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Comment by infecto | Hacker News Reader

I think loophole is probably appropriate. The spirit of the law was of course low value goods are not worth the burden. The increase to 800 in 2016 was probably a little much but who would have guessed whole business models would run off of this ruling. The spirit is for small shipments, not entire business models running off of it.

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I don't think this is exactly correct. One purpose of a de minimis exemption is to clear the way for small overseas businesses to integrate more easily into the national economy by minimizing border wait times and overhead importation costs on cheap goods / goods only found overseas. It has the dual benefit of reducing customs labor costs for the taxpayer. From an economic perspective, business models like these are a desirable and purposeful consequence.

We focus on businesses like Temu because everyone agrees they sell cheap garbage, but a lot of overseas businesses sell high-quality or even essential goods. (And clearly, for many people, whatever Temu sells is good enough.)

This rule goes back to the 30s and for most of its history the goal is to reduce administrative burden. The fact that small business around the world might benefit from it is indirect and never the main goal.

We focus on Temu because they are running a large dollar value business on imports that skirt duty tax. The dollar volume is the important piece here as they playing on an unfair advantage.

If the purpose of the exemption were only to reduce the labor cost of importation, some other scheme (such as prohibiting the importation of cheap goods entirely) would be far more effective. Several other options would be at least equally effective. Factors besides labor are clearly also considered.

In your view, what are the factors in addition to customs labor costs that were weighed in 2016 the choice to increase the de minimis exemption? I'm curious, because you seem to feel very strongly that global economic integration is not one of them.

I’m not saying global integration wasn’t ever discussed or considered, just that historically, the primary driver behind de minimis was administrative efficiency. You can trace it all the way back to original rule in the 30s. The idea was that the cost of collecting duty on low-value goods often exceeded the revenue collected, so it made sense to wave them through.

That’s very different from encouraging large-scale commercial exploitation. When entire logistics chains are built specifically to stay under the threshold, intentionally bypassing duties that domestic importers would have to pay, that’s a policy failure, not a success. You can absolutely argue that it incidentally helped smaller exporters or increased consumer access, but that’s a long way from saying it was intended to support global e-commerce platforms arbitraging regulatory gaps.

You asked what factors were weighed—labor costs and shipment volume handling, sure. Maybe some light consumer benefit. But "building duty-free pipelines for billion-dollar drop-shippers" probably wasn’t in the memo.

> but who would have guessed whole business models would run off of this ruling

Anyone who thought about it critically for like 10 minutes?

I’m convinced that a small proportion of people fundamentally can’t consider beyond first order consequences. Others can’t consider or imagine beyond second order consequences. One could argue third order relies more on domain knowledge than anything, which could explain why career politicians and bureaucrats genuinely can’t fathom the inevitable downstream effects of an action even if blindly obvious to those with business experience.

It’s the same pattern with discussions of rent control. Despite overwhelming evidence that the third-order consequences make things worse for far more people than the first- and second-order effects help, proponents seem unable to reconcile that “preventing rent from increasing” could possibly make housing less affordable.

The de minimis threshold dates back to the 1930s and has only been adjusted a handful of times—most recently in 1993 and then in 2016. The 2016 increase was substantial, and in hindsight, probably too high. Still, at the time, few could have anticipated just how fully it would be exploited. The business models we’re now seeing at scale—like Temu’s—didn’t meaningfully exist back then. Even Shein was far from the force it is today.

The loophole may have been visible, but the ecosystem to take advantage of it at this level simply wasn’t in place yet. So no, this wasn’t as obvious as you’re pretending it was.

> Still, at the time, few could have anticipated just how fully it would be exploited

In 1930? Sure, you couldn't expect them to know that everyone would have a wireless telegraph in their pocket and they'd have cheaper and more skilled Chinese labor/manufacturing available.

In 2016? Really? Amazon was already going full steam. Ali Express was well known. It absolutely should have been obvious to legislators and those that lobby them professionally what would happen. How many people regularly, or even annually, buy items for over $800 from either of them?

You are either naive or a wishful thinker. Government moves slow and I have zero expectation they would have been able to see the writing on the wall. Again I think $800 was too high of a limit but I also think you give too much credit to your hindsight.

Either naive or wishful thinker. No other option.

As far back as the 1950s the textile industry was against raising the de minimis threshold because they wouldn't be able to compete with duty free mail order imports. We keep increasing it. We get SHEIN. Surprised Pikachu, nobody could have foreseen this.

Aliexpress was already huge in 2016. And obviously the government could see the volume of parcels arriving via international mail and getting dumped off on USPS, because they did something about that.

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