In 2016, the U.S. Congress relaxed a provision called “de minimis” for international parcels entering the United States, allowing single items such as clothing, trinkets, and other goods valued at less than $800 to enter the U.S. duty-free and with minimal inspections. However, this “small parcels” trade rule unexpectedly became a loophole not only for retailers and e-commerce platforms but also for international drug traffickers.
According to the U.S. Customs and Border Protection (CBP), currently 90% of goods enter the U.S. through this small parcel method, with the majority arriving via air transport.
U.S. ports of entry are now filled with these small parcels, with a large portion originating from China. Customs data shows that in the fiscal year 2023, 60% of all small parcels entering the U.S. were from China, totaling about 6.4 billion items. The U.S. House of Representatives Committee on U.S.-China Strategic Competition stated that half of these parcels from China are from the two major low-cost e-commerce platforms Temu and Shein.
As a result, only a small fraction of the nearly 4 million small parcels arriving at U.S. shores daily are subjected to inspection by U.S. customs.
The change in trade policy in 2016 also altered the logistics system of international drug traffickers. With the help of this trade provision, drug traffickers have been able to ship large quantities of small parcels from China to the U.S. Over the past few years, the U.S. has become a major transit point for Mexican drug cartels using Chinese-manufactured precursor chemicals to produce fentanyl pills.
Security officials state that traffickers easily import precursor components of fentanyl disguised as common household items from China. These precursor chemicals only require small amounts to produce large quantities of fentanyl pills.
Subsequently, traffickers smuggle these fentanyl precursors from China to the U.S. and then onward to Mexico. In Mexico, major crime groups such as the Sinaloa Cartel and the Jalisco New Generation Cartel use these chemicals to manufacture industrial-scale fentanyl. The finished fentanyl is then smuggled back to the U.S. from Mexico.
In other words, the simple adjustment to the trade rules regarding $800 small parcels in 2016 not only fueled Americans’ online shopping habits but also led to a severe reliance on fentanyl, a synthetic opioid, causing the worst drug crisis in U.S. history and devastating communities.
U.S. government data shows that in 2023 alone, nearly 75,000 people died from overdosing on synthetic opioids. Recent data suggests that while the death rate may be slowing down, the overdose fatality rate remains alarmingly high, with hundreds of deaths occurring weekly.
A recent investigation by Reuters revealed that in January 2023, U.S. federal agents raided the home of a maintenance worker, Wadih Daahir, in Tucson, Arizona, a city near the U.S.-Mexico border. Daahir, whose side job involved shipping parcels to Mexico, was found with about 40 kilograms of powdered substances in packages intended for shipment to Mexico.
Two federal agents familiar with the situation told Reuters that the powder was 4-AP, a key chemical from China used in synthesizing fentanyl. U.S. federal agents estimated that the 63-year-old Daahir had transported about 7,000 kilograms of fentanyl precursor chemicals to a Mexican drug trafficker associated with the Sinaloa Cartel over the previous two years, equivalent to producing 5.3 billion fentanyl pills, enough to kill the entire U.S. population multiple times.
It was revealed that these chemicals were first air-freighted from China to Los Angeles International Airport, bypassing customs through the de minimis exemption for small parcels, then transported to Daahir’s address in Tucson by air or land. Daahir would then drive the large boxes filled with these small parcels to Mexico, a few miles away.
A 2024 Mexican government document reviewed by Reuters confirmed crucial details of the U.S. investigation into Daahir’s activities.
Daahir was questioned but not charged. The investigators concluded that he was unaware of the contents of the boxes and did not know the materials inside were used to produce fentanyl drugs. Daahir passed away on July 1, 2024, due to heart disease.
Before his death, Daahir gave an interview to Reuters in his Tucson home, stating that he unknowingly became part of the global fentanyl supply chain.
Daahir, the son of Lebanese immigrants, born in Mexico, had been working as a maintenance worker in Tucson for over 40 years while running a side business of transporting parcels to Mexico. Mexican customers unable to easily purchase certain goods in Mexico would order them online and have them shipped to Daahir’s address.
Once a sufficient number of parcels accumulated, Daahir would use a truck to transport the goods to the U.S.-Mexico border, where he stated that Mexican border agents always waved him through.
Daahir would label the parcels for transfer, usually handing them over to a local courier company in Nogales, a border town in Sonora, Mexico, to continue delivery to the final destination. He mentioned charging a 25% fee based on the parcel value, with most customers transferring payment to his Mexican bank account.
He stated, “The Mexicans buy things online. The goods arrive here, I get them, and then I take them to Mexico. I don’t ask questions.”
However, he told Reuters that he regretted his unintentional role in the U.S. fentanyl crisis, saying, “I see people on the streets doing drugs, talking to themselves. It’s really bad.”
Law enforcement officials in the U.S. suggest that potentially hundreds or even thousands of temporary delivery drivers are transporting such cargo to Mexico from the southwestern U.S., forming a “massive ant army” leveraged by drug traffickers.
Over the past year, Reuters conducted an investigation into the global chemical trade behind the U.S. opioid crisis. The reporters interviewed over eighty current and former law enforcement officials, diplomats, trade experts, lawmakers, chemical suppliers, and drug traffickers to understand how Mexican cartels exploit U.S. trade policies and advanced customs systems to make America a vital hub for fentanyl precursors.
The three countries – the U.S., China, and Mexico – are now at the center of the illegal fentanyl trade, serving as the world’s largest consumer, raw material supplier, and manufacturer, respectively.
Reporters also visited the parcel inspection facility near Los Angeles International Airport, one of the largest and most technologically advanced air cargo hubs in the U.S. In the fiscal year 2023, Los Angeles International Airport received 684,000 air freight shipments daily.
Through the investigation, reporters purchased various fentanyl precursors from Chinese sellers destined for the U.S., and third-party laboratories confirmed that these precursors could be used to produce fentanyl.
The prices of these chemicals range from $130 to $260, significantly lower than the $800 de minimis threshold, and the delivery methods are similar to any other parcels. Some of these chemicals are not regulated under U.S. law, posing an additional challenge for law enforcement in intercepting these items at the border.
The investigation revealed that some Chinese chemical suppliers are confident that they can evade detection by U.S. customs with the fentanyl precursors they sell. If a shipment is seized, they offer free replacements to customers. All these factors indicate how easy it is for fentanyl chemicals to enter the U.S. market.
Stopping fentanyl precursor chemicals from entering the U.S. and reaching the hands of drug traffickers has become a top priority for U.S. law enforcement agencies. Katrina W. Berger, Deputy Director of Homeland Security Investigations (HSI), stated in a statement, “The threat posed by fentanyl and precursor chemicals in illegal narcotics trafficking must be taken very seriously.”
In the fiscal year 2023, U.S. customs seized nearly 3.8 tons of fentanyl precursors, almost four times the total amount collected since the data began being tracked in 2021.
However, U.S. security officials admit that they are being overwhelmed. In the fiscal year 2023, U.S. customs received 1 billion small parcels declared at a value of $54.5 billion. Government data shows that this is double the quantity of small parcels from four years ago. Customs warehouses are filled with boxes containing sneakers, tools, and toasters, providing perfect cover for concealing fentanyl precursor chemicals.
Congressman Earl Blumenauer proposed legislation to reform the small parcel rules, acknowledging that the system has spiraled out of control. He stated, “We have lost control of what is about to happen. When there are 1 billion packages coming in, you cannot track illegal, unsafe, or illicit products.”
Senior government officials stress that the actual problem is more severe than just reforming trade laws on small parcels. Small parcels bound for the U.S. are packed in large boxes, known as “master cartons,” where thousands of small packages and boxes are crammed into one box for easier transport. These master cartons are indispensable tools in global trade, aiding carriers in shipping large quantities of goods worldwide in the e-commerce era. However, drug traffickers also exploit this legitimate shipping method to conceal fentanyl precursor chemicals, regardless of the actual contents of the master cartons.
The de minimis small parcel rule in the U.S. originated in 1938. The exemption from low-value goods tariffs was established in response to the tariff collection costs outweighing the tariff revenue generated. At that time, the duty-free entry limit was $1.
This limit increased to $5 in the 1970s and then to $200 in 1994. By the late 2000s, the three major courier companies wanted a higher limit. In 2008, UPS, DHL, and FedEx created their trade organization called the Express Association of America, aiming to suggest raising the duty-free limit to $800 to expedite delivery times and reduce carrier costs, including hiring customs brokers to handle government documents for low-value parcels.
Other industry groups supported this idea as well. However, lawmakers saw it as a windfall for large corporations.
The age of e-commerce subsequently began. U.S. small shop owners started using the eBay platform to source products and reach customers worldwide. With the formation of the 2015 Customs Trade Facilitation Act, eBay was keen on positioning these small sellers as spokespeople for the small parcels expansion movement.
In April 2015, as part of eBay’s advocacy effort in Washington, small business owners from a hardware store in Washington state and a scrapbooking supplies retailer in Wisconsin met with lawmakers on Capitol Hill.
At that time, Brian Bieron, eBay’s policy executive, stated, “This solves a lot of political problems. The notion that all this stuff you’ve heard about trade is only benefiting big companies and elites isn’t true. It’s actually helping small businesses here.”
Etsy, a popular online marketplace for handcrafted goods, also lobbied for easing the small parcel limit. The company stated in a release, “Etsy supports de minimis exemption terms tailored to support micro-businesses.”
Greta Milligan Peisch, who served as the International Trade Advisor for the Senate Finance Committee from 2015 to 2021, reflected on the weight of these small businesses’ voices in affecting congressional votes during that period. She said, “This was a major driving force behind supporting the provision at the time.”
In February 2016, a 160-page Trade Facilitation and Trade Enforcement Act was overwhelmingly passed by the Republican-controlled Congress, with President Barack Obama signing it into law shortly afterward. The bill contained a brief provision that quadrupled the small parcel duty-free limit to $800.
Congressman Blumenauer was one of the lawmakers who supported the vote back then but now expresses regret about the decision.
He expressed, “There were no signs at that time that we were heading for trouble. It was positioned as an efficiency product, just a minor adjustment to a threshold – but that was not the case.”
The impact of the legislation was immediate. According to U.S. Customs statistics, in the 2016 fiscal year, there was a 95% spike in small parcels entering the U.S. compared to the previous year. Both then and now, most goods were significantly undervalued, with an average declared value of $54 per small parcel in the 2023 fiscal year.
Steve Story, an executive at Apex Logistics International in California, remarked that the legislation spread a method to expedite foreign manufactured goods’ duty-free entry into the largest consumer market globally, the U.S.
Storry stated, “When they raised the de minimis limit to $800, wow, it exploded.”
The U.S. government initially estimated that the duty and fee exemptions accrued over the first decade of the law implementation would amount to $176 million. However, based on the current number of small parcels, economist Christine McDaniel from George Mason University estimates that the loss has surged to $735 million annually.
Even so, McDaniel still supports this small parcel measure. She believes it is a boon for shoppers and small businesses, allowing them to access a wider variety of goods at lower prices. She estimates that abolishing the provision would impose an additional $47 billion import and transportation cost burden on American consumers and businesses annually.
In contrast, research by the National Bureau of Economic Research provides a lower estimate. Their study suggests that abolishing the legislation would cost consumers an additional $12-14 billion, although this increase would also have a severe impact on the poorest Americans.
Supporters of the legislation contend that small parcels benefit individuals on the ground. However, drug traffickers have also noticed this advantage.
U.S. drug enforcement officials state that Mexico became a hub for illegal fentanyl production in the mid-2010s. Concurrently, China emerged as the world’s largest producer of chemicals, predominantly supplying fentanyl products and precursor chemicals to Mexican cartels.
In 2019, under pressure from the Trump administration, China placed fentanyl and similar products under national control, effectively ceasing the illegal export of finished fentanyl products. Nonetheless, Mexican cartels swiftly stepped in and took over the production of fentanyl products.
These cartels now require more Chinese chemicals than ever before and need more pathways to import them into Mexico. U.S. officials say the cartels have arranged bulk shipments through sea and air transport since 2019, but the use of large-barrel packaging makes it more challenging to evade law enforcement compared to small parcels.
U.S. customs and drug enforcement officers told Reuters that minimal smuggling of fentanyl precursor chemicals via small parcels through U.S. airports only began significantly in the last few years.
Undoubtedly, fentanyl chemicals are also entering Mexico via small air transports. To investigate the supply chain, Reuters journalists purchased various chemicals directly air-freighted from China to Mexico City. Third-party chemists determined that these chemicals could be used in fentanyl production. However, U.S. law enforcement officials emphasize that the speed, reliability, and massive quantity of small parcels flowing through the U.S. entry system make it more attractive to traffickers.
Once Chinese fentanyl precursor sellers turn over shipments to transportation companies, they typically misrepresent the contents, at times falsely labeling the parcels. Still, these transport companies often lack the time to inspect each package to ensure it matches the sender’s description.
These chemical parcels are bundled with other legitimate merchandise packages into master cartons, loaded onto transport pallets, and tightly secured with tape or netting before being loaded onto airplanes.
U.S. customs officials highlight that these master cartons can reach up to 8 feet tall, containing thousands of individual small parcels. Upon arrival in the U.S., unpacking and inspecting them is time-consuming.
If small parcels meet the de minimis rules, they can bypass formal entry procedures. Under the law, U.S. customs must collect detailed information for goods arriving through traditional channels. This data includes specific product codes needed to determine the customs duties and taxes owed.
In contrast, master cartons eligible for the de minimis exemption only require an accurate description of the shipment contents. Even these looser requirements are often ignored. Some boxes arrive with vague descriptions of the goods inside, such as “gifts,” “items,” and “various products.” Regardless, many of these master cartons often clear customs.
Subsequently, these master cartons are usually fast-tracked to freight agents for unpacking. The small parcels inside, some pre-labeled with transport tags from FedEx, UPS, USPS, and other carriers, are then passed on to these carriers for the “last mile” delivery.
The return addresses on these parcel labels typically list addresses of U.S. freight agents or other U.S. locations instead of the sender’s foreign address. Reuters investigative reporters confirmed that most precursor chemicals, purchased from Chinese sellers, were sent to a rented mailbox in New