The Biden administration announced new steps on Friday to curb the “overuse and abuse” of a long-standing trade law that allows low-value shipments to be imported into the United States without paying import duties and handling fees.

The measures include a new rule proposal that would exclude foreign shipments of products subject to US-Chinese tariffs from the special tariff exemption.

This trade rule, known as the “de minimis loophole,” allows packages valued at less than $800 to enter the United States relatively unchecked. Over the past decade, the number of “de minimis” shipments has exploded, from around 140 million to over a billion, the White House estimates.

“The dramatic increase in de minimis shipments has made it increasingly difficult to detect and block illegal or unsafe shipments to the United States,” Daleep Singh, deputy national security adviser for international economics, told reporters on a conference call Thursday previewing the measures.

Officials say the explosion in de minimis shipments is largely due to a few China-linked online retail giants such as Shein and Temu, which are exploiting the exemption to ship millions of dollars worth of clothing and inexpensive home goods from factories in China directly to American customers.

Each individual package is typically worth significantly less than $800 and therefore qualifies for the de minimis exemption.

But new restrictions on products subject to tariffs under Sections 301, 201 and 232 – like those proposed on Friday – could turn that business model on its head.

“Since about 70 percent of Chinese textile and apparel imports are subject to Section 301 tariffs, this move will dramatically reduce the number of shipments that will qualify for the de minimis exemption,” Singh said.

In addition to the proposed tariff rules, the White House also announced plans for a new rule that would “require specific, additional data for de minimis shipments – including the 10-digit tariff number and the person claiming the de minimis exemption,” according to a fact sheet.

The Biden administration also called on Congress to pass legislation to revise the original de minimis rules.

An obscure customs loophole passed by Congress in 1930 – the so-called “de minimis” exemption – has again come under White House scrutiny in recent years after lawmakers expressed concern that the rule would allow foreign retailers to evade tariffs and border inspections of their packages.

Last year, the House Select Committee on the Communist Party of China released a report on Shein and Temu, concluding that the two companies “likely account for more than 30 percent of all packages shipped to the United States daily under the de minimis rule and likely account for nearly half of all de minimis shipments from China to the United States.”

Traditional retailers typically import containers of goods and send them to U.S. warehouses for distribution. Shein and Temu, on the other hand, typically ship their products directly to American consumers through their networks of Chinese suppliers.

By exploiting the de minimis loophole to avoid tariffs, Chinese retail giants have likely evaded tens of millions of dollars in import duties.

In 2022 alone gap paid $700 million in import duties, H&M paid $205 million and David’s Bridal paid $19.5 million, according to the House Special Committee on the Communist Party of China.

However, Shein and Temu did not pay any import duties at all, the committee said.

A Shein spokesman on Friday denied the committee’s claim, saying the company paid “millions of dollars in import duties in both 2022 and 2023.”

The lawmakers claim that by avoiding the high import tariffs the U.S. imposes on most Chinese textiles, clothing and shoes, Shein and Temu are able to offer extremely low prices and outdo their import-paying competitors.

They also argued that the exemption would allow Shein and Temu to import products made using slave labor undetected because the packaging would not be checked and tested to the same extent.

Shein argues that its inventory-reduced supply chain and overall business model allow it to offer such low prices and that its pricing structure has nothing to do with the de minimis exemption.

“SHEIN places the utmost importance on compliance with import regulations, including reporting requirements under U.S. law regarding de minimis imports,” a company spokesperson told CNBC on Friday.

Last summer, Shein’s CEO Donald Tang called for reforms to the de minimis rule, saying the “rule needs to be completely revised to create a level playing field for all retailers.” He left open what these reforms would look like.

On Friday, the Shein spokesman said the company stands by Tang’s comments.

“We look forward to working with everyone involved on the reform,” the spokesman said.

The company has acknowledged that cotton from banned regions was found in its supply chain and said it is working to correct the problem.

When asked, a Temu spokesperson said the company’s growth was “not dependent on the de minimis rule. We are reviewing the new rule proposals and remain committed to providing added value to consumers.”

In a statement, Temu said the company was “committed to ethical labor practices,” “prohibits any form of forced, child or penal labor, and requires compliance with all local labor laws.”