Direxion Daily China Bear 3X (YANG)

[tw0122]

YANG me up to $100 on this news.... Trump’s executive orders directing 25% levies on Canada and Mexico — plus a 10% duty on China — specify that the “de minimis” exemption for small packages no longer applies. Under the exemption, products below that dollar amount are able to enter the US without tariffs — a boon for China’s e-commerce retailers who ship often cheaper wares directly to consumers in the US.

Regardless, the impact of the change threatens to fall most squarely on China, affecting retailers including Alibaba, JD.com Inc., PDD Holdings Inc.’s Temu and fashion-focused Shein. American shoppers and companies imported about $48 billion worth of shipments from the world under that loophole in the first nine months of last year, according to US Customs and Border Protection estimates.

Approximately a billion packages are estimated to enter the USA under the cover of the de minimis exemption. 
This is where the enforcement mechanism of the “External Revenue Service” combines with the tariff approach and the “state of emergency.”  President Trump imposed the tariffs under the International Emergency Economic Powers Act, a nearly 50-year law that gives the president sweeping power to impose sanctions after declaring an emergency.
The de minimis loophole comes from back in the 1930s. The idea back then was, say you went on a vacation to Paris, you shouldn’t have to file customs paperwork or pay taxes if you decided to ship some little Eiffel Tower statues to your friends back home.
Congress in 2015 then raised the de minimis threshold from $200 to $800.  However, the e-commerce world exploded, and Chinese companies began using the de minimis loophole to ship cheap goods (ex. Temu and Shein) into the USA direct to consumers without paying any customs duty.
It was reported last year that the U.S. was on track to receive a billion packages through the de minimis loophole that aren’t taxed and don’t have customs slips saying what they are.  Making matters worse, illegal items are slipping through the cracks, including, knockoffs, unsafe items and even chemicals used to make fentanyl.  The worst abuser that exploits this de minimis loophole is, by far, China.