The Biden-Harris Administration recently announced plans to tighten regulations on the de minimis exemption, a rule that allows goods valued at $800 or less to enter the United States without duties, taxes, or extensive documentation. These changes seek to curb the flow of duty-free textile and apparel imports from China.
“Over the last ten years, the number of shipments entering the United States claiming the de minimis exemption has increased significantly, from approximately 140 million a year to over one billion a year. This exponential increase in de minimis shipments makes it more challenging to enforce U.S. trade laws, health and safety requirements, intellectual property rights, consumer protection rules…”
White House Fact Sheet | September 13, 2024
SECTION 301 TARIFFS
One of the key changes involves prohibiting goods subject to major trade actions, including Section 301 tariffs, from qualifying for de minimis entry. Section 301 tariffs currently apply to about 40% of all U.S. imports, with 70% of textile and apparel imports from China falling under this category. The goal of this rule is to prevent companies from using the de minimis exemption to bypass tariffs, which are designed to protect U.S. industries from unfair competition.
DATA REQUIREMENTS FOR DE MINIMIS SHIPMENTS
The Administration is also planning a separate rule that would require additional information for de minimis shipments. This would include the submission of the 10-digit Harmonized Tariff Schedule (HTS) code and details about the recipient of the goods. This measure aims to enhance oversight by providing U.S. Customs and Border Protection (CBP) with better data to monitor imports and ensure compliance with trade laws.
In addition to the proposed regulations, the Administration is urging Congress to pass a bill that would further restrict de minimis eligibility, specifically carving out apparel from this exemption. The bill would also address the Section 301 goods, as legislative action is seen as a faster route to implementing these reforms. The Administration has called for these changes to be enacted by the end of the year to provide stronger protection for U.S. workers and businesses.
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