Amazon Plans to Further Exploit de Minimus Loophole

While Fulfilled by Amazon merchants have long taken advantage of the duty-free treatment of small shipments, Amazon's own merchandise sales have customarily involved the payment of tax and duty, creating an opening for the Chinese e-tailers Shein and Temu.

Not for long.   Wednesday, Amazon announced a new channel for its platform which will sell consumer goods and clothing direclty from China to US customers.  Eliminating the US warehousing nexus puts the Seattle-based merchant on equal footing with its Chinese rivals, in terms of landed cost.

De Minimis Exemption:

Section 321 shipments enter under de minimis procedures which allow small packages valued at $800 or less to enter the United States tax and duty-free. CBP estimates that 85% of all shipments entering the United States meet this exemption, the highest in the world. China, the largest beneficiary of the waiver, enforces a de minimus of 50 yuan ($7.90).

While importers can only take advantage of the Section 321 benefit on one single transaction per day, shipments direct to consumers permit entire retail ecosystems to flourish duty-free.

With Fulfilled by Amazon sales exceeding $100 billion last year, the total while not measured can be presumed material. These “agency” transactions are not “imports by Amazon,” and the program encourages participating merchants to ship in smaller lots, to conserve warehouse space and avoid customs clearance delays.  The Coalition for a Prosperous America has estimated duty-free imports under section 321 well over $100 billion per year.

On April 13, the U.S. Customs and Border Protection (CBP) planned to enforce a mandate for advance submission of data for Section 321 Type 86 shipments, which fall under the de minimis exemption on duties.

This mandate required shippers and customs brokers to file complete and accurate data sets, including full product descriptions and HS codes, before the arrival of goods in the U.S. Failure to submit the full data set before the shipment’s arrival would render the goods ineligible for de minimis treatment, incurring duties and clearance charges.

Shortly before implementation, CBP postponed the requirement to allow for further programming and data testing.

According to Open Secrets, Amazon spent more than $22 million in 2023 on lobbying expenses and political contributions.