This week CBP expressed their annoyance, twice, with processing 4 million packages a day and not collecting a dime. They published two press releases (links at the bottom) announcing a significant shift in their approach to de minimis imports. These sub $800 value shipments currently enjoy minimal scrutiny and duty-free entry. These proposed changes, outlined in two Notices of Proposed Rulemaking (NPRMs), will have very significant consequences through the import landscape, particularly for businesses heavily reliant on the de minimis exemption such as Shein and Temu.
For context, in 2024, 1.36 Billion packages came in whereas in 2014 it was 139 Million - a 10 X increase. The value of the goods in 2024 was declared at $54 Billion. Imputing a 20% duty on that would bring in revenue to the government of almost $11 Billion a year.
What's Changing?
The core of these proposed changes revolves around increased data collection and stricter enforcement. CBP aims to gain greater visibility into the 4 million de minimis packages entering the U.S. daily, allowing them to charge duties and better identify and intercept illicit or high-risk goods. This means importers will be required to provide more detailed information about their shipments electronically before they arrive in the U.S.
Why the Change?
CBP cites several reasons for this shift, including concerns about:
Illicit Goods: The surge in de minimis shipments has made it harder to detect illegal drugs (fentanyl in particular), counterfeit goods, and other contraband hidden among legitimate imports.
Unfair Competition: CBP argues that the current de minimis threshold gives an unfair advantage to foreign (read Chinese) businesses, particularly those engaging in questionable labor or environmental practices.
Consumer Safety: Ensuring the safety of goods entering the country, especially those that may pose health risks, is a driver behind the increased scrutiny.
I suspect they may also be frustrated trying to get their teenage children to pick up all the twice worn clothes they bought on Shein off their bedroom floors.
Impact on Importers
Speaking of Shein, and other importers who have built their business models around the de minimis exemption. These changes could have a significant impact:
Increased Costs - Duties. Yup, payments will now have to be made based on the value of the merch coming in.
Increased Costs - Admin and Operational: More stringent data requirements and potential delays at customs mean higher operational costs.
Supply Chain Disruptions: increased scrutiny will disrupt existing supply chains and lead to delivery delays. This is part of CBPs aim and fits in squarely with their forced labor mandate.
Loss of Competitive Advantage: If the de minimis exemption is curtailed or eliminated for certain goods, it could erode the price advantage enjoyed by some importers. This being said, there are analyses out there that show that adding duty payments will increase costs but that the cost savings of direct to consumer is still advantageous versus a model of importing en masse and moving to distribution centers, retail and eCom outlets.
What's Next?
These proposed rules are still under review, and the exact details of their implementation remain to be seen. However, it's clear that CBP is taking a more assertive stance on de minimis imports. Importers should closely monitor these developments and prepare for a future where relying solely on the de minimis exemption may no longer be a viable strategy.
These changes are not surprising. In a recent call with Aaron Alpeter at IZBA, he observed that “I’m not surprised with this at all. Changing these rules has become a bipartisan issue and it looks like an easy way to score political points.”
Similar changes in de minimis were proposed by the EU in 2023 and are likely to hit importers into the European Union some time next year.
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