Market researchers have noted that since the COVID-19 pandemic started, Americans have been spending more time on the water. And that has helped keep the recreational boating industry afloat. Liliya Anisimova has the story, narrated by Anna Rice. Videographer: Aleksandr Bergan   
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The upcoming Eid al-Adha holiday, or the major Muslim Feast of Sacrifice, highlights the difficulties that Egypt’s most vulnerable households are facing in the country’s deepening economic crisis.
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Conservatives anxious to counter America’s leading economic adversary have set their sights on a top trade priority for labor unions and progressives: cracking down on the deluge of duty-free packages coming in from China.

The changing political dynamic could have major ramifications for e-commerce businesses and consumers importing products from China valued at less than $800. It also could add to the growing tensions between the countries.

Under current U.S. law, most imports valued at less than $800 enter duty-free into the United States as long as they are packaged and addressed to individual buyers. It’s referred to as the de minimis rule. Efforts to lower the threshold amount or exclude certain countries altogether from duty-free treatment are set to become a major trade fight in this Congress.

“De minimis has become a proxy for all sorts of anxieties as it relates to China and other trade-related challenges,” said John Drake, a vice president at the U.S. Chamber of Commerce, who argues that the current U.S. law should be preserved.

The rule speeds the pace of commerce and lowers costs for consumers. It also allows U.S. Customs and Border Protection to focus its resources on the bigger-ticket items that generate more tariff revenue for the federal government.

The volume of products coming into the U.S. that benefit from the de minimis rule has soared in recent years. Congress raised the U.S. government’s threshold for expedited, duty-free treatment from $200 to $800 in 2016.

The volume of such imports has since risen from about 220 million packages that year to 771 million in 2021 — with China accounting for about 60%, according to the government — and 685 million last year.

“I think everybody’s got to kind of wrap their head around what kind of mistake this was,” Robert Lighthizer, the former U.S. trade representative during the Trump administration, told a House panel last month. “Nobody dreamt this would ever happen. Now we have packages coming in, 2 million packages a day, almost all from China. We have no idea what’s in them. We don’t really know what the value is.”

Lighthizer urged Congress to get rid of the de minimis rule altogether, or take it to a much lower amount, say $50 or $100. He said foreign companies are taking advantage of the “loophole” and “putting people out of work in stores; they’re putting people out of work in manufacturing.”

Last year, House Democrats pushed to prohibit Chinese-made goods from benefiting from the special treatment for lower-cost goods. That move was part of a larger measure that boosted investments in semiconductor manufacturing and research.

In the rush to get a bill passed before the 2022 elections, the Biden administration and Democratic leaders jettisoned provisions without bipartisan buy-in. The trade provision was opposed by important U.S. business groups and key Republican members of Congress, so it didn’t make the final bill.

Fast forward just a few months and it’s clear the political dynamic has shifted — and quickly.

In its first set of recommendations, a new House committee focused exclusively on China called for legislation that would reduce the threshold for duty-free shipments into the U.S. with a particular focus on “foreign adversaries, including the (People’s Republic of China.)”

The Select Committee on the Chinese Communist Party said that exploiting the $800 threshold may be a major avenue through which Chinese companies selling directly to American consumers can circumvent U.S. law designed to prevent the sale of goods made with forced labor. The committee also said Customs and Border Protection “could not reasonably scrutinize” goods sent under the $800 threshold for forced labor concerns because of the sheer number of products coming in.

The committee is most concerned about retailers Temu and Shein, which ship directly to consumers in the U.S. In a report released Thursday, it said the two companies alone are likely responsible for more than 30% of all de minimis shipments entering the U.S. each day, or nearly 600,000 a day last year.

The committee also has competitiveness concerns. It points out that U.S. retailers such as Gap and H&M paid $700 million and $205 million in import duties, respectively, in 2022. In contrast, virtually all of the goods sold by Temu and Shein are shipped using the de minimis exception in which the importer pays no duty.

Committees with jurisdiction over trade are also signaling a new mindset. Last year, the top Republican on the House Ways and Means Committee, Texas Rep. Kevin Brady, since retired, warned against what he called “hasty changes in reasonable de minimis limits.”

But the Republican now leading the House Ways and Means Committee, Rep. Jason Smith of Missouri, said he wants to “have a lot of conversations” about the $800 threshold.

“Basically, when you’re looking at $800 or less, that’s a free-trade agreement with anyone. And you’re looking at millions of products that come in per day. We need to look at it,” Smith said.

Meanwhile, the Senate has some bills on the issue, which were just introduced this month.

One, from Sens. Sherrod Brown, D-Ohio, and Marco Rubio, R-Fla., would prevent the expedited, tariff-free treatment of imports from certain countries, most notably China and Russia.

The other, from Sens. Bill Cassidy, R-La., and Tammy Baldwin, D-Wis., not only similarly targets China and Russia, but would affect other trade partners. It would do so by reducing the threshold for duty-free treatment to the amount that other nations use.

For example, taking a country like Belgium, which uses the European Union threshold of 150 euros, or about $165 currently – then the U.S. would reciprocate and use that same amount when determining whether goods coming in from Belgium get duty-free and expedited treatment.

Cassidy said it was former President Donald Trump who “really reframed the argument” for Republicans when it comes to trade with China.

“He pointed out that, through a variety of mechanisms, they are taking jobs, not because they are out-competing us, but because they are subsidizing, because they are using forced labor, that sort of thing,” Cassidy said.

In early 2022, when Congress was considering putting the de minimis trade provision in the semiconductor bill, several business groups led by the Chamber of Commerce and the National Association of Manufacturers wrote congressional leaders urging them to keep it out. They said the changes would “impose sweeping costs on American businesses, workers and consumers, add new inflationary pressures on the U.S. economy, and exacerbate ongoing supply chain disruptions at U.S. ports.”

Drake said that cutting back the threshold not only would represent a big tax increase for many U.S. small businesses, but many would have to hire a customs broker to process their shipments.

“There’s a reason Congress raised the level back in 2016,” Drake said. “They knew in addition to it being a competitive advantage for the U.S. business community, they also recognized that collecting duties on these low-value shipments, you know, really wasn’t worth the trouble.”
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Pakistan’s parliament on Sunday approved the government’s 2023-24 budget which was revised to meet International Monetary Fund conditions in a last ditch effort to secure the release of more bailout funds.

The IMF in mid-June expressed dissatisfaction with the country’s initial budget, saying it was a missed opportunity to broaden the tax base in a more progressive way.

The revised budget was approved a day after Finance Minister Ishaq Dar introduced new taxes and expenditure cuts.

“The [finance] bill is passed,” House Speaker Raja Pervaiz Ashraf said in a live TV broadcast on Sunday.

With currency reserves barely enough to cover one month’s imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF funds do not come through.

There are five days to go before the $6.5 billion Extended Fund Facility (EFF) agreed in 2019 expires on June 30. The IMF has to review whether to release some of the $2.5 billion still pending to Pakistan before then. The tranche has been stalled since November.

Dar also announced on Saturday a number of other changes, including raising a petroleum levy and lifting of all restrictions on imports, which has been one of the major concerns of the IMF as part of its fiscal tightening measures for the South Asian economy.

The budget revision came after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of a global financing summit in Paris last week, followed by a marathon three-days of virtual talks between the two sides.

Under the $6.5 billion EFF’s ninth review, negotiated earlier this year, Pakistan has desperately been trying to secure the IMF funds, which are crucial to unlock other bilateral and multilateral financing for the debt-ridden country.
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Evan Burroughs has spent eight years touting the virtues of an Oregon pilot program charging motorists by the distance their vehicle travels rather than the gas it guzzles, yet his own mother still hasn’t bought in.

Margaret Burroughs, 85, said she has no intention of inserting a tracking device on her Nissan Murano to record the miles she drives to get groceries or attend needlepoint meetings. She figures it’s far less hassle to just pay at the pump, as Americans have done for more than a century.

“It’s probably a good thing, but on top of everybody else’s stress today, it’s just one more thing,” she said of Oregon’s first-in-the-nation initiative, which is run by the state transportation department where her son serves as a survey analyst.

Burroughs’ reluctance exemplifies the myriad hurdles U.S. states face as they experiment with road usage charging programs aimed at one day replacing motor fuel taxes, which are generating less each year, in part due to fuel efficiency and the rise of electric cars.

The federal government is about to pilot its own such program, funded by $125 million from the infrastructure measure President Biden signed in November 2021.

So far, only three states — Oregon, Utah and Virginia — are generating revenue from road usage charges, despite the looming threat of an ever-widening gap between states’ gas tax proceeds and their transportation budgets. Hawaii will soon become the fourth. Without action, the gap could reach $67 billion by 2050 due to fuel efficiency alone, Boston-based CDM Smith estimates.

Many states have implemented stopgap measures, such as imposing additional taxes or registration fees on electric vehicles and, more recently, adding per-kilowatt-hour taxes to electricity accessed at public charging stations.

Last year, Colorado began adding a 27-cent tax to home deliveries from Amazon and other online retailers to help fund transportation projects. Some states also are testing electronic tolling systems.

But road usage charges — also known as mileage-based user fees, distance-based fees or vehicle-miles-traveled taxes — are attracting the bulk of the academic attention, research dollars and legislative activity.

Doug Shinkle, transportation program director at the nonpartisan National Conference of State Legislatures, predicts that after some 20 years of anticipation, more than a decade of pilot projects and years of voluntary participation, states will soon need to make the programs mandatory.

“The impetus at this point is less about collecting revenue than about establishing these systems, working out the kinks, getting the public comfortable with it, expanding awareness around it,” he said.

Electric car sales in the U.S. rose from just 0.1% of total car sales in 2011 to 4.6% in 2021, according to the U.S. Bureau of Labor Statistics. S&P Global Mobility forecasts they will make up 40% of the sales by 2030, while other projections are even rosier.

Patricia Hendren, executive director of the Eastern Transportation Coalition, said figuring out how to account for multistate trips is particularly important in the eastern U.S., where states are smaller and closer together than those in the West. Virginia’s program, launched in 2022, is already the largest in the nation and will provide valuable lessons, she said. 

Hendren’s organization, a 17-state partnership that researches transportation safety and technology innovations, participated in one of the earliest pilot projects and eight others since. The biggest hurdle, she said, is to inform the public about the diminishing returns from the gas tax that has long paid for roads.

“This is about the relationship between the people who are using our roads and bridges and how we’re paying for it,” Hendren said. “We’ve been doing it one way for 100 years, and that way is not going to work anymore.”

Eric Paul Dennis, a transportation analyst at the Citizens Research Council of Michigan, said the failure of states to convert years of research into even one fully functional, mandatory program by now raises questions about whether road usage charging can really work.

“There’s no program design that I have seen that I think can be implemented at scale in a way that is publicly acceptable,” he said. “That doesn’t mean that a program can’t be designed to do so, but I feel like if you can’t even conceive of the program architecture that seems like something that would work, you probably shouldn’t put too much faith in it.”

Indeed, a chicken-and-egg dispute over how to proceed in Washington state has stymied road usage charging efforts there.

Lawmakers passed a bill last month that would have begun early steps toward a program by allowing collection of motorists’ odometer readings on a voluntary basis. Democratic Gov. Jay Inslee vetoed the measure, though, arguing that Washington needs a program in place before starting to collect citizens’ personal data.

States also must grapple with the social and environmental implications of their plans for replacing the gas tax, said Asha Weinstein Agrawal, director of the National Transportation Finance Center at San Jose State University’s Mineta Transportation Institute.

The institute has conducted national surveys every year since 2010 and found growing support for mileage-based fees, special rates for low-income drivers and rates tied to how much pollution a vehicle generates, she said.

Weinstein Agrawal said public policy, and the way transportation is funded, often fails to reflect states’ growing emphasis on curbing carbon emissions as a way to deal with climate change.

“To switch over to a system that makes it cheaper to drive a gas guzzler and more expensive to drive a Prius,” she said, “seems both symbolically problematic and to be sending, in the most literal way, the wrong economic incentives to people.”

Evan Burroughs said his 85-year-old father, Hank, who drives an electric car, avoids paying significant vehicle registration fees by participating in Oregon’s program, while Burroughs himself has paid an extra dollar or two each month for his Subaru Outback.

“To me, that’s worth it to be part of the experiment,” he said, “and to know I’m paying my fair share for the roads.” 
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China needs to step up measures as soon as possible to bolster a faltering post-COVID recovery in the world’s second-largest economy, a senior economic official with the country’s top political advisory body said on Sunday.

Analysts at major international banks have downgraded economic growth forecasts for 2023 after May data showed demand weakened in China and abroad, raising the case for more stimulus.

“It is better to introduce measures sooner [rather] than later,” said Ning Jizhe, deputy head of the economic committee of the Chinese People’s Political Consultative Conference (CPPCC) and a former vice head of the National Development and Reform Commission (NDRC).

China’s economy faces heavy downward pressure and its recovery is unstable and imbalanced, said Ning, who is also a former head of the National Bureau of Statistics.

The strength of macroeconomic measures “ought not be small” to prevent “an economic spiral contraction” in a global slowdown, said Ning.

China’s cabinet this month met to discuss measures to boost economic growth, pledging to roll out policies in a timely manner and to take more forceful actions in response to changes in the economic situation.

The nation’s benchmark loan prime rates (LPR) were cut on Tuesday in the first such reductions in 10 months while the five-year LPR was reduced by a smaller than expected 10 basis points.

China’s central bank is likely to cut lending rates further, but a reluctance to borrow among private companies and households means that continued policy easing could hurt banks that are already battling margin pressures, analysts said.
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Conservatives eager to counter America’s leading economic adversary have set their sights on a top trade priority for labor unions and progressives: cracking down on the deluge of duty-free packages coming in from China.

The changing political dynamic could have major ramifications for e-commerce businesses and consumers importing products from China valued at less than $800. It also could add to the growing tensions between the countries.

Under current U.S. law, most imports valued at less than $800 enter duty-free into the United States as long as they are packaged and addressed to individual buyers. It’s referred to as the de minimis rule. Efforts to lower the threshold amount or exclude certain countries altogether from duty-free treatment are set to become a major trade fight in this Congress.

“De minimis has become a proxy for all sorts of anxieties as it relates to China and other trade-related challenges,” said John Drake, a vice president at the U.S. Chamber of Commerce, who argues that the current U.S. law should be preserved.

The rule speeds the pace of commerce and lowers costs for consumers. It also allows U.S. Customs and Border Protection to focus its resources on the bigger-ticket items that generate more tariff revenue for the federal government.

The volume of products coming into the U.S. that benefit from the de minimis rule has soared in recent years. Congress raised the U.S. government’s threshold for expedited, duty-free treatment from $200 to $800 in 2016.

The volume of such imports has since risen from about 220 million packages that year to 771 million in 2021 — with China accounting for about 60%, according to the government — and 685 million last year.

“I think everybody’s got to kind of wrap their head around what kind of mistake this was,” Robert Lighthizer, the U.S. trade representative during the Trump administration, told a House panel last month. “Nobody dreamt this would ever happen. Now we have packages coming in, 2 million packages a day, almost all from China. We have no idea what’s in them. We don’t really know what the value is.”

Lighthizer urged Congress to get rid of the de minimis rule altogether, or reduce it to a much lower amount, say $50 or $100. He said foreign companies are taking advantage of the threshold and “putting people out of work in stores, they’re putting people out of work in manufacturing.”

Last year, House Democrats pushed to prohibit Chinese-made goods from benefiting from the special treatment for lower-cost goods. That move was part of a larger measure that boosted investments in semiconductor manufacturing and research.

In the rush to get a bill passed before the 2022 elections, the Biden administration and Democratic leaders jettisoned provisions without bipartisan buy-in. The trade provision was opposed by important U.S. business groups and key Republican members of Congress, so it didn’t make the final bill.

Fast forward just a few months and it’s clear the political dynamic has shifted — and quickly.

In its first set of recommendations, a new House committee focused exclusively on China called for legislation that would reduce the threshold for duty-free shipments into the U.S. with a particular focus on “foreign adversaries, including the (People’s Republic of China.)”

The Select Committee on the Chinese Communist Party said that exploiting the $800 threshold may be a major avenue through which Chinese companies selling directly to American consumers can circumvent U.S. law designed to prevent the sale of goods made with forced labor. The committee also said Customs and Border Protection “could not reasonably scrutinize” goods sent under the $800 threshold for forced labor concerns because of the sheer number of products coming in.

The committee is most concerned about retailers Temu and Shein, which ship directly to consumers in the U.S. In a report released Thursday, it said the two companies alone are likely responsible for more than 30% of all de minimis shipments entering the U.S. each day, or nearly 600,000 a day last year.

The committee also has competitiveness concerns. It points out that U.S. retailers such as Gap and H&M paid $700 million and $205 million in import duties, respectively, in 2022. In contrast, virtually all of the goods sold by Temu and Shein are shipped using the de minimis exception in which the importer pays no duty.

Committees with jurisdiction over trade are also signaling a new mindset. Last year, the top Republican on the House Ways and Means Committee, Texas Rep. Kevin Brady, since retired, warned against what he called “hasty changes in reasonable de minimis limits.”

But the Republican now leading the House Ways and Means Committee, Rep. Jason Smith of Missouri, said he wants to “have a lot of conversations” about the $800 threshold.

“Basically, when you’re looking at $800 or less, that’s a free-trade agreement with anyone. And you’re looking at millions of products that come in per day. We need to look at it,” Smith said.

Meanwhile, the Senate has some bills on the issue, which were just introduced this month.

One, from Sens. Sherrod Brown, D-Ohio, and Marco Rubio, R-Fla., would prevent the expedited, tariff-free treatment of imports from certain countries, most notably China and Russia.

The other, from Sens. Bill Cassidy, R-La., and Tammy Baldwin, D-Wis., not only similarly targets China and Russia, but would affect other trade partners. It would do so by reducing the threshold for duty-free treatment to the amount that other nations use.

For example, if another country, say Belgium, which uses the European Union threshold of 150 euros, or about $165 currently, then the U.S. would reciprocate and use that same amount when determining whether goods coming in from Belgium get duty-free and expedited treatment.

Drake, of the U.S. Chamber of Commerce, said that cutting back the threshold not only would represent a big tax increase for many U.S. small businesses, but many would have to hire a customs broker to process their shipments.

“There’s a reason Congress raised the level back in 2016,” he said. “They knew in addition to it being a competitive advantage for the U.S. business community, they also recognized that collecting duties on these low-value shipments, you know, really wasn’t worth the trouble.”
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