On 13th September 2024, the Biden administration announced plans to restrict low-value imports under the de minimis exemption, which allow goods valued at up to $800 to enter the US duty-free. The administration also called on Congress to pass reform this year, meaning changes could potentially be made before Black Friday weekend or Christmas. Read on to find out what this means for businesses shipping to the US.
First off, what is de minimis?
Many countries around the world have a de minimis threshold which means ‘too small to be taken into consideration’. Therefore, if the value of the product is under a country’s threshold it may be considered tax and duty free.
What does de minimis mean for e-com businesses?
The threshold varies from country to country, however, in some countries, where there are no de minimis exemptions, every import is subject to a full import declaration and corresponding duties and taxes are applied.
Where de minimis does apply, business can avoid import duties and taxes, allowing for competitive prices, improved margins and more streamlined customs clearance and delivery times.
What is the exemption threshold in the US and how is this about to change?
In the USA, the de minimis exemption was added to US trade law nearly 100 years ago and has become a key fixture in cross-border e-commerce deliveries. For a long time, the threshold was $200 but it went up to $800 in 2016.
However, the US administration has stated that in the last decade, many companies – particularly Chinese retail giants like TEMU and Shein – have taken advantage of the threshold to bring tons of low-cost goods into the country whilst paying little taxes.
This is a problem because it undercuts prices for many US companies. It also provides more opportunity for the movement of illegal and counterfeited goods.
In an attempt to protect more US companies that are selling higher-value goods and combat contraband entering the country via low-cost packages, the US administration plans to issue an executive order prohibiting items that are subject to certain tariffs from meeting the de minimis exemption.
Who will the changes to the US customs threshold affect?
The plans will almost certainly impact de minimis-reliant sellers. Temu and Shein are two of the biggest examples of companies with de minimis-reliant supply chains. The rule would exclude roughly 70% of textile and apparel shipments coming from China. It would also affect other sellers who circumvent these tariffs by shipping via China.
The rules, if confirmed, will exclude all shipments containing products covered by sections Section 301, Section 201 and Section 232. For smaller companies, the crack-down may not affect their sales as much, but they could see a ramping up of administration requirements, such as the enforcement of 10-digit tariff codes.
How can I prepare for changes like these?
If you are exporting goods to the US, it will pay you to be aware of the changes as and when they develop.
SAMOS can help guide you through these adjustments. We help to demystify the complex rules and regulations of global delivery systems. We handle everything – from customs to clearance – on behalf of our customers and we ensure that all prices are upfront and transparent. We’re here to keep shipping simple.
If you’d like to know more about de minimis, the proposed changes to US tax exemptions, or any other delivery conundrum, get in touch with SAMOS.
