Section 321 of the Tariff Act of 1930 allows up to $800 in imports per person per day to enter the US free of charge and with minimal customs requirements. Fueled by increased trade from consumers, these “de minimis” exports have exploded but are not recorded in Census trade data. Who benefits from this type of trade, and what are the policy implications? We analyze data on international shipments, including de minimis shipments, from threeglobal carriers and US Customs and Border Protection. Low-income zip codes are likely to import de minimis exports, particularly from China, suggesting that tax and administrative costs in direct-to-consumer trade are subject to hardship. In theory, setting prices above the threshold leads to terms-of-trade gains through leverage, even in a situation with absolute prices passing through to the benchmarks. Theoretically, clustering reduces the elasticity of demand for direct shipments. Eliminating §321 would reduce total welfare by $11.8-$14.3 billion and would disproportionately harm low- and minority-income consumers.
That comes from a recent paper by Pablo Fajgelbaum and Amit Khandelwal.
Source link