Low value woe-ohs: e-Commerce buyers and de minimis rules

de minimis rules

It’s not our fault that the pandemic accelerated a shift to e-commerce by five years in less than a year and a half. But those buyers are increasingly having their orders fulfilled directly from foreign countries or from facilities set up just outside of America’s borders. The de minimis rules which raised the ceiling to $800.00 as part of the Trade Facilitation and Trade Enforcement Act (TFTEA) signed into law in 2015 have meant that buyers can order much higher value items and place larger orders without paying duty.

The de minimis level saw a four-fold increase at once – going from $200.00 to $800.00. The catch, though, is that the Section 321 rules state that it is one low-value shipment per importer, per day. From CBP: 

Section 321 Program -Section 321, 19 USC 1321 is the statute that describes de minimis. De minimis provides admission of articles free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800.”

Whether sent directly from overseas to a U.S. buyer or held in a warehouse just over the U.S. border in Canada or Mexico (see this great explainer thread that sideswipes Amazon for their employment practices), it is entirely possible that a typical buyer is purchasing multiple items from multiple platforms, retailers or sellers daily without so much as a thought on how those orders are shipping or being fulfilled.

For customs brokers like Argents and others, we can prepare and send these entries to Customs electronically – what is called a Type 86 entry. These Type 86 entries are usually grouped by the hundreds, if not the thousands, as an entire truckload or container of individual sales are presented to CBP at an air, land or sea port of entry.

What happens, though, if the sunglasses and the new dress, bought from two different sellers, arrive at the border on the same day? Remember, the rule is one person on one day. Logistics companies are finding that U.S. Customs and Border Protection are refusing to release multiple shipments to the same consignee on the same day, meaning that packages are being held up in transit.

Argents works closely with our clients to find solutions that minimize the impact of de minimis rules and trade regulations that buyers aren’t aware of but can negatively affect a seller’s online reputation for shipping and delivery. There are options, including the traditional entry process (either formal or informal entry) that allows for an unrestricted number of entries to be made daily for an importer. The use of Section 321 and Type 86 entries were advanced even further with the imposition of Section 301 tariffs on many items exported from China. The Biden Administration has maintained those tariffs, with seemingly no end in sight and despite external corporate pressure. So sellers are rightly taking advantage of ways to get goods to buyers, while keeping costs down in the face of record freight rate increases and insufficient capacity to get everything to market.

At the end of the day, and even when the pandemic has been controlled, buying habits have changed and traditional, large-footprint retail will likely not be returning anytime soon. As buying patterns pivot, partner with Argents to ensure that the final mile between seller and buyer is as short and direct as possible.

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