September 23, 2024

U.S White House proposes De Minimis restrictions under Section 321

Section 321: U.S. White House proposes De Minimis restrictions

The Biden Administration has indicated its intention to limit the availability of De Minimis’ duty-free imports of the low-value goods under U.S. Customs and Border Protection (CBP) jurisdiction. Today the duty-free value is USD$ 800 of aggregate dutiable value, per importer, per day. Low-value imports are allowed duty-free under Section 321 of the Tariff Act.

According to the Administration, the regulatory changes would limit the use of Section 321 as follows:

Prohibiting the exemption to be used for goods subject to Section 201 “safeguard” duties, Section 301 “safeguard” duties imposed on products of China, and Section 232 “national security duties” imposed on aluminum and steel products;
Require importers to provide specific additional information for de minimis shipments, including 10 digit tariff classification information and the name “of the person claiming the de minimis shipments;
Establish rules concerning who is eligible to claim the Section 321 exemption and requiring entry filers “to identify the person on whose behalf the exemption is being claimed.”

The use of the program has increased dramatically in recent years particularly in online purchases of consumer goods such as fast-fashion clothing. Today over 1 billion duty-free entries are made across the country according to the E.O. CBP and other interested federal agencies have low visibility into the details of these entries due.

De minimis imports are increasingly viewed as a weakness for national security threats such as the rise of fentanyl deaths, commercial threats to domestic textile and apparel manufacturers, and undermining U.S. trade policy including by circumventing additional duties on consumer goods from China.

The forthcoming Notice of Proposed Rulemaking (NPRM) will eliminate de minimis availability for all shipments that contain products covered by tariffs under Sections 201 or 301 of the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962.

For example, the additional Section 301 duties on imports from China today account for an astonishing 40% of U.S. Imports and of those 70% are textile and apparel imports. When those items are imported by individual consumers and the dutiable value is less than USD 800 per day, then no duties are paid – despite the fact that significant duties would have been paid if the value exceeded de minimis.

The proposed changes could have significant impacts on a number of supply chains, especially e-commerce fulfillment facilities. These facilities would need to evaluate the tariff status of goods they handle to determine if they are eligible for Section 321 treatment. It would also create substantial Customs valuation issues as goods shipped from countries other than their country of origin would likely be subject to appraisement at retail prices being paid by United States purchasers.