimis treatment … is available … but shall cease to be available for such articles upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expediently process and collect tariff revenue … for covered articles otherwise eligible for de minimis treatment,” the order says.
Trump has set a March 1 deadline for certain tariffs on goods imported from Canada and Mexico, though he has reneged on multiple tariff roll out initiatives since taking office. The de minimis exemption cut off has been left open-ended.
The Hill reached out to the White House, the Commerce Department, and U.S. Customs for an update about the systems being put in place to handle the rule change. The Hill also reached out to the Port Authority of New York and New Jersey, which manages JFK airport, site of a massive package pile-up following the rule change as the U.S. port of entry that receives a quarter of all de minimis imports.
Trade experts say that ending the de minimis exemption will require a major regulatory upgrade to the U.S. import inspection system, including a significant hiring boost to make sure small packages containing illegal drugs and their components are spotted at the border. Such a regulatory upgrade would grate against the staffing and budget cuts that the Trump administration is making in other parts of the federal government, mostly through the temporary advisory panel led by billionaire Elon Musk.
“If you eliminate the de minimis exemption, some estimates show that 22,000 additional customs officers [will be needed],” Clark Packard, a research fellow at the libertarian-leaning CATO Institute, a Washington think tank, told The Hill. “They eliminated it for China for three days, and there were literally a million packages backed up at JFK, and that’s just one port of entry. If you’re talking about fully eliminating it or eliminating it just for China … you’re going to need to staff up.”
Businesses freaked out about the de minimis exemption when Trump temporarily got rid of it, and their lobbies have been working to make sure the rule is kept in place.
“We are working to ensure that the thousands of American small businesses that use a vital, Congressionally supported tax exemption known as de minimis can maintain access to it,” the National Foreign Trade Council, a business group that represents dozens of U.S. multinational corporations, said in a statement.
Two different legislative proposals on de minimis cancellation graded last year by Oxford Economics found they would both cost more to implement than they would generate in revenue. One would fall short by $2.5 billion while the other would fall short by $600 million.
Meanwhile, tariff hawks are eager to see the Trump administration make good on its initial actions.
“We are very bullish for getting a complete ban, as opposed to only a China-ban,” Nick Iacovella, vice president of the Coalition for a Prosperous America, a business group that advocates for domestic economic production, told The Hill Monday, adding that his organization “looks forward to working with the administration to accomplish that goal.”
House appropriator Rosa DeLauro (D-Conn.), who has advocated for an end to the de minimis exemption, said earlier this month political pressure to keep the exemption in place was coming specifically from private shipping companies.
“The pressure is coming from FedEx, from UPS, from DHL – the express shippers,” she said. “Why is it that the President moved back on February 7? On February 6, he met with the chair of the FedEx board.
She added that Trump’s backpedaling on the issue was no reason to think that its cancellation wasn’t still an option, comparing the posturing on de minimis to increases in the child tax credit passed during the Biden administration.
“If I decided we could do something because it didn’t happen the first time around, we never would have had in the American Rescue Plan a child tax credit, about which I worked for twenty years. You can’t get tired,” she said. “The environment changes here, and the people change, so that you have to continue to be at it.”
Asked about de minimis in front of the assembly of governors on Friday, Trump pivoted hard to the topic of advertising campaigns as a policy fix for drug addiction, as opposed to additional import inspection and taxation.
“We’re going to do an advertising campaign – they’re working on it right now – saying how bad drugs are for you,” he said. “We have now hired a couple of the best agencies. We’re going to spend about a hundred million, maybe two hundred million on advertising, saying that when you take … fentanyl, it destroys your skin, it destroys your teeth, it destroys your brain, it destroys everything.”
Fentanyl, a synthetic opioid assembled from chemical precursors often produced in China, is only the latest opium-related flashpoint between China and Western nations, which fought two wars in the 19th century over the importation of opium to China by the British.
Modern commentators have noted the historical parallel.
“China criminalized the production and exportation of fentanyl, a synthetic opioid which reminded people of trade wars that happened 170 years ago in China,” international relations scholar Thomas Breslin and co-author Wenjie Sun wrote in a 2021 article for the Iranian Journal of Public Health, catalogued by the U.S. National Library of Medicine. China banned the fentanyl production in 2019, but China-based chemical makers then started producing and selling fentanyl precursors.
“Prohibition by the Qing dynasty of opium from the British did not solve China’s opium problem. China eventually let the provinces govern the opium trade, tax it, and get rid of opium by health promotion,” they wrote.
