Section 321 Entry: Major Changes to De Minimis Shipments Under Biden Administration

Introduction: A Shift in De Minimis Policy

In a move that could significantly impact the logistics and e-commerce industries, the Biden Administration has announced sweeping changes to the de minimis exemption for low-value goods entering the United States. This executive action, issued on September 13, 2024, aims to reshape how businesses utilize the $800 de minimis threshold for duty-free imports. As we approach the busy holiday season, these changes are poised to create ripples across global supply chains, particularly affecting shipments from China.

Key facts from the announcement include:

• Potential denial of de minimis treatment for products subject to Section 301, 201, and 232 tariffs
• Increased reporting and documentation requirements for low-value shipments
• Possible implementation as early as November 2024, affecting holiday season imports
• Focus on enforcing the Uyghur Forced Labor Prevention Act (UFLPA)

Understanding De Minimis and Section 321 Entry

Before delving into the changes, it's crucial to understand what de minimis and Section 321 entry entail. The de minimis provision, part of Section 321 of the Tariff Act of 1930, allows for the duty-free entry of shipments valued at $800 or less. This has been a boon for e-commerce businesses and consumers alike, enabling faster, more cost-effective importation of low-value goods.

Section 321 entry, particularly entry type 86, has been widely used for these de minimis shipments. It has allowed businesses to bypass extensive paperwork and avoid duties on qualifying imports, streamlining the process for bringing goods into the country.

Key Changes to De Minimis Shipments

1. Restrictions on Products Subject to Specific Tariffs

The most significant change is the potential denial of de minimis treatment for products subject to:

• Section 301 tariffs (affecting approximately 85% of products from China)
• Section 201 tariffs (impacting items like washing machines and solar panels)
• Section 232 tariffs (affecting steel and aluminum industrial products)

This change could dramatically reduce the number of products eligible for duty-free entry under the de minimis threshold, particularly those originating from China.

2. Enhanced Reporting Requirements

The new regulations are expected to increase entry data requirements for de minimis shipments. Businesses may need to provide:

• More detailed information about recipients (adhering to the "one importer per day" rule)
• Identification of additional supply chain participants (manufacturers, sellers, consignees)
• More specific descriptions of goods (e.g., "100% cotton men's T-shirt" instead of simply "T-shirt")

3. Consumer Product Safety Commission (CPSC) Enforcement

The new rules will likely require importers to file CPSC testing certificates or General Certificates of Conformity (GCCs) at the time of entry for all shipments, including those under the de minimis threshold. This is a significant change from the current practice where these certificates are only required upon request.

4. Mandatory 10-Digit HTS Reporting

All de minimis entries, including manifest clearances, will be required to report the 10-digit Harmonized Tariff Schedule (HTS) code. This change may necessitate the use of licensed customs brokers for businesses that previously handled their own clearances.

5. Increased UFLPA Enforcement

The new regulations direct Customs and Border Protection (CBP) to increase enforcement of the Uyghur Forced Labor Prevention Act through more audits, operations, and foreign verifications.

Impact on Businesses and Supply Chains

These changes are set to have far-reaching effects on businesses that rely on de minimis shipments, particularly those importing from China. Some potential impacts include:

• Increased costs due to duties on previously exempt goods
• Longer processing times for shipments due to additional documentation requirements
• Need for more detailed supply chain tracking and record-keeping
• Potential disruptions to just-in-time inventory systems
• Increased complexity in compliance and customs procedures

Preparing for the Changes

While the exact implementation timeline is not yet clear, businesses should start preparing for these changes immediately. Here are some steps to consider:

1. Review Your Import Portfolio

Analyze your current imports to identify which products may be affected by the new regulations. Pay particular attention to goods originating from China or those subject to Section 301, 201, or 232 tariffs.

2. Update Product Classifications

Ensure all your products have accurate 10-digit HTS codes. This may require working with customs experts or investing in classification software.

3. Enhance Supply Chain Visibility

Improve your ability to track and document all aspects of your supply chain, from manufacturers to end recipients. This will be crucial for meeting the new reporting requirements.

4. Review Compliance Procedures

Assess your current compliance procedures and make necessary updates to ensure you can meet the new requirements, particularly regarding CPSC certifications and UFLPA compliance.

5. Consider Alternative Shipping Methods

Explore alternative shipping methods or consolidation strategies that might help mitigate the impact of these changes on your business.

How FreightAmigo Can Help Navigate These Changes

At FreightAmigo, we understand the challenges these new regulations pose to businesses relying on de minimis shipments. As a digital logistics platform, we are uniquely positioned to help our clients adapt to these changes quickly and efficiently. Here's how we can support you:

1. Real-Time HTS Code Verification

Our digital platform can help ensure that all your shipments have the correct 10-digit HTS codes, reducing the risk of delays or complications at customs.

2. Enhanced Shipment Tracking

With our advanced tracking capabilities, you can maintain visibility of your shipments at all times, making it easier to provide the detailed information required under the new regulations.

3. Automated Documentation

Our system can help automate the creation and submission of required documentation, including CPSC certifications and detailed product descriptions, saving you time and reducing errors.

4. Customs Clearance Assistance

We can connect you with expert customs brokers who are up-to-date on the latest regulations, ensuring smooth clearance for your shipments.

5. Alternative Shipping Solutions

Our platform allows you to compare various shipping options, helping you find alternative routes or methods that may be more cost-effective under the new regulations.

6. Compliance Support

We can provide guidance on UFLPA compliance and other regulatory requirements, helping you navigate the complex landscape of international trade.

Conclusion: Adapting to a New Era of De Minimis Shipments

The changes to Section 321 entry and de minimis shipments represent a significant shift in U.S. import policy. While these new regulations pose challenges, they also create opportunities for businesses to streamline their processes and improve their supply chain management.

As we navigate this new landscape together, FreightAmigo is committed to providing the tools, expertise, and support you need to adapt and thrive. By leveraging our digital logistics platform, you can turn these regulatory challenges into opportunities for growth and efficiency.

Stay ahead of the curve and ensure your business is prepared for these changes. Contact FreightAmigo today to learn how we can help you navigate the evolving world of international logistics and de minimis shipments.