How a U.S. Tax Loophole Supercharged China’s Exports

When Congress raised the threshold for imported goods to enter the United States tax-free to $800 from $200 nearly a decade ago, it threw open the door to the American consumer market.

Chinese companies rushed in. First on platforms like eBay and Amazon, and then on apps like Shein and Temu, exporters funneled the products of China’s vast manufacturing supply chain straight to doorsteps in the United States.

This single policy change in 2016 helped transform the economic relationship between the two countries.

While the United States has received factory goods from China for decades, and China’s manufacturing efficiency has loaded the supply chains of American businesses, the expanded tariff-free loophole got American shoppers hooked on buying their exercise clothes and household gadgets online at rock-bottom prices. And in China, millions found work in factories that sold goods on e-commerce marketplaces — not just China’s own, like Shein, Temu and TikTok, but also Amazon and Walmart.

This trade had ballooned. Some four million packages a day entered the United States last year with no customs inspection and no duties paid.