U.S. Seeks to End Abuse of De Minimis Exemption for Low-Value Shipments

For many years, U.S. Customs & Border Protection (CBP) regulations have provided a de minimis exemption from the normal entry reporting procedures for low-value shipments. The current threshold is $800, so that shipments under this amount can utilize the so-called “321” express courier procedures, which exempt covered merchandise from paying any duties, taxes, or fees otherwise imposed on regular entries of merchandise using formal entry procedures.

However, with the explosion of shipments claiming the de minimis exception (now totaling over $1 billion per year), CBP has found it increasingly difficult to enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to block illicit synthetic drugs such as fentanyl and synthetic drug raw materials and machinery from entering the country.

Hence, on September 13, 2024, the Biden administration announced several major proposed rule-making initiatives designed to target and stop the abuse of this exemption to block imports that violate U.S. law. These actions are primarily aimed at Chinese e-commerce platforms that account for a large percentage of de minimis shipments, as well as at drug traffickers that import large amounts of fentanyl and other illicit substances via the de minimis exemption.

The actions announced on Sept. 13 consist of the following:

• New Rulemaking to Reduce De Minimis Volume and Strengthen Trade Enforcement: The administration intends to issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962. 
  • Because the “China tariffs” imposed under Section 301 cover approximately 40% of U.S. imports (including 70% of textile and apparel imports), this proposed rule change would stop importers of these goods from being able to claim the de minimis exemption.
  • Because goods covered by antidumping and countervailing duties are already excluded from this exemption, the proposed rule change would apply this prohibition to all goods covered by trade remedy duties (including the Section 232 “steel and aluminum national security tariffs” and the Section 201 “safeguard tariffs”).
• New Rulemaking to Improve Accountability and Enforcement in De Minimis Shipments: The administration intends to issue a Notice of Proposed Rulemaking regarding the entry of low-value shipments that would strengthen information collection requirements to promote greater visibility into de minimis shipments.
  • Two key data elements will be required under the proposed rule: the identity of the party claiming the de minimis exemption and the 10-digit tariff code under the Harmonized Tariff Schedule of the United States (HTSUS).
• Final Rule to Prevent De Minimis Shipments from Circumventing Safety Standards: Consumer Product Safety Commission (CPSC) staff intend to propose a final rule requiring importers of consumer products to file Certificates of Compliance (CoC) electronically with CBP and CPSC at the time of entry, including for de minimis shipments.
  • For companies that circumvent consumer protection testing and certification procedures, the proposed rule would enhance the CBP’s and the CPSC’s ability to target and block unsafe consumer products from entering the U.S. market.
    
    

The Sept. 13 announcement also called on Congress to pass legislation this year to comprehensively reform the de minimis exception to prevent Chinese and other foreign vendors from abusing this procedure to the detriment of American workers, consumers, and businesses. The parameters provided by the administration of the reforms it believes Congress should enact encompass:

• Exclusion from de minimis eligibility of import-sensitive products. Congress should act to exclude import-sensitive products, including textile and apparel products, from the de minimis exemption. 
• Exclusion from the de minimis exemption of shipments containing products that are covered by Section 301, Section 201, or Section 232 trade enforcement actions. The administration intends to issue a Notice of Proposed Rulemaking to exclude shipments containing products covered by Section 301, Section 201, or Section 232 trade remedies actions (as noted above), but legislative action by Congress to make this statutory change would help to achieve this important reform more quickly. 
• Passage of previously proposed de minimis reforms in the Detect and Defeat Counter-Fentanyl Proposal. These reforms would, among other actions, increase transparency and accountability under the de minimis program by requiring more data from shippers, including the product tariff classification number, and would give border officials the tools they need to more effectively track and target the millions of shipments coming in claiming the de minimis exemption.