DHS, Treasury, and CBP Seek to Modify the De Minimis Exemption from Duties and Fees for Low Value Shipments, Including to Prohibit Products of China Subject to Section 301 Duties from De Minimis Eligibility

Key Points

• On January 14 and 21, 2025—straddling the end of the Biden and beginning of the second Trump Administrations—U.S. Customs and Border Protection (CBP) issued two notices of proposed rulemaking (the “Proposed Rules”), which would impose significant regulatory changes to the entry of certain low-value shipments — often referred to as de minimis shipments — that are exempt from the payment of duties. CBP’s purported rationale for the Proposed Rules is to reduce the risk of violations such as fentanyl smuggling, counterfeits, and undervaluation.
• The January 21 Proposed Rule includes one of the most significant modifications, being that CBP proposes to prohibit merchandise subject to certain special tariffs—e.g., Section 301 tariffs applicable to almost all Chinese-origin imported goods—from benefiting from de minimis. This prohibition would mean importers and e-commerce providers—and, correspondingly, consumers—would have to ensure the payment of duties, taxes and fees on any shipment of Chinese-origin goods subject to Section 301 tariffs, even if the shipment would, otherwise, be eligible for de minimis (e.g., be valued at $800 or less). Importers, including qualifying e-commerce marketplaces, of these low-value Chinese-origin goods would also have to follow a more burdensome entry process and file additional entry documents and information to enter the goods.^[1]
• The January 14 Proposed Rule proposes the implementation of two entry processes for de minimis shipments: (1) a “basic entry process,” which is similar to the current informal entry process for de minimis shipments that provides for their release from CBP custody based on presentation of a bill of lading; and (2) an “enhanced entry process,” which is similar to the Entry Type 86 Test and which would be required to be used for de minimis shipments subject to partner government agency (PGA) requirements. Under the enhanced entry process, importers would have to provide additional shipment information not currently required under the law. Importantly, the Proposed Rules collectively propose to extend the requirement to provide the 10-digit HTSUS number to generally all shipments claiming the de minimis exemption—whether using the basic entry or enhanced entry process—which is a significant change to the data collection requirements under existing law relevant to de minimis shipments.
• The January 14 Proposed Rule also proposes other changes, including clarification on which party qualifies as the “one person” eligible for the de minimis administrative exemption.
• President Trump issued a Presidential Memorandum on January 20, calling for the Departments of Homeland Security, Treasure, Commerce, United States Trade Representative and the White House to assess the de minimis exemption and recommend additional improvements to protect revenue and public health. President Trump also issued a Memorandum on January 20 that requires all executive departments and agencies to not issue any rules until a Trump appointee reviews and approves the rule, which could delay implementation of the Proposed Rules.

Background

19 U.S.C. § 1321(a)(2) authorizes administrative exemptions from duty, tax, and formal entry procedures for shipments of certain imported articles, including articles valued at $800 or less. The importing community often refers to these shipments as “de minimis shipments.”  The $800 de minimis exemption is subject to the condition that the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from duty cannot exceed $800. Also, the exemption will not apply if merchandise covered by a single order or contract is forwarded in separate lots to obtain the benefit of duty- and tax-free entry.  Under current law, de minimis shipments may enter the United States under certain informal entry procedures in 19 C.F.R. Part 143, Subpart C.

Through these entry procedures, de minimis shipments may enter the United States by presentation of certain information included in a bill of lading or a manifest listing each bill of lading. Importers do not have to file formal entry documents (e.g., Customs Form 7501) for de minimis shipments—or pay duties, fees or taxes on the merchandise covered under de minimis shipments. The importing community often refers to the Part 143 informal entry procedure as the “release from manifest” process.

Currently, the Departments of Homeland Security and Treasury and CBP process over 4 million de minimis shipments, valued at $800 or less, into the United States each day. Following the 2016 increase of the de minimis limit from $200 to $800, and according to CBP, the number of de minimis shipments entering the United States has grown from approximately 139 million shipments in 2015 to over 1 billion in 2023.

On September 13, 2024, the Biden Administration announced in a Fact Sheet that it intended to announce significant modifications to the requirements applicable to de minimis shipments to address the increase in the use of de minimis, which has further challenged CBP’s ability to enforce U.S. laws and consumer protections and to block illicit drugs, particularly fentanyl, from entering the country.

Also, in 2024, a bipartisan group of Senators introduced legislation focused on stopping the import of illicit goods by restricting the use of the de minimis exemption for imports that are subject to trade remedy prohibitions. This legislation would also require CBP to collect more information about commercial packages and increase penalties for bad actors. Members of the China Select Committee have also expressed concerns over the volume of de minimis imports entering the United States.

CBP already has existing authority under 19 U.S.C. § 1321(b) to modify by regulation the de minimis exemption for any reason to protect revenue or unlawful importations – which is what, purportedly, CBP has used to issue the Proposed Rules. It is unclear what further authority from Congress would be needed to restrict de minimis import volumes.

January 14, 2025 Notice of Proposed Rulemaking

The first proposed rule—i.e., the January 14 Proposed Rule—aims to establish two processes for entering de minimis shipments: (1) the already-existing “release from manifest” process with relevant changes and which the law will now refer to as the “basic entry process” under 19 CFR §143.23(k); and (2) the “enhanced entry process” under proposed 19 CFR §143.23(1), a new process that mirrors the Entry Type 86 Test.

In a January 17, 2025 press release, CBP Acting Commissioner Flores stated that “there is more to be done … CBP will continue to innovate within our current authorities, and we urge the private sector to maintain their vigilance. To achieve comprehensive de minimis reform and trade modernization, we urgently need statutory updates.”

The January 14 Proposed Rule clarifies that merchandise subject to PGA requirements (e.g., Food and Drug Administration (FDA)) must utilize the “enhanced”—and more burdensome—entry process. This process would also require data to be transmitted to CBP in advance of arrival of the shipment to allow for CBP to timely conduct targeting and offer expedited release. CBP proposes to adopt the same time frames as currently applicable for filing advance electronic data under regulations promulgated pursuant to the Trade Act of 2002. For example, a vessel cargo filing must be received by CBP 24 hours before cargo is laden aboard the vessel at the foreign port. For air cargo, the filing must be received by CBP no later than the time of departure of the aircraft for the United States, or no later than four hours prior to the arrival of the aircraft in the United States (applicable to aircraft departing from North America, Mexico, Central America, South America (north of the equator), the Caribbean, or Bermuda.

The enhanced entry process will differ from current law in that additional data will be required to be filed as follows:

• Clearance tracing identification number.
• Country of shipment of the merchandise.
• 10-digit classification for the merchandise in Chapters 1-97 (and any additional classification in Chapters 98-99, if applicable) of the Harmonized Tariff Schedule of the United States (HTSUS), unless the HTSUS waiver privilege has been obtained and asserted, and the merchandise is not subject to the requirements of other government agencies.
• One or more of the following:
  • The uniform resource locator (URL) to the marketplace’s product listing.
  • Product picture.
  • Product identifier.
  • Shipment x-ray or other security screening report number verifying completion of foreign security scanning of the shipment.

In addition, the January 14 Proposed Rule would include certain conditional data elements for the “enhanced entry process” that must be submitted if they apply, including advertised retail product description and marketplace name and website or phone number. The January 14 Proposed Rule also looks to create an HTSUS waiver that would allow certain approved entities to use the enhanced entry process without providing an HTSUS number in certain cases.

Under the January 14 Proposed Rule, the current default clearance process for qualifying low-value shipments, known as the “release from manifest” process, would continue to be offered with some modifications, and will be referred to as the “basic entry process.” The basic entry process may not be utilized for goods subject to PGA data requirements. One of the biggest changes under the “basic entry process” from the current “release from manifest” process is that, for each shipment, a required data element is the “name and address of the person claiming the exemption from duty and tax” under 19 C.F.R. § 10.151 or § 10.152—which would be defined under the new regulations as the “owner or purchaser of the merchandise imported on one day.”

The Proposed Rule provides that it is possible that the party who is eligible for the exemption is different from the party authorized to make the entry under 19 C.F.R. § 143.26(b). The Proposed Rule seeks to clarify that if one individual receives over $800 fair retail value of shipments, then all shipments, destined for that individual, imported on that day become ineligible for the de minimis exemption. The Proposed Rule also recognizes that, under 19 C.F.R. § 10.151, that merchandise for which the exemption is being claimed must be entered by a party authorized to make entry under 19 C.F.R. § 143.26(b).  CBP also seeks to require the name and address of the final deliver-to party, if distinct from the party eligible for the administrative exemption. This will enable CBP to know whom and where the merchandise is destined for delivery in the United States, and the value of goods going to one person eligible for exemption on one day. CBP also proposes to remove the name and address of the ultimate consignee, which is currently required, to avoid the duplication of data.

Notably, the January 14 Proposed Rule—which, in the importing community, is largely driven as an effort to curb the nefarious use of the de minimis administrative exemption as a way to illegally import fentanyl and other contraband into the United States—does not subject mail importations under 19 C.F.R. Part 145 to the same requirements. The express carrier community, which will be significantly impacted by the Proposed Rules, has seen more enforcement and scrutiny from CBP in recent years as the government has indicated that bad shippers are trying to use express courier industry as a way to smuggle illegal goods into the United States.

The U.S. government has historically not held the U.S. Postal Service to the same standards or enforcement measures as express consignment operators even though it is evident that mail is likely being used just as often by bad actors to enter illegal goods into the United States. The U.S. Postal Service has also avoided customs compliance obligations. This Proposed Rule nonetheless purports to allow CBP to require the enhanced entry process on mail importations, which as a practical matter would be imposed on the sender and recipient of low value parcel post, and not the U.S. Postal Service.

Comment Period

Comments must be received on the January 14 Proposed Rule by March 17, 2025. Comments should be submitted through the Federal eRulemaking Portal via docket number USCBP-2025-0002.

January 21, 2025 Proposed Rule

Under the second Proposed Rule – released within the same week as the January 14 Proposed rule, CBP proposes to make merchandise that is subject to specified trade or national security actions ineligible for the de minimis administrative exemption and to require that certain shipments claiming the de minimis exemption provide the 10-digit HTSUS classification of the merchandise. CBP broadly estimates that this will affect 15.9% of imports covered by Section 232, 201 and 301 that are currently exempt from additional duties.

Under the January 21 Proposed Rule, importers would have to pay tariffs on all goods subject to an ad valorem tariff pursuant to Section 232, 201 or 301. Importers of such goods would then have to pay both the additional duties owed under a specified trade or national security action and regular customs duties when the value is below $800. To enable CBP to determine which entries are ineligible for the de minimis exemption, CBP also proposes requiring a 10-digit HTSUS classification for all shipments of de minimis merchandise entered using the basic or enhanced entry processes. Therefore, while the January 14 Proposed Rule did not require the provision of HTSUS codes for goods entered under the “basic entry” process, the January 21 Proposed Rule applies this requirement to all de minimis shipments.

CBP states in the January 21 Proposed Rule that this new measure should improve its ability to accurately identify the contents of a shipment claiming the administrative exemption even if it does not contain goods subject to a trade or national security action under Section 232, 201 or 301. Given that many of these goods currently use manifest clearance to enter the United States (where a “precise” description of the merchandise is required, but no HTSUS), CBP states that having HTSUS classification data will improve CBP’s ability to identify violative shipments.

Comment Period

Comments must be received on the January 21 Proposed Rule by March 24, 2025. Comments should be submitted through the Federal eRulemaking Portal via docket number USCBP-2025-0003.

Further Related Action From The Trump Administration

On his first day in office, President Trump issued a Memorandum outlining his trade and economic policies to executive agencies. The Memorandum instructs agencies to assess the loss of tariff revenues and the risks from importing counterfeit products and contraband drugs that each result from the current implementation of the de minimis exemption, and to recommend modifications to protect U.S. revenue and public health by preventing unlawful importations. President Trump also released a Memorandum requiring all departments and agencies to freeze the rulemaking process until a Trump-appointed department or agency head review and approves the rule. This may ultimately mean that implementation of the Proposed Rules is delayed, or that final implemented rules will change the de minimis exemption through different means.

Considerations for the Importing Community

• Importers—and other impacted members of the importing community, including shippers, e-commerce platforms and express carrier providers—will need to assess how a de minimis prohibition on Section 301, 232 and 201 goods will impact their business. Inevitably, it will mean that additional costs will need to be paid and decisions will need to be made on how to account for these costs.
• The importing community also needs to review the list of additional information required and begin to determine where to identify this information for the purpose of both the “basic” and “enhanced” entry process—planning ahead will be the best plan to minimize disrupting supply chains and distribution channels once the Proposed Rules are implemented.

Akin has a robust customs team and extensive experience in advising on compliance, enforcement and remediation activities related CBP and related supply chain concerns. If you have questions about this alert and would like assistance in responding to CBP inquiries, or would like to discuss potential impact of these Proposed Rules, contact our team.

^[1] By Executive Order on February 1, 2025, President Trump imposed additional tariffs on products of China and prohibited entirely the use of the de minimis exemption for such products. The tariff and de minimis prohibition went into effect on February 4, 2025. Although the President may suspend this Executive Order, like he has already done for ones imposing tariffs on products of Canada and Mexico, he has not done as of the date of this publication. See Akin’s Alert on the three Executive Orders here and Akin’s Executive Order Tracker here.