Recent efforts by both the White House and Congress show that momentum is increasing toward changes affecting the low-value shipments that dominate e-commerce.
Section 321 of the Tariff Act of 1930 allows for the informal entry of articles that have a retail value of $800 or less and are imported by one person in one day. These de minimis shipments are free of duty and taxes and are subject to expedited clearance processing. Section 321 imports account for a substantial share of all U.S. e-commerce imports by quantity and their value more than doubled from 2018 to 2020, and China is the leading source of such shipments by a large margin.
Because de minimis imports are subject to minimal documentation and inspection, there have been increasing concerns that they may be used to transport narcotics or goods that violate U.S. laws on forced labor, product safety, and intellectual property rights. In response, multiple bills have been introduced in the House and Senate this year seeking to restrict the use of Section 321, such as (1) prohibiting its use for goods from non-market economies (like China) or products subject to antidumping or countervailing duties and/or Section 301, Section 232, or Section 201 tariffs, (2) requiring a 10-digit HTSUS number for de minimis entries from countries subject to Section 301 tariffs, and (3) establishing new civil penalties for de minimis violations. The House Ways and Means Committee has already approved legislation with some of these provisions, and House Speaker Mike Johnson, R-La., has said he is working to have the House pass by the end of this year a package of China-related legislation that includes de minimis restrictions.
In the meantime, the Biden administration has used existing authorities to take steps of its own. U.S. Customs and Border Protection announced last fall a strategy to combat fentanyl and other synthetic drugs that included a commitment to crack down on unmanifested or mis-manifested de minimis shipments by employing progressive enforcement actions beyond seizure, to include penalties, liquidated damages, denial of landing rights, and landed quantity verifications. In April the Department of Homeland Security announced an enhanced strategy to combat illicit trade in textile and apparel products that includes improved screening of de minimis entries, including expanded targeting, laboratory and isotopic testing, and focused enforcement operations. Most recently, as part of what Acting Commissioner Troy Miller said is CBP’s “multi-layered enforcement approach to prevent abuse of the de minimis process,” the agency made several modifications to its entry type 86 test designed to expedite the entry of de minimis shipments and even suspended several companies from that test after determining that their entries posed an unacceptable compliance risk.
The White House has now signaled that it wants to build on these efforts. In a July 31 memorandum President Biden directed federal agencies to redouble their efforts to disrupt supply chains for fentanyl and synthetic opioids, which an administration official said “will lead to increased intelligence collection, increased coordination and cooperation, and increased disruption efforts.” While no further details were given, a White House fact sheet noted that CBP is already engaged in related efforts, including installing 123 new large-scale scanners at southwest border ports of entry that will increase inspection capacity of cargo vehicles from 17 percent to 70 percent.
Biden also called on Congress to pass legislation to “give border officials the tools they need to more effectively track and target the millions of small-dollar shipments that cross our borders every day.” A White House fact sheet explained that under this legislation “CBP would be granted the authority to demand additional documentation and other information about de minimis packages and would impose a corresponding penalty on violators.” The bill would also “add a user fee for de minimis packages to help pay for the staff and equipment needed to better identify, and seize, illicit fentanyl being shipped in small packages into our country.”
(While the bill would thus perpetuate a focus on commercial shipments, which the fact sheet said has included operations involving hundreds of federal personnel at container stations, warehouses, express consignment facilities, international mail facilities, airports, and ports of entry over the past two years, the White House itself acknowledged that “more than 90% of interdicted fentanyl is stopped at ports of entry where cartels attempt to smuggle it primarily in vehicles driven by U.S. citizens.”)
The White House made no mention of lowering the de minimis entry level, though DHS Secretary Alejandro Mayorkas said recently that his department is working to advance legislation to do that because the current level is making it difficult to enforce laws prohibiting imports of goods made with forced labor and other restricted items.
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