The Biden Administration has indicated its intention to adopt regulations sharply reducing importers’ ability to use the $800 low value shipment exemption” contained in Section 321 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1321.

In a September 13, 2024, notice posted to the White House website, the Administration indicated that would publish a Notice of Proposed Rulemaking to address what it terms “significant increased abuse of the de minimis exemption, in particular [by] China-founded e-commerce platforms.”

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 Consumer Product Safety Commission would also initiate rulemaking requiring imports of consumer products to file Certificates of Compliance (CoC) with Customs and CPSC at the time of entry, including for low-value shipments.

The Administration also teased prohibiting textile and apparel products from using the Section 321 exemption, but did not specifically propose this.

The Administration also encouraged Congress to possibly short-circuit its rulemaking proposal by enacting comprehensive legislation to overhaul the use of Section 321’s low-value exception.

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.

Another question is whether Customs and Border Protection, whose resources are already stretched thin, could handle the additional volume of formal and informal entries which would be filed if this proposal were adopted. Section 321 shipments have increased from 140 million per year to more than a billion per year.

Please feel free to reach out to a Neville Peterson professional for more information on submitted comments once the proposed rulemaking is published, and for exploring alternate ways of saving duty while importing goods into the United States.