Former EAC for Operations Says Restrictions Unnecessary for de Minimis

Todd Owen, who served as executive assistant commissioner for field operations at CBP for about five years before retiring in 2020, argued that hundreds of millions of dollars for technology upgrades, and staffing expansions, would be more helpful to catch contraband in the small package environment than removing Chinese goods or other restrictions.

Owen, who now runs Cross Border Advisory Network, was invited to speak at a program at the Peterson Institute for International Economics. The program's message was that de minimis is a benefit to consumers, and that restricting it is protectionism, not a necessity to cut down on substandard products and illegal drugs coming to the U.S.

Owen, who noted he was sharing his own view, and not speaking for CBP, said there are misconceptions about how CBP handles small packages. He said people think CBP "knows nothing about de minimis shipments -- not true. [They say] that de minimis shipments are not inspected by CBP -- not true."

Owen said as international mail comes down the conveyor in JFK's international mail facility, dogs are sniffing, and package after package goes through X-ray machines while an officer looks at a screen.

He said that screening is not as effective as it could be, because X-rays have difficulty detecting opioid precursor chemicals from any other powder. In contrast, the Transportation Security Administration is able to use 3-D tomography that incorporates automated threat detection with its algorithm. "We need the same technology at the mail facilities," he said. "The big difference why CBP doesn’t have this and TSA does -- it’s the funding from Congress."

He said TSA has a guaranteed $250 million annually to maintain and upgrade technology, while CBP "is at the mercy of Congress each year."

Owen argued that if a certain country's goods are no longer eligible for duty-free entry, or if the dollar amount is lowered, "That action alone is doubtful to secure the border. These 4 million parcels are not going to stop coming."

CBP's current leadership disagrees, saying that restricting eligibility will reduce the volume, making inspection less challenging.

He said CBP needs better data -- which is being addressed in a proposed rule expected soon. He said CBP needs Congress to pass a law that would impose stricter penalties for missing or false data. And, he said, the game changer would be better inspection technology and more officers.

Yale Professor Amit Khandelwal is a co-author on an economics paper about who receives de minimis shipments, which found that in ZIP codes where the average income is below $45,000 annually, people save about $44 per year from not having to pay duties on imports from platforms like Shein and Temu; households with more than $100,000 in income would only save $36. Khandelwal also found that ZIP codes that are 95% non-white save $50 while ZIP codes that are 95% white only save $17 annually.

Khandelwal said the de minimis imports represent about 7% of all consumer imports (as opposed to intermediate goods). Of all e-commerce sales, both domestic and imported, de minimis represents 19%.

He said the aggregate loss to consumers from higher tariffs if there were no de minimis at all could be expected to be in the $11 billion to $13 billion range; in comparison, the U.S.-China trade war led to a loss of about $50 billion.

He disagreed with Owen that CBP still would be managing 4 million packages a day without de minimis.

"You’re also going to see when prices go up, people are going to buy less of it," Khandelwal said. "They’re going to start to shift their consumption to offline stores."