Senate Finance Chairman, Members Say Section 301 de Minimis Exception Wrongly Being Rushed

Senate Finance Committee Chairman Chuck Grassley, R-Iowa, joined by five Republicans and two Democrats on the committee, told the Office of Management and Budget that a proposed rule to carve out items under Section 301 tariffs from de minimis needs “a thorough and complete review,” including a public comment period of 60 days. However, the letter was not signed by either of the two men who might be the chairman in January, depending on which party controls the Senate.

Their letter, sent Dec. 23, says that changing the rule would affect thousands of businesses and 1.2 billion de minimis shipments made over fiscal years 2018 and 2019, and because that's a significant change in regulations, the agency has to do a cost-benefit analysis and assess feasible alternatives, “including an explanation for why the proposed rule is preferable to those alternatives, or an explanation for why no alternative exists.” The senators argue that legally, this proposed rule triggers the “significant regulatory action” cost-benefit requirements under Executive Order 12866.

“We see no reason why a rule with such a significantly large impact on both government and the private sector should not allow the necessary period to analyze the economic impact, carefully consider the benefits and costs, and provide all stakeholders an opportunity to comment in accordance with normal administrative procedures,” they wrote. “According to testimony in our committee, we have every reason to believe that many of these shipments go to small businesses or microenterprises that employ thousands of Americans. If this proposed rule went forward, it would require the submission of customs entries for millions of additional shipments and increase taxes on numerous small businesses.”

The senators also said that the Finance Committee's position that it prefers an $800 de minimis level has not changed since 2015, and that they made that clear in the committee's report on the USMCA Implementation Act. “We are surprised that the Treasury Department is considering creating a carve out from the de minimis thresholds for certain shipments through a proposed rule,” they said, given that they have made it clear they believe any changes to de minimis would need legislation.