Border Tricks

Chinese goods are skipping US tariffs thanks to a secret loophole.

Ludo Lugnani
Ludo Lugnani

What’s going on here?

Trucks at California’s Otay Mesa crossing are queuing to enter Mexico to offload goods, exploiting a tariff loophole by re-entering the U.S. as smaller, duty-free shipments.

What does it mean?

The trick is based on the "de minimis" exemption, a trade loophole allowing imports under $800 to skip U.S. tariffs. This helps people get their packages faster and cheaper, but it also means some companies are clever and send lots of small packages to avoid paying fees on bigger, more expensive ones.

How does it work?

  • Shipping to Mexico in Bonded Trucks: Large shipments, often from China, arrive in the U.S. but don't officially enter the country. They are transported in "bonded" trucks, which means these goods are still technically in transit and have not officially entered the U.S. commerce system, thus avoiding initial tariffs.
  • Breaking Down Shipments: Once in Mexico, these large shipments are unloaded and divided into many smaller packages. Each package is worth less than $800.
  • Re-entry as Small Packages: These smaller packages are then sent back across the border to the U.S. Since each is under the $800 limit, they enter the U.S. without having to pay any tariffs.

This strategy lets Chinese goods flood into the U.S. without duty, skewing trade figures and benefiting online giants like Shein and Temu at the expense of traditional retailers. As warehouses pop up near the border to capitalize on this loophole, border towns see a boom. While consumers enjoy lower prices, this loophole exposes discrepancies in trade policy that might prompt legislative changes after the US election.

How does this impact Law Firms?

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