Tariffs are, truthfully, an exceedingly complicated topic, but their political quality can, most substantially, be boiled down to the simple fact that it is a tax, and any position for or against a tariff in that regard can be understood as a position that is for or against a tax. Even so, whether or not it is cloaked by such lofty ideals such as “national security,” “American interests” or “protecting our domestic industry,” it is still a tax; in the same way that a tobacco tax or a gas tax or congestion pricing is a tax on those goods with the goal of disincentivising their use. A tariff is simply that tax on imported goods, with the primary goal of disincentivising the purchase of foreign goods — this is its most immediate effect, and anything which comes after has the tariff as its cause. The stated intent of these tariffs — most particularly tariffs on goods previously covered by the de minimis exemption — are unnecessary, and their purposes could have most certainly been achieved through other, more precise means without the convulsions that have since happened: the scalpel, not the sledgehammer. To this, what can be said other than “talk smack, get smacked.” While there is a necessity to consider the productivity and macroeconomic implications of this, space demands I do not do so here.
Originating in the Smoot-Hawley Act of 1930, this exemption had the express purpose of streamlining the customs process. The de minimis exemption allows packages under a certain price to enter the U.S. without an import tax. The exemption began as a way to “improve administrative efficiency and to avoid expense and inconvenience to the government.” In 1990, Congress sought to use the exemption to facilitate international trade, further increasing the threshold beyond what was needed to offset inflation. The exemption in its current form, increased in 2016 from $200 to $800, and its use by large-scale e-commerce companies to avoid import duties is arguably outside the original intended use of the exemption.
However, of course, we are observing the same reaction to the elimination of de minimis (which is the imposition of a tariff) now as we did in 1930 to the passage of Smoot-Hawley: Countries which had maintained amicable trade relations with the United States raised their tariffs. The shrinking of those available foreign markets drove the country further into the depression, allowing us to learn that the presence of reduced trade barriers allows higher levels of scale to be both reached and profitable, which improves the well-being for all, owing to more available goods and reduced cost for those goods. The effect we are seeing is to be expected — countries are responding, as is their absolute right to do so, and are suspending their shipments as a way to cope with the increased cost of doing business. The volume of foreign trade — while for American consumers, this means an increased cost in smaller, more expensive goods — means decreased revenue for those industries which the U.S. depends on exports. These are, principally, agriculture, chemicals, consumer technologies and machinery, all of which re-enter as factors of production and contribute in their whole to decreased prices by virtue of production-at-scale. This itself may, and perhaps is already, causing layoffs and non-hiring as the mass of business slows, something which could have been easily avoided. It is indeed fortunate that we have not yet experienced a recession, but we should perhaps remind ourselves that non-implosion is not success, and that economies thrive on stability.
There is one argument in favor of the exemption of de minimis which perhaps is the strongest: curbing overconsumption. The greatest users of de minimis are those companies which are as well the greatest contributors to this crisis. There is, indeed, an addiction to stuff that is both cheap and one-time use which is sold on Shein, Amazon and Temu which is horrendous both for wallets as well as the environment — and this is independent of the allegations of human abuse by all of those companies — that is itself an abuse of de minimis since they are not one-time uses. A prime example of this is fast fashion. The elimination of de minimis can curb overconsumption by reducing consumption; but, at the same time, this is more like performing surgery with a sledgehammer, as it affects at the same time small businesses who depend on imports with less volume that do not contribute to this crisis.
The purposes of the de minimis exemption could perhaps have been satisfied and their economic goals have been met if our executive administration was able to rise above its standards, but it seems that the policy of the day is the chainsaw rather than the scalpel, and our wallets scream with the consequences. If the goal was to reduce overconsumption of environmentally destructive goods, something like the Jones Act that requires goods sold on the U.S. market be made in such a manner (for instance, clothes be made of natural fibers).
If the goal is to return de minimis to its intended purpose, then reducing the exempted value would accomplish that goal admirably, as it did in the past. If the goal is indeed to reshore American productive industry, I would again call for a reference to the Jones Act as a model of carefully restructuring priorities and laws rather than obliterating them. This is a problem that is easily solvable if separated out into its component parts and dealing with them with tact and proper consideration rather than sweeping decrees — but as these things are well beyond this administration’s expertise, thus have they delivered us the elimination of de minimis.
Decker Rossi, FCRH ‘27, is a philosophy and economics double major from Arlington, Virginia.
