The recent modifications to the de minimis scheme announced by the administration of US President Joe Biden generate a wave of uncertainty on both sides of the border , affecting low-value imports from China and Mexican logistics operations that depend on this system.
As the United States tightens rules , Mexico faces the task of adjusting its trade and customs structure to compete more fairly, according to a statement issued by Mexico’s Ministry of Economy (SE).
In this regard, the Office of the United States Trade Representative (USTR) announced the completion of a series of modifications that eliminate the widespread use of the de minimis scheme , under which products valued at less than $800 could enter the country without paying tariffs.
In the case of Mexico, the minimis considers an exemption from paying Value Added Tax (VAT) on the import of goods with a value of less than 50 dollars.
The finalization of modifications to Section 301 actions was also announced , including tariff increases on strategic products such as lithium-ion batteries, semiconductors, electric vehicles, masks and medical equipment, with the intention of strengthening measures against China, according to a press release issued by the White House .
In this context, according to the USTR, the imposition of these measures is part of ongoing efforts to protect American industries.
According to Adrian Gonzalez, president of Global Alliance Solutions LLC, these changes “threaten the viability of logistics sectors that were created to handle the high volume of packages and their future is now in doubt.”
The USTR statement specified that the new tariffs, which will come into effect on September 27, 2024, could impact key sectors such as energy and technology , affecting the flow of products and the operations of logistics companies in both countries.
This decision was the result of increasing pressure from Customs and Border Protection (CBP) and the US domestic industry, who denounced the abusive use of this system, particularly on products from China.
In Mexico, the impact is significant, especially for the logistics sector on the northern border. Gonzalez explained that the de minimis scheme had driven a logistics boom in cities such as Tijuana and Reynosa , where dedicated centers processed and forwarded these packages to the United States taking advantage of tax benefits.
However, with new regulations, the viability of these operations is now at risk.
“Logistics companies will have to adapt quickly to this new reality or face possible disappearance,” warned González.
In the analysis presented by González, he comments that the Secretary of Homeland Security , Alejandro Mayorkas, pointed out that the elimination of the scheme for products subject to tariffs under sections 201, 232 and 301 is crucial to protect American workers and companies against “unfair trade practices from China . ”
In this context, Mayorkas said in a blunt statement: “Low cost does not mean low risk,” referring to the “widespread and abusive use of the scheme.”
Faced with this reality, Mexico is not sitting idly by . On June 5, 2024, within the framework of the Customs Facilitation Dialogue Forum (FODFA) , Mexican authorities and representatives of the private sector met to address the problems arising from the irregular use of the de minimis scheme .
During the forum, key institutions such as the National Customs Agency of Mexico (ANAM) , the Tax Administration Service (SAT) and the SE discussed how the increasing importation of goods without complying with regulations affected the competitiveness of the national industry.
In this regard, representatives of Concamin and Canaintex highlighted that sectors such as textiles and footwear were particularly vulnerable to the undervaluation of goods.
In this regard, they urged the authorities to reduce the amount allowed in the de minimis scheme , following the example of other countries, in addition to strengthening control mechanisms.
Tightening regulations in the United States, coupled with Mexico’s efforts to regulate the use of the de minimis scheme, mark the end of an era in which low-value imports drove e-commerce and cross-border logistics .
According to Adrián González, Mexican companies that depended on this system will have to diversify their operations and seek new strategies to remain competitive in an increasingly regulated environment.
Market diversification and improved customs processes will be essential for Mexican companies to overcome the challenges posed by the end of the de minimis scheme, both in Mexico and in the United States.
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