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Home Market Research Economy

Freedom as a Loophole – Econlib

by TheAdviserMagazine
2 months ago
in Economy
Reading Time: 4 mins read
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Freedom as a Loophole – Econlib
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The August 29 planned abolition of the de minimis customs exemption in the United States may come as a shock to those who believe that, as the physical universe is made of visible matter and dark matter, the political world is made of Democratic and Republican stuff, “the Left” and “the Right.” The restriction of de minimis was launched under Democratic rule and is pursued under Republican rule. (See “End of De Minimis Alarms E-Commerce Sellers, Consumers,” Wall Street Journal, August 5, 2025; “Crackdown on Tariff Exemption Snares U.S. E-Commerce Retailers,” Wall Street Journal, January 30, 2025; and “Biden Takes Aim at China’s Temu and Shein With Trade Crackdown,” Wall Street Journal, September 13, 2024.)

The use of the Latin expression de minimis (de means “about” and minimis is “small things”) is inspired by the Roman maxim De minimis non curat praetor, that is, “the praetor does not concern himself with trifles.” Under the Roman Republic, the praetor was a sort of judge who administered civil justice in Rome and its foreign territories. The maxim is often interpreted as saying that the law is not concerned with insignificant things or breaches.

De minimis is used notably to describe an exemption to customs duties (tariffs). In the case of the US, goods imported from abroad and worth less than $800 are exempted from tariffs, if not restricted by other laws. The legal source of this exemption is 19 U.S.C. § 1321(a)(2)(C), part of the famous Smoot-Hawley Act of 1930 as amended. Accordingly, until now, when you order goods worth below the threshold from a foreign country, you do not have to pay the tariff as a condition for putting your hands on your package. De minimis on goods from China has already been terminated in May. The benefit of this exemption has become more important as American tariffs have much increased—from a weighted average of 2.2% last year (WTO figure) to a range of between 10% and 50% today.

They want, as they say in collectivist circles, to “close the loophole.” The abolition of the little freedom allowed by de minimis is more significant than one may think.

For the government, the exception had the benefit of keeping “the people” quiet by hiding some tariffs. When goods are imported by commercial intermediaries, the tariffs are a hidden tax in another way: past the importer, they are silently incorporated in prices.

When a consumer wants something and a supplier offers it at an agreeable price from wherever it is, only coercion can prevent a trade. Suppliers are very entrepreneurial in their efforts to serve the consumers. Platforms such as Shein, Temu, or Etsy discovered that they could connect an American consumer and a foreign supplier who will ship the ordered product directly to the consumer, allowing the latter to avoid tariffs through the de minimis exception. These trades have grown rapidly over the past few years, from 637 million shipments to Americans in 2020 to 1.36 billion in 2024. These are not billionaire trades: the average package is worth $54 (in 2023).

The platforms in question are often used by small American entrepreneurs who fill their orders with goods made in, and shipped from, foreign countries. Aren’t the American producers and consumers involved part of “the people”? This question reminds us of a central thesis of Anthony de Jasay: “governing” means harming some individuals in order to favor others. In the case under consideration—the suppression of de minimis—some workers and shareholders in American manufacturing are the main beneficiaries, at the cost of American consumers and shippers among others.

Note that when trade is restricted—when, for example, the state takes a cut on what its subjects order from abroad—the consumer’s freedom and habit of ordering is partly replaced by the capacity of some domestic producer (say, a manufacturing shareholder or worker) to order the patronage of a domestic consumer.

More generally, all this reminds us of some fundamentals of social, economic, and political life. We must reframe the fundamental fault line in politics as the distinction between the primacy of collective (and political) choice and the primacy of individual (and private) choices. The primacy of individual choices means that a collective choice is an exception, possibly justified by a requirement of theoretical unanimity as explained by the school of constitutional political economy; while the primacy of collective choices means that individual choice results from a loophole.

This way of looking at the situation parallels the distinction between a social arrangement where everything not explicitly forbidden is allowed and a political system where everything not explicitly permitted is forbidden. Anthony de Jasay justifies the first alternative partly with the epistemological argument that the second one would, in practice, require a nearly infinite list of what is permitted. A companion argument is that forbidding everything would cancel the benefits of life in society for most people (except the forbidders).

We are thus led to discover that in a collectivist political system, liberty is a loophole that the collective can close at will, i.e., at the pleasure of its rulers. That collectivism and individualism are a matter of degree, at least on the border between them, does not void the argument for a general presumption in favor of individual choices.



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