From Tedium, September 17:
Locking A Loophole
The Biden administration’s push to close an obscure loophole on imports highlights just how disruptive the Temu model really is.
A couple of years ago, I found myself waiting for like a month for something I acquired from a crowdfunding campaign. The device, a tablet I ended up writing both a review and a follow-up for, was in the U.S. for something like two and a half weeks, just sitting there in customs.
It was nerve-wracking as all get-out. But the customs process eventually did what it was supposed to, and I got my weird Linux tablet.
Meanwhile, Temu has managed this model where it ships stuff directly from China, no lengthy stay in customs necessary. Why is that? One answer can be found in an obscure legal principle, called de minimis.
Essentially, de minimis, at a very simplified level, refers to the idea of something being such small potatoes that it’s not worth the legal system’s time. It is not limited to import law, but it fits neatly into import law context when it comes to shipping goods from other countries. The U.S. codified this into section 321 of the Tariff Act of 1930, which allows for the import of goods “free of duty and of any tax imposed on or by reason of importation” under a certain price point.
Put in layman’s terms, Americans care when you ship a pallet of obscure Linux tablets that cost less than $800 each, but mostly can’t be bothered to check when you ship just one.
De minimis is essentially intended for one person acquiring one item from another person without having to go through the massive headache of customs. It is a rule that essentially exists with the presumption that checking every single package would be a massive pain in the ass, even if it is technically not in the spirit of the law.
But there’s just one problem. In 1930, we didn’t have a digital infrastructure that allowed people to ship lots of small things at scale across borders. Now, technology makes it trivial, even if you’re halfway across the world.
The cheap junk on Temu essentially exists to leverage a customs loophole.
Companies like Shein and Temu essentially exist to exploit this rule. They built their entire business models around the idea that if they had a large enough scale, they could essentially cut down on their shipping costs significantly by embracing this loophole. This has made it possible for the companies to go mainstream in an extremely short amount of time. These companies sell cheap junk of the fast fashion or minor trinket variety for just a few dollars, as long as you’re willing to wait a few extra days for it to travel overseas....
....MUCH MORE
