Stricter rules loom for low-value US imports

[UNITED STATES] The United States government has announced plans to implement more stringent regulations on low-value imports entering the country under the de minimis rule. This move aims to address growing concerns about the influx of goods, particularly from China, that have been bypassing customs scrutiny and potentially posing risks to American consumers and businesses.

The de minimis exemption, established under Section 321 of the Tariff Act of 1930, allows goods valued at $800 or less to enter the United States duty-free and with minimal customs screening. This threshold was raised from $200 to $800 in 2016, leading to a significant surge in low-value imports, especially through e-commerce platforms.

The Surge in De Minimis Shipments

Since the threshold increase, the number of de minimis shipments has skyrocketed:

• In fiscal year 2022, there were over 685 million de minimis shipments
• The U.S. Customs and Border Protection (CBP) now processes an average of more than 4 million de minimis imports daily
• De minimis imports have grown from approximately 140 million shipments annually to over 1 billion in recent years

Concerns Driving the Proposed Changes

Several factors have prompted the U.S. government to reconsider the current de minimis rules:

National Security Threats: There are concerns about the entry of illegal and unsafe goods, including illicit drugs like fentanyl.

Unfair Competition: Many China-founded e-commerce platforms are exploiting the exemption, potentially undercutting American workers and businesses.

Circumvention of Trade Enforcement: Some companies may be using the de minimis rule to avoid tariffs and other trade enforcement actions.

Consumer Safety: There's a risk of non-compliant products entering the U.S. market without proper safety checks.

Proposed Changes to De Minimis Rules

The Biden administration has outlined several key changes in its proposed regulations:

1. Exclusion of Certain Products

The new rules would exclude from the de minimis exemption all shipments containing products covered by:

Section 301 tariffs (which currently cover about 40% of U.S. imports, including 70% of textile and apparel imports from China)

Section 201 tariffs (covering products like washing machines and solar panels)

Section 232 tariffs (related to steel and aluminum products)

2. Enhanced Data Collection

The proposed rules would require additional information for de minimis shipments, including:

• The 10-digit tariff classification number
• The identity of the person claiming the de minimis exemption

3. Stricter Compliance Requirements

The Consumer Product Safety Commission (CPSC) intends to propose a final rule requiring importers of consumer products to file Certificates of Compliance electronically with CBP and CPSC at the time of entry, including for de minimis shipments.

Potential Impact on E-commerce and Trade

The proposed changes could have significant implications for various stakeholders:

For Consumers

• Possible increase in prices for low-value imported goods
• Potentially longer wait times for international shipments
• Enhanced product safety and authenticity assurance

For E-commerce Platforms

• Need to adapt business models, especially for platforms heavily reliant on direct-to-consumer shipments from China
• Potential decrease in the competitiveness of certain imported products

For U.S. Businesses

• Potential leveling of the playing field for domestic manufacturers and retailers
• Increased protection against unfair competition from overseas

For International Trade

• Possible retaliation from trading partners, potentially affecting U.S. exports
• Shift in global supply chains, with some businesses potentially moving production to countries not targeted by these measures

Reactions and Perspectives

The proposed changes have elicited mixed reactions from various quarters:

Pete Flores, the acting head of CBP, emphasized the importance of the new measures:

"Every day, the men and women of CBP interdict goods that threaten the health and safety of Americans as well as the economic vitality of our country. This proposed rule will help to give us some of the tools we need to address more of these threats."

However, critics argue that the changes could harm consumers and small businesses that rely on affordable imports. Some experts suggest that the full elimination of de minimis could result in significant additional costs:

"The full elimination of de minimis would impact more than 1 billion shipments – in total, valued at $54 billion – and would result in $8 billion to $30 billion in additional annual costs that would eventually be passed on to consumers."

Looking Ahead: Implementation and Challenges

The proposed changes are still in the early stages, with the U.S. Customs and Border Protection agency (CBP) issuing a Notice of Proposed Rulemaking. This process allows for public input and review, and legal challenges from pro-trade groups are expected.

Key dates and expectations:

• The proposed rule changes could be implemented within 60 to 120 days, potentially impacting holiday purchases in 2025.
• The Biden administration is urging Congress to pass legislation to comprehensively reform de minimis laws, which could accelerate and expand these changes.

The proposed changes to the de minimis exemption represent a significant shift in U.S. trade policy, aimed at addressing national security concerns, protecting domestic industries, and ensuring consumer safety. While these measures may help combat the abuse of the current system, they also pose challenges for e-commerce businesses and could impact consumer prices.

As the global trade landscape continues to evolve, particularly in the realm of e-commerce, finding the right balance between facilitating trade and ensuring proper oversight remains a complex challenge. The coming months will be crucial as stakeholders navigate these potential changes and adapt their strategies accordingly.

For businesses involved in cross-border e-commerce, staying informed about these developments and preparing for potential changes in import procedures will be essential. Consumers, too, should be aware that their online shopping experiences for international goods may soon look different.

As the situation develops, it will be important to monitor how these proposed changes impact various sectors of the economy, from retail to manufacturing, and how they shape the future of global trade in an increasingly digital world.