President Trump issued July 30 an executive order that will suspend commercial de minimis entries from all countries as of Aug. 29. Trump said he is taking this action under the International Emergency Economic Powers Act to prevent evasion of the “reciprocal” tariffs he imposed in response to a declared national emergency regarding U.S. trade deficits.
Background. The de minimis exemption currently allows the informal, duty-free entry of articles that have a retail value of $800 or less and are imported by one person in one day. However, a White House fact sheet said this exemption “has been abused, with shippers sending illicit fentanyl and other synthetic opioids, precursors, and paraphernalia into the United States in reliance on the lower security measures applied to de minimis shipments.” De minimis shipments also account for the majority of all cargo enforcement actions, the fact sheet said, and the skyrocketing number of such shipments has resulted in “significant lost revenue” from import duties.
De minimis treatment had already been eliminated as of May 2 for low-value packages from China and Hong Kong, which the White House said account for the majority of de minimis shipments to the U.S. In addition, the president recently signed into law a bill that will (1) terminate the de minimis exception for commercial shipments from all countries as of July 1, 2027, and (2) impose a penalty on those who use the de minimis exception before that date to import goods in violation of any other U.S. law ($5,000 for the first violation and $10,000 for each subsequent violation).
Applicable tariffs. Stating that he is acting more quickly than provided in that bill to “save American lives and businesses now,” the president has ordered that, effective with respect to goods entered or withdrawn from warehouse for consumption on or after 12:01 am EDT on Aug. 29, imported goods sent through means other than the international postal network that are valued at or under $800 and that would otherwise qualify for the de minimis exemption will be subject to all applicable duties, taxes, fees, exactions, and charges. Exemptions allowing U.S. travelers to bring back up to $200 in personal items and individuals to receive bona fide gifts valued at $100 or less duty-free will remain in place.
For packages shipped through the international postal system, carriers will be required to collect and remit (1) a duty equal to the effective IEEPA tariff rate applicable to the country of origin of the product, or (2) a duty ranging from $80 to $200 per item depending on the effective IEEPA tariff rate applicable to the country of origin of the product ($80 if the tariff rate is under 16 percent, $160 if the tariff rate is between 16 and 25 percent inclusive, and $200 if the tariff rate is above 25 percent). The latter option will be available for six months, after which all applicable shipments must comply with the other methodology.
The “effective IEEPA tariff rate” means the combination of all tariffs imposed under IEEPA to date, subject to the stacking rules established in April.
CBP processing. The president said he is taking this action following a notification from the Department of Commerce that adequate systems are now in place to “fully and expeditiously process and collect duties for articles otherwise eligible for duty-free de minimis treatment on a global basis.” The EO will therefore require shipments otherwise qualifying for de minimis treatment (other than those sent through the international postal network) to be filed using an entry type in the Automated Commercial Environment by a party qualified to make such entry. However, with U.S. Customs and Border Protection processing in excess of four million de minimis shipments each day, the trade community has raised concerns about CBP’s ability to complete formal entry procedures for such shipments in a timely manner.
Bonding. The EO authorizes CBP to require a basic importation and entry bond for informal entries valued at or less than $2,500. In addition, any carrier that transports international postal shipments to the U.S., by any mode of transportation, must have an international carrier bond to ensure payment of the duties described in this EO.
Severability. The EO provides that if any of the tariffs issued under the previous IEEPA EOs that are being challenged in court are ultimately deemed to be invalid, the suspension of duty-free de minimis treatment will not be affected.
This provision appears to be a response to a recent Court of International Trade decision that it could not overturn President Trump’s decision to suspend de minimis treatment for imports from China and Hong because the courts have already struck down the EOs implementing that decision in their entirety. The CIT evidently felt that the IEEPA tariffs and the de minimis prohibition were too intertwined to allow one to be overturned without also invalidating the other, and it appears that the president is trying to retroactively counter that holding.
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