In a flurry of recent activity, U.S. Customs and Border Protection (“CBP”) issued two notices proposing new regulations covering imports of low-value shipments, also known as de minimis shipments. The first notice, entitled “Entry of Low-Value Shipments,” was published in the Federal Register on January 14, 2025, and proposes new requirements for the entry of de minimis shipments under the administrative exemption. The second notice, titled “Trade and National Security Actions and Low-Value Shipments,” was published today. The second notice proposes new rules regarding eligibility for the administrative exemption with respect to goods subject to certain trade remedies.
Together, the proposed new regulations aim to enhance visibility and support enforcement efforts on potentially violative low-value shipments. We review the major contents of both notices in further detail below.
Section 321 of the Tariff Act of 1930 addresses importations into the United States of articles that have a retail value of $800 or less, and are imported by one person, per day. These low-value shipments may enter free of duty and taxes and are subject to expedited clearance processing with minimal information collection requirements.
The proposed regulations come after the completion of two pilot programs, the Section 321 Data Pilot and the Entry Type 86 Test, in collaboration with the trade community to find solutions to the challenges in processing low-value shipments. The two pilot programs were implemented in 2019 to test both CBP’s capability to collect, and the trade community’s ability to provide, certain enhanced data through CBP-approved electronic systems. The goal is for the new regulations to capture the most successful aspects of both programs.
CBP is inviting comments from the public on these new data reporting requirements and electronic clearance procedures. Information on submitting comments can be found below.
Major Concerns: Forced Labor, Fentanyl, and Trade Law Enforcement
The change in the de minimis threshold from $200 to $800 in 2016 and the rise of e-commerce facilitated a rapid growth in the imports of small-value shipments. In 2023, approximately one billion packages entered the U.S. under the de minimis exemption, a stark increase from 139 million in 2015. This sheer volume of de minimis imports has given rise to major concerns about parties abusing the de minimis exemption to circumvent forced labor laws, specifically the Uyghur Forced Labor Protection Act (“UFLPA”), evade payment of duties required under U.S. trade and national security laws, and to enter illicit substances, particularly those used to produce fentanyl.
Since the publication of the Department of Homeland Security’s 2022 UFLPA Strategy, the Chinese apparel and cotton industries have been singled out as a sector of high concern for forced labor practices. A report by the Select Committee on the Chinese Communist Party outlined how fast fashion companies use de minimis provisions to avoid paying duties and elude responsibility for forced labor in their supply chain. As of 2023, two large Chinese apparel companies were responsible for 30% of daily packages shipped into the U.S. under the de minimis exception. These companies keep most, if not all the goods sold on their platform under $800 and may not be the importer of record under a direct-to-consumer model, so UFLPA prohibitions are more challenging to enforce.
While China banned fentanyl production in 2019, many Chinese companies produce precursor chemicals to the drug. These chemicals, along with other materials like pill presses and die molds, have been found to come into the United States via de minimis shipments due to their less stringent entry requirements. CBP states that the data provided in de minimis packages “often does not adequately identify the entity causing the shipment to cross the border, the final recipient, or the contents of the package.”
Although the current regulations do not permit goods subject to antidumping and countervailing duties (AD/CVD) to be imported through de minimis entry, the astronomical rise in volume of low-value shipments and limited data requirements for entry has also posed challenges to enforce payment of AD/CVD, as well as duties owed under other U.S. trade remedies, namely, Section 201 or 301 of the Trade Act of 1974 or Section 232 of the Trade Expansion Act of 1962. In fiscal year 2023, an estimated 77 percent of shipments claiming de minimis would have been assessed additional duties under Sections 232, 201, or 301 had they not claimed the administrative exemption.
Entry of Low-Value Shipments: Proposed Regulations
As noted above, the two notices contain a number of proposals with significant potential impacts on the trade community. The first notice proposes new and amended rules regarding the entry of de minimis shipments via one of two entry processes: the basic entry process, or the enhanced entry process. Both processes and additional proposals are summarized below.
The current de minimis import process, also known as “release from manifest,” is considered burdensome and time-consuming for CBP as each shipment’s bill of lading or manifest listing must be manually reviewed and released by a CBP officer. The information currently required for the manifest process is the country of origin of the merchandise; shipper name, address and country; ultimate consignee name and address; specific description of the merchandise; quantity; shipping weight; and value. CBP proposes to rename the existing process as the “basic entry process,” and require additional data elements to be provided, such as the name and address of the person being exempted from payment of duty on the shipment. For qualifying low-value shipments, this would be the owner or purchaser. For bona fide gifts, this would be the person receiving the articles. As detailed further below, in the second notice CBP also proposes that the 10-digit Harmonized Tariff Schedule of the United States (“HTSUS”) classification of the goods is provided during the basic entry process.
The proposed regulations also establish a new “enhanced entry process” for certain low-value shipments, requiring that certain data be submitted in advance during specified time frames. The new process would maintain two key benefits of the Entry Type 86 Test: (1) the expedited clearance of certain shipments and (2) the availability of duty- and tax-free entry for qualifying low-value shipments.
Importers will need to share data about the contents, origin, and destination of the shipments ahead of entry. Specific additional data elements would include:
- Clearance tracing identification number (refers to the individual bill of lading number or other unique identification number used to associate the merchandise on the individual bill of lading with the eligible imported merchandise for which entry is sought)
- Country of shipment
- 10-digit HTSUS subheading (waivers may be made available for filers with demonstrated capabilities and histories of segmenting out goods subject to requirements from partner government agencies (“PGAs”))
- Either the marketplace product listing URL, a product picture, a SKU or product code (“product identifier”), and/or a shipment x-ray or other security screening report number verifying completion of foreign security scanning of the shipment (“security screening report number”)
- Seller name and address
- Purchaser name and address
- PGA data, if warranted
- Marketplace name and website
Required data elements must be transmitted to CBP on or before the appropriate deadlines for submission of advance cargo information by mode of transportation (i.e., 24 hours before cargo is laden aboard a vessel at a foreign port; for air cargo, either at time of departure or 4 hours prior to arrival depending on country of departure; or 30-60 minutes prior to truck cargo reaching the first U.S. port of arrival).
Generally, qualifying shipments may use either the basic entry process or the enhanced entry process, with certain notable exceptions. Bona-fide gifts, as described in 19 CFR § 10.152, would not be eligible to use the enhanced entry process. Conversely, mail shipments and shipments of goods regulated by federal agencies as described in 19 CFR § 143 would not be eligible to use the basic entry process. The current regulations do not permit goods subject to antidumping and countervailing duties (AD/CVD) or any other duties required by other federal agencies to be imported through de minimis entry. The proposed regulations add language to emphasize this ineligibility.
In addition to the two proposed entry processes, the proposed regulations clarify that if the aggregate fair retail value of shipments imported by one person in a single day exceeds $800, then all such shipments for that day would no longer qualify for duty- and tax-free entry under the low-value shipments exemption. The term “one person” would be further clarified as the owner or purchaser of the goods. The notice also proposes to revise the definition of the term “shipment” to provide that a single shipment corresponds to an individual bill of lading.
The proposed regulations also provide that reasonable care must be exercised when making entry under the enhanced process. The reasonable care requirement applies to the owner or purchaser of the shipment; an express consignment operator or carrier in possession of the shipment; or, when appropriately designated by the owner, purchaser, or consignee of the shipment, a customs broker.
Trade Remedies and Low-Value Shipments: Proposed Regulations
The second notice, which proposes new rules regarding eligibility for the administrative exemption with respect to goods subject to certain trade or national security actions, contains two major proposed rules:
First, the proposed regulations would make merchandise subject to Section 301, 201, or 232 duties ineligible to claim the de minimis exemption. This proposal would apply to all merchandise identified in a specified trade or national security action imposing an ad valorem tariff, even if the merchandise is accorded an exclusion from such tariff. The proposed rulemaking does not affect the validity of any exclusions. Excluded products may continue to be entered under an appropriate formal or informal entry process to allow for the collection of any applicable tariff.
Second, CBP proposes to require a 10-digit HTSUS classification for merchandise entered under the proposed basic entry process claiming de minimis, in addition to the proposed requirement to provide the 10-digit HTSUS classification for merchandise entered under the enhanced entry process discussed above.
The second notice also discusses the applicability of the proposed regulations to postal shipments, which CBP has included in the scope of its proposed rulemaking. If CBP determines to exclude international mail shipments from the scope of any final rule, the agency intends to address any trade remedies and national security loophole for de minimis goods through additional rulemaking tailored to the unique operational and legal characteristics of the international mail environment.
Impacts
The new rules would more stringently enforce the $800 aggregate value limit of de minimis imports that an individual can receive per day. They define the term one “person” as the owner or purchaser of the merchandise imported on one day and “shipment” as an individual bill of lading. Under the existing regulations, one person may enter up to $800 a day under the exemption with anything over $800 having to be entered formally into the country. The proposed rule would mean that if any shipment pushed the aggregate fair retail value of all shipments imported by that person in a single day beyond $800, then all shipments for that day would no longer qualify for de minimis treatment.
Companies that utilize a direct-to-consumer sales model, particularly those that enter goods using the de minimis entry type, may begin to offer consumers options for orders approaching the $800 limit in order to remain eligible for de minimis entry. There may also be an increase of products previously subject to Section 301 duties claiming countries of origin other than China in order to remain eligible for entry under de minimis. All parties should ensure that any change in country of origin is the result of legitimate supply chain changes, rather than the mere desire to avoid duty payment.
Consumers of merchandise subject to Section 232, 201 or 301 duties that was previously imported under the de minimis exemption are expected to pay higher prices as a result of tariffs and fees imposed by CBP and customs brokers relating to the new requirements. CBP estimates that the average price of imported goods may increase, and that this policy may also have considerable impacts on employment. While sectors that benefit from the proposed regulations such as textiles and apparel would see job growth, there may be offsetting job losses in other sectors. However, by year 10 the economy would return to full employment under both scenarios.
CBP also estimates that, when the standard duty rate is combined with the tariff rate applied to the aggregate value of imported merchandise subject to an ad valorem tariff under Section 232, 201 and 301, the total amount of additional revenue to be collected on merchandise subject to these trade or national security actions is projected to range between $5.9 billion and $7.8 billion in 2025. Additionally, the proposed additional data collection requirements would provide CBP with more robust information to take enforcement action against noncompliant shipments at the time of entry. Ensuring that de minimis shipments and the information provided for them are compliant with the new regulations will be crucial for sellers, purchasers, express consignment operators and carriers, and/or customs brokers in avoiding any future enforcement actions taken by CBP.
Public Opportunity to Comment
CBP is requesting comments from the public regarding the proposed regulations outlined in both notices. The most useful comments would refer to specific sections of the proposed rules and include data, information, and/or arguments supporting any recommended change.
Comments pertaining to items outlined in the first notice must be received by March 17, 2025. Items of interest for comments in that notice include provision of a product identifier and/or screening report number, as well as the proposed HTSUS classification waiver.
Comments pertaining to items outlined in the second notice must be received by March 24, 2025. In addition to the proposed amendments outlined in the second notice, CBP is also seeking comments on whether these proposals should also be extended to bona-fide gifts valued at $100 or less ($200, if the gift is from certain island possessions) sent from persons in foreign countries to persons in the United States and/or certain personal or household articles valued at $200 or less accompanying persons arriving in the United States. CBP is also requesting comments from the public on the feasibility of applying these proposals to mail shipments.
American First Trade Policy
Soon after President Trump’s swearing-in yesterday, January 20, 2025, the White House released a Memorandum entitled “America First Trade Policy.” As part of this Memorandum, the President instructed the Secretaries of the Treasury, Commerce, and Homeland Security, and the Senior Counselor for Trade and Manufacturing, in consultation with the United States Trade Representative, to assess the loss of tariff revenues and the risks from importing counterfeit products and contraband drugs resulting from the use of the de minimis exemption and to recommend modifications as warranted to protect both the revenue of the United States and the public health by preventing unlawful importations. The changes proposed in the two rulemakings discussed above appear to be consistent with the instructions regarding the de minimis exemption in the America First Trade Policy. However, it remains to be seen what impact the Policy may have on the proposed rulemakings.
The White House also yesterday released a Memorandum entitled “Regulatory Freeze Pending Review,” in which the President directed all executive departments and agencies to (1) unless exempted under specific circumstances, not propose or issue any rule in any manner until reviewed and approved by a department or agency head appointed or designated by the President after noon on January 20, 2025; (2) immediately withdraw any rules that have been sent to the Office of the Federal Register but not published in the Federal Register, so that they can be reviewed and approved, and; (3) consider extended postponing effective dates of any rules published in the Federal Register by at least 60 days. It remains to be seen what impact, if any, the directives outlined in this Memorandum may have on the procedures of these proposed rules.
Cassidy Levy Kent
CLK can assist parties interested in evaluating the impact of the proposed regulations as well as in preparing and submitting comments. If you have questions or need assistance with any proposed new requirements for de minimis entry, please contact CLK’s Customs and Compliance team.