U.S. Customs & Border Protection recently submitted a proposal to the Office of Management and Budget that would eliminate the $800 de minimis exemption for goods subject to Section 301 tariffs.
De Minimis and its Section 301 exemption of duties/tariffs
De Minimis refers to the program requiring CBP to clear free of duties and taxes any shipment of merchandise having a fair retail value in the country of shipment not exceeding $800. Importers of shipments valued below $800 were exempt from Section 301 duties.
The proposal Excepting Merchandise Subject to Section 301 Duties from the Customs De Minimis Exemption comes as a final review before the publication of a new rule that is sure to impact e-commerce and small-parcel shippers heading into the holiday season. This is especially so given that many Section 301 tariff exclusions expired at the beginning of September and the administration appears increasingly disinclined to grant new product exclusions.
Compliance Issues for Importers
It seems that this proposed change is intended to target e-commerce shipments that are collectively high volume, but below the $800 threshold, individally. Removing the de minimis exemption will create the listed compliance issues below for importers of low value goods.
1. Tariff classification will become more relevant because Section 301 does not apply to all tariff provisions equally;
2. Country of origin of the imported goods becomes more relevant. Section 301 China duties apply only to goods on Chinese origin. As a result, importers who assumed that goods were of Chinese origin may now need to evaluate the production processes and inputs of their goods to ensure that they are indeed of Chinese origin.
Note: Goods properly entered under Section 321 de minimus provisions are currently not subject to Section 301 duties, by taking advantage of this exception, many small businesses have been able to avoid the additional tariffs on their imports from China that would otherwise have been payable.
Need More Information?
GHY’s Section 301 – Search Tool can help you easily navigate through the complex array of Section 301 tariffs and product exclusions. Search by HTSUS number (i.e. 0304.61.0000; decimals are required, or the first 4 digits i.e. 0304), or search by product description (with a word/few words).
If you have any questions about Section 301 product exclusions or Section 321 programs, don’t hesitate to contact one of our helpful trade experts today.