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Industry lobbies for de minimis reform, but outlook is 'dim'

Published September 20, 2018

RENO, Nev. (BRAIN) — In light of the new 25 percent tariffs approved by President Donald Trump this week, bike industry groups are ramping up their lobbying calling for a reform of the de minimis value — the minimum value of an imported shipment that is subject to U.S. duty collection and Customs documentation.

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Individuals who buy goods from overseas don’t have to pay duties on shipments valued at less than the de minimis, which is currently $800. With existing tariffs of 5 to 11 percent, and upcoming tariffs on Chinese goods of 25 percent, that gives the foreign sellers up to a 36 percent head start over U.S.-based vendors, not even counting state and local sales tax.

The Bicycle Product Suppliers Association and PeopleForBikes are actively lobbying in Washington to lower the minimum, which was raised from $200 to $800 last year, said Specialized's Bob Margevicius, who spoke at a BPSA Supplier Seminar at Interbike on Wednesday. A change to the de minimis requires congressional approval, he said.

Besides endangering jobs in the U.S. bike industry, the current program makes it easier to import unsafe products that don't meet U.S. standards or that are counterfeit.

Compared to the minimis in other countries, the U.S.’s $800 looks unfair, as well. Canada’s de minimis is $15, Mexico’s is $50 and China’s is less than $10.

But Margevicius said the "outlook for long-term change to de minimis is pretty dim. There are a lot of powerful lobbyists who are involved [who oppose a change]." They include delivery companies like FedEx and UPS, large online vendors like Amazon and Alibaba, and even the U.S. Customs and Border Protection agency. "It's a very strong lobby group and they are fighting even to increase the de minimis beyond $800," he said.

In testimony in Washington last month, ASE's Pat Cunnane called for lowering the de minimis to $50. Cunnane told the U.S. Trade Representative and other members of the multiagency Section 301 Committee that the current de minimis harmed his business and would be even more damaging if the tariffs were approved. ASE is the parent company of retail chain Performance Bicycle and distributor ASI.

Several members of the committee questioned Cunnane about his proposal, and he followed up with a letter to U.S. Trade Representative Robert Lighthizer.

"With the existing tariff of 11 percent on most bikes, and 3 to 8 percent on many other parts and accessories, I am already at a substantial disadvantage to overseas retailers that sell bicycles to Americans without paying any duties," Cunnane told Lighthizer in the Sept. 6 letter. "An increase of 25 percent to the existing 11 percent tariff on complete bicycles would make this competitive advantage insurmountable."

Cunnane sent Lighthizer an image from U.K.-based Chain Reaction Cycles' website promoting the lack of duty collection on orders under $800.

Cunnane also CC’d the letter to nine U.S. senators and representatives.

Margevicius at the seminar Wednesday.
Topics associated with this article: Trade/tariffs, Interbike

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