The Biden administration last week announced plans to implement stricter rules on e-commerce goods imported into the country under the de minimis exemption.
If implemented, the requirements would mean that any products that are part of Section 301, Section 201, or Section 232 trade enforcement actions would no longer be covered by the de minimis exemption.
The exemption allows goods valued at $800 or less to avoid paying duties and undergo less customs scrutiny when shipped directly to an individual.
Section 301 tariffs currently cover about 40% of US imports, including 70% of textile and apparel imports from China. Other items subject to these tariffs include shoes and machinery.
“Some e-commerce platforms and other foreign sellers are evading these tariffs by shipping items from China to the US claiming the de minimis exemption,” the Biden administration said in a statement. . “If terminated, these goods will no longer be eligible for the de minimis exemption.”
Section 201 tariffs include products such as clothes-washing machines and solar panels, while Section 232 covers industrial steel and aluminum products.
Meanwhile, additional data will be required for de minimis shipments, including the 10-digit tariff classification number and the person claiming the de minimis exemption.
Finally, the staff of the Consumer Product Safety Commission (CPSC) intends to propose a final rule requiring importers of consumer products to file Certificates of Compliance electronically with Customs and Border Protection (CBP ) and CPSC at the time of entry, including for de minimis shipments.
At this stage, it is unclear how long it will take for the new rules to be implemented, although the Biden administration has called on Congress to pass legislation this year.
Freight forwarder Flexport pointed out that this could mean the rules would be enforced during peak seasons and e-commerce sales days, such as 11.11 and Black Friday.
The forwarder estimates that the rulemaking could take between 60-120 days to implement and will need to go through a public comment period.
“In general, we anticipate additional duty costs and increased documentation requirements for all businesses currently using the de minimis exemption, should the executive order take effect,” Flexport said.
“In the short term, businesses will need to start providing HTS classifications up to the 10-digit level for all products if they have not done so before. So, the most immediate step for businesses today is to start sorting the 10-digit HTS code.”
The new rules come as the US continues to clamp down on goods imported into the country by the likes of Temu and Shein.
The Biden administration said that over the past 10 years, the number of shipments entering the US claiming the de minimis exemption has increased significantly, from about 140m a year to more than 1bn a year.
The growth in e-commerce shipments follows an increase in the de minimis exemption from $200 to $800 in 2015.
“The exponential increase in de minimis shipments makes it more difficult to enforce US trade laws, health and safety requirements, intellectual property rights, consumer protection rules, and to prevent illicit synthetic drugs like fentanyl and synthetic drug raw materials and machinery from entering the country,” the Biden administration said.
“The vast majority of shipments entering the US claiming the de minimis exemption come from several Chinese-established e-commerce platforms, which endanger American consumers, undercut American workers and businesses, and result in importing large volumes of low-value products such as textiles and clothing into the US market duty-free.
“The growing volume of de minimis shipments makes it increasingly difficult to target and intercept illegal or unsafe shipments. This is done by foreign giant corporations that take advantage of the de minimis exemption for various reasons.
“Some companies take advantage of de minimis to hide shipments of illegal and dangerous products and avoid compliance with US health and safety and consumer protection laws. Other foreign entities use them to avoid the US trade enforcement action intended to level the playing field for American workers, retailers, and manufacturers.”
The rise of Temu and Shein has resulted in an increase in the volume of air cargo, with packages flown into the country and sent directly to the consumer, unlike Amazon where goods are imported in bulk – meaning subject to they on tariffs – and stored. in warehouses in the destination market before sale.
Surveys show that consumers find Amazon to be more reliable and offer better, faster service than the Chinese e-commerce behemoths, but low prices weigh more on their purchasing decisions.
Brandon Fried of the AirForwarders Association said recently Maintaining the current de minimis threshold is important for sustaining growth in air cargo.
“It simplifies the import process for low-value goods, reduces administrative burdens, and lowers costs for businesses and consumers,” he said.
Instead, he wants to see more funding for US customs so they can inspect more packages.
“To be sure of that Incoming shipments meet value and declaration requirementsCBP needs adequate funding for enforcement personnel. This will help balance the benefits of the de minimis threshold with the need for effective oversight and compliance,” he added.
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