Media

Key Takeaways

• The Biden administration on September 13 issued two Notices of Proposed Rulemaking (NPRM) that once implemented will restrict access to de minimis exemptions to U.S. customs examinations and duties. The White House stepped in after Congress showed itself unable to quickly act on the matter.
• The “de minimis” exemption under Section 321 of the Tariff Act of 1930 allows goods valued at less than USD 800 to enter the United States under expedited customs review processes and free of duties and taxes. The White House will issue two rules to 1) remove de minimis exemptions for shipments containing products (mostly from China) that are subject to special Section 201, 301, and 232 tariffs, and 2) increase reporting requirements for goods claiming a de minimis exemption.
• If implemented as proposed, the rules will restrain the booming “fast-fashion” business, particularly Chinese companies Shein and Temu, and perhaps increase U.S. retailers’ and apparel-makers’ competitiveness over the longterm.
• But changing de minimis measures may also decrease revenue for U.S. ecommerce platforms that host de minimis import resellers and could impact revenue for internet platforms that sell ads to Chinese e-commerce companies.
• The White House hopes the new rules will also help block small-lot shipments of illegal drugs, and reinforce U.S. laws trying to block the use of cotton from the Xinjiang region in China, as a reaction to China’s use of forced labor among minority populations there.
• Moving forward, the White House’s approach to de minimis may be substantially adjusted, due to public comments, private sector lobbying, the arrival of a new president, and the impact of continued Congressional debate and lawmaking on the topic.