On September 13, 2024, the Biden-Harris administration expressed its strong focus on reforming trade and customs legislation, specifically the De Minimis Exemption. These changes in the shipping process can potentially impact operations during high-demand periods like Black Friday. Shippers must stay informed and adapt their strategies to navigate the evolving regulations and ensure smooth operations amidst the upcoming changes.

The De Minimis Exemption

To ship goods internationally, businesses need to pay charges related to duties or taxes. With the De Minimis Exemption, a shipment below $800 is considered low value. Therefore, it can enter a country without being subject to duties or taxes. On top of that, the United States requires less information and minimal customs processing for these shipments, which results in faster and more affordable international shipping for many businesses. 

During peak sales periods like Black Friday, such legislation allows e-commerce retailers to benefit from low costs and fast delivery times for international shipments. Currently, over a billion shipments a year claim the de minimis exemption. According to the White House, the high number made it harder to enforce US trade laws. It specifically slows down the targeting and blocking of illegal or unsafe shipments, which caused them to express their strong focus on reforming this legislation.

Comprehensive Legislative Reforms on De Minimis

Before a legislation reform is finalized, it must go through the rulemaking process, which requires publication of the proposed changes and impact, a public comment period, review and response to public comments, and finalization of the rule. However, the current administration issued a Notice of Proposed Rulemaking, which allows the whole process to be cut down to 60-120 days. 

If the administration proceeds quickly with the implementation, here are some changes that may be experienced even before Black Friday:

1. Shipments under Sections 201, 301, or 232 of the Trade Act of 1974 and the Trade Expansion Act of 1962: Section 301 of the Trade Act 1974 allows the U.S. President to tackle unfair trade practices that harm U.S. products or burden U.S. exporters. This provision protects American industries from discriminatory or harmful trade practices. It applies tariffs to about 85% of products imported from China. If the reform is finalized, shipments subject to specific tariffs under US trade law must submit to existing duties and tariffs.

2. Elimination or Reduction of De Minimis Threshold: The current $800 threshold might be lowered or eliminated, subjecting even smaller shipments to tariffs, taxes, or stricter import regulations.

3. Stricter customs inspections: Even low-value shipments must undergo more stringent customs inspections, making it harder to enter the country duty-free. This also means shipments must go through thorough checks for health, safety, and regulatory compliance.

4. Increased Documentation and Tracking: Importers and businesses, even the small ones, might be required to provide more detailed information, paperwork, and compliance requirements on their shipments. 

What’s Not Changing:

Despite the potential introduction of new rules, some core elements of the current policy will remain unchanged. Here are some of them: 

1. Identification Requirement for De Minimis Claims: Even before the reform, identifying the person making the de minimis claim was a requirement, and it will continue as such, but now as a formal policy.

2. Type 86 (T86) Classification: Low-value shipments will still be classified under Type 86 using a 10-digit Harmonized Tariff Schedule (HTS) code for admissibility and reporting.

3. Exclusion of Specific Goods: Under the current CBP policy, shipments under Anti-Dumping (AD) or Countervailing Duties (CVD) will remain excluded from de minimis treatment.

Potential Impacts Businesses Should Watch Out For

The potential reform directly affects consumers and businesses, especially on high-volume shopping events like Black Friday. Here are the two most significant effects the reform might have on both businesses and consumers:

• Increased Costs for E-Commerce: Without the de minimis exemption, businesses must pay additional duties and tariffs on low-value shipments that previously entered duty-free. This can result in higher consumer shipping costs and reduced business profit margins. 

• Longer Shipping: Since stricter customs regulations will be implemented, delivery delays could become more common, disrupting the fast-paced shipping timelines consumers have come to expect during peak shopping events like Black Friday.

Outpace Shipping Challenges with Gori Company’s Expert Solutions

The reforms have yet to be finalized, and pro-trade groups under the Administrative Procedure Act are actively working and taking every legal action to delay their implementation. However, you must stay informed by following reputable news sources for the latest updates on the situation.

Navigating these changes can be intimidating, but Gori Company’s ShipBae makes it more accessible. Our multi-carrier shipping rate solution helps you effortlessly manage potential increases in shipping costs. With our Smart Rate Tool, you can optimize shipments to save money, ship faster, and make smarter shipping decisions. Just input your package details, and let us handle the rest. You can monitor delivery statuses and manage your shipments effortlessly through our all-in-one platform. 

Contact us now to start optimizing your shipments!