De Minimis Rollback Begins, Pauses

Shippers were whipsawed by the news cycle as the White House rolled out its America First Trade Policy, with Presidential actions caroming from Colombia to Canada and Mexico, finally settling on China. 

More fulsome in scope than previous actions, included are measures ensuring e-commerce heavyweights Temu, Shein and Amazon will no longer be able to take advantage of what House Ways and Means Committee Chair Jason Smith has described as a “free trade agreement with China.” 

Changes to De Minimis Exemptions.

With the February 1 Order, the U.S. revoked the de minimis exemption for Chinese imports, subjecting all shipments to duties and tariffs, including those previously exempt valued at $800 or less.  The China Actions are spelled out in a Federal Register document [90 FR 9038] and  Customs and Border Protection Cargo Systems Message [CSMS 69332482]

Oops...

Then on February 5, the White House walked back the termination, stating "Duty-free de minimis treatment under 19 U.S.C. 1321 is available for otherwise eligible covered articles described in subsection (a) of this section, but shall cease to be available for such articles upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expediently process and collect tariff revenue applicable pursuant to subsection (a) of this section for covered articles otherwise eligible for de minimis treatment.”

Customarily The U.S. Customs and Border Protection (CBP), a division of the Department of Homeland Security (DHS), processes and collects tariff revenue on imported goods.

Stricter Oversight Proposed. 

Following the Biden Administration’s September 2024 announcement to initiate rulemaking processes to curb the flow of imports from China under de minimis rules,  CBP issued a proposed amendment [90 FR 3048] to its regulations to strengthen oversight of low-value shipments valued at $800 or less. 

The rule change aims to address the rise in e-commerce shipments and enhance CBP’s ability to intercept high-risk goods, including illicit drugs and counterfeit products.

More Data Required.  

CBP’s proposal introduces new electronic data requirements under Section 321(a)(2)(C) of the Tariff Act. Shipments will require additional details about sellers, purchasers, final recipients, and marketplaces to improve compliance checks and reduce enforcement gaps.  They propose to require that certain shipments claiming this exemption provide the 10-digit Harmonized Tariff Schedule of the United States (HTSUS) classification of the merchandise.

National Security Items to be Ineligible.

CBP further proposes to make merchandise that is subject to specified trade or national security actions (Section 301, Section 232, or Section 201 trade measures) ineligible for the $800 de minimis administrative exemption.  [90 FR 6852]

Rising Volume of Low-Value Shipments

CBP has observed exponential growth in the volume of low-value shipments, driven by the e-commerce boom and the 2016 statutory increase in the duty-free limit from $200 to $800. Between fiscal years 2015 and 2023, low-value shipments surged from 139 million to over one billion annually. Currently, such shipments account for over 90% of all imports by volume but are subject to less rigorous data requirements compared to formal entries.

This growth has presented enforcement challenges, as the lack of detailed information about these shipments often hampers CBP’s ability to identify non-compliant goods. The proposed rule seeks to address these gaps by leveraging advancements in technology and lessons learned from pilot programs, including the Section 321 Data Pilot and Entry Type 86 Test.