On September 13, the Biden-Harris administration announced new actions to address "significant increased abuse" in the use of the de minimis import exemption. The de minimis import exemption allows low-value shipments (i.e., shipments valued at $800 or less in the aggregate to one person on one day) to enter the United States duty free and through a streamlined entry process that requires minimal data. The proposed package of de minimis reforms is expected to impact all importers using the de minimis exemption, but enforcement will likely focus on shipments from the People's Republic of China (PRC) and shipments of textiles and apparel.
Since the de minimis threshold was raised from $200 to $800 in 2016, the value of overall shipments utilizing the de minimis threshold—and thus, the volume of shipments subject to lesser duties and reporting requirements—has ballooned, from $140 million to over $1 billion today.
The administration's actions, in coordination with United States Trade Representative (USTR), U.S. Customs and Border Protection (CBP), and Consumer Product Safety Commission (CPSC), are threefold:
- USTR will publish a Notice of Proposed Rulemaking (NPRM) to prohibit shipments containing products subject to tariffs under Section 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962, from using the de minimis exception.
- CBP will publish an NPRM requiring additional data collection for de minimis entries. Specifically, the NPRM is expected to require the reporting of the applicable 10-digit classification number under the Harmonized Tariff Schedule of the United States and the identity of the person or entity that is claiming the exemption.
- CPSC will issue a proposed final rule requiring importers of consumer products to file Certificates of Compliance electronically with both CBP and CPSC, even for de minimis shipments.
Importantly, there will be an opportunity for public comment on the actions noted above.
The administration also announced that it was prioritizing textile and apparel enforcement, that it will increase customs audits and foreign verifications for these products, and that it would increase enforcement activities related to the use of forced labor, including compliance with the Uyghur Forced Labor Prevention Act, for textiles. It also announced that it would explore procurement opportunities domestically for textile production to increase job growth in the United States.
Finally, the administration urged Congress to take action to exclude all textile and apparel shipments from the de minimis exemption and to further codify the proposed agency actions.
If you have any questions regarding how these changes may impact your business or if you are interested in submitting comments on either of the forthcoming NPRMs or the CPSC proposed final rule, please reach out to Venable's International Trade and Logistics Group.