Market insights

De minimis compliance—what you need to know

Are your imports compliant?

Read our expert article on de minimis and make sure your imports are aligned with this important regulation.

Article last updated 30. October 2024

What businesses need to know about upcoming import measures. As de minimis reforms take shape, e-commerce businesses are adapting to protect consumers and compete globally.

This article draws on insights from our customs team and industry experts to provide a comprehensive overview of upcoming changes to de minimis regulations.

We consulted with Derek McKenny, Global Customs Development Manager, The Americas and Matthew Clark, Director of Trade Consulting, North America, who highlighted the importance of adapting to these changes proactively.

Proposed reforms could redefine what it means to import goods under de minimis, challenging businesses to adapt or risk falling out of compliance.
Matthew Clark
Director of Trade Consulting, North America

Getting familiar with the de minimis rule

The de minimis rule—a legal principle exempting duty-free treatment of low value imports—allows goods valued at $800 or less to enter the United States duty-free under Section 321 of the Tariff Act of 1930. Initially set at $200, this threshold was raised in 2016, significantly boosting e-commerce, and making customs processes for low-value goods much easier.

While this rule has facilitated the entry of affordable products, particularly from China, it has also raised safety and compliance concerns. Some goods can bypass scrutiny by U.S. Customs and Border Protection (CBP) and other Partner Government Agencies. These include the Environmental Protection Agency (EPA), the Food and Drug Administration (FDA), and the Consumer Product Safety Commission (CPSC), highlighting potential risks for U.S. consumers. The rise of online shopping has further fuelled the influx of low-value imports, such as electronics and apparel, causing scrutiny over safety and compliance.

Matthew Clark comments:

With products slipping past scrutiny under the de minimis exemption, we must ask ourselves: what rules and compliance measures are being avoided and what non-compliant products are inadvertently allowed into our markets under the de minimis rule?
Matthew Clark
Director of Trade Consulting, North America

The data showing the surge in de minimis imports:

Fiscal year	Total section 321 BOLs (de minimis)
FY 2018	410.5 million
FY 2019	503 million
FY 2020	636 million
FY 2021	771.5 million
FY 2022	685.1 million

Source: CBP Trade Statistics

The increasing volume of de minimis shipments—over 685 million in fiscal year 2022—highlights the urgent need for regulatory oversight, particularly as these goods often come without comprehensive safety evaluations.

What to know now about de minimis

On September 13, 2024, the Biden administration issued an executive action aimed at addressing the abuse of the de minimis exemption, particularly concerning imports from China. The proposed measure could eliminate de minimis treatment for imported products subject to Sections 301, 201, and 232 tariffs. This change will likely lead to higher prices for many U.S. businesses that rely on these exemptions, outweighing any potential delays in transit. This shift comes as part of a broader strategy to ensure that trade practices align with national security interests and protect U.S. manufacturing.

While the reforms are designed to protect U.S. workers and consumers, they will also affect businesses importing low-value goods. Specifically, the executive action could deny de minimis treatment to products subject to Section 301 duties, which are in place to address unfair trade practices impacting approximately 85% of products from China. It also applies to Section 201 duties covering items like washing machines and solar panels, as well as Section 232 duties related to steel and aluminium products.

As a result, these shipments may face standard reporting, bond, and documentation requirements similar to those of any standard freight entry. This could lead to increased operational costs for businesses and longer lead times for low-value shipments, ultimately affecting pricing strategies and market competitiveness.

Derek McKenny adds:

We are finding that many ecommerce customers are now questioning their current supply chain ‘set-up.’ More and more are now considering direct consols into the Americas area for distribution into the U.S. from either Canada or Mexico. In fact, some are considering larger DC’s in the U.S. to accommodate high volume B2C parcel business pre-labelled at origin.
Matthew Clark
Director of Trade Consulting, North America

How to prepare

Accurate classification: use the 10-digit Harmonized Tariff Schedule (HTS) code for all imported products to comply and avoid penalties.
Strengthen documentation: be prepared to document the identity of individuals claiming de minimis exemptions and provide detailed descriptions of goods.
Consumer safety compliance: make sure that all consumer products meet CPSC requirements, potentially requiring electronic Certificate of Compliance (CoC) for de minimis shipments.
Supply chain transparency: implement tracking systems to comply with information collection requirements.
Engage competent customs brokers: hire informed licensed customs brokers for guidance on compliance with new regulations.
Staff education: organise training sessions to familiarise employees with regulatory changes and their operational implications.
Stay informed: monitor legislative developments related to de minimis reforms to adapt quickly to any changes.
Risk management strategies: develop strategies for identifying and mitigating compliance risks through audits and checklists.

What’s next

The Biden administration plans to issue a Notice of Proposed Rulemaking that could implement changes affecting de minimis shipments within 60 to 120 days, potentially impacting holiday purchases. This process allows for regulatory changes without Congressional approval, but public input and review will follow. Legal challenges from pro-trade groups are expected to delay implementation.

Key aspects of the executive action include stricter identification requirements for claimants and a 10-digit HTS classification for de minimis entries.

Derek McKenny explains:

Businesses should proactively classify products at the 10-digit level to prepare for potential increases in documentation and duty costs. They must understand the product's essential character and explore “tariff engineering,” where modifying a semi-finished or finished product can result in a different HTS tariff classification. For example, a semi-finished good that is part of an assembly or a raw material, when completed, may be exempt from Section 301 tariffs.
Derek McKenny
Global Customs Development Manager, The Americas

Need help?

Navigating these upcoming de minimis reforms can be challenging. Connect with Kuehne+Nagel’s team of experts to learn how to adjust to these changes, while staying compliant with new regulations.

Matthew Clark affirms:

As an industry, we are invested in ensuring that our customers are compliant and secure. We’ve been around for a long time and will continue to adapt to stay ahead of the curve in this changing landscape.
Matthew Clark
Director of Trade Consulting, North America