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Flexport Says Companies Should Prepare for Smaller de Minimis Program

Flexport employees advised attendees on a webinar this week to prepare for a scaling back of de minimis, in case the rulemaking that removes goods subject to Section 301 tariffs moves forward.

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Marcus Eeman, a Flexport senior global customs manager, said he thinks it unlikely that all goods from China might become ineligible for de minimis, but that removing apparel from de minimis is likely. Sen. Ron Wyden, D-Ore., who will be the ranking member on the Senate Finance Committee in the next Congress, introduced a bipartisan bill that wouldn't allow "import sensitive" goods to qualify for de minimis.

Eeman said importers should buy a customs bond, and should make sure they have the right amount of warehouse space. If the goods they have been bringing in through de minimis would no longer be imported in that channel, companies may need to shrink their warehouse commitments.

He said they should calculate what the cost of goods would be with a $2 per package fee, and the duty, and what the prices would need to be.

"If de minimis gets canceled in three months, maybe you can’t buy at a profitable rate anymore," he said. "Which products would no longer be cost-effective to import?"

Jenn Park, Flexport trade advisory director, said companies should run an ACE analysis of what they imported each year for the past five years, and should calculate the tariffs that would be owed on Chinese imports if Trump follows through with his latest threat to hike tariffs on Chinese goods by another 10 percentage points on top of current tariffs.

"Classification is very important today, more so than ever," she added.

Eeman told attendees that CBP has gotten better at enforcement in de minimis, and is cracking down on consignee and address fraud, as well as vague descriptions. He recommended that importers put down a Dun & Bradstreet number or MID code for their foreign suppliers in Type 86 paperwork, as it usually allows for faster release.

If Section 301 goods are made ineligible for de minimis, an International Trade Today reporter asked, who will be responsible for ensuring that the low-value package doesn't contain those goods, and is eligible for this kind of entry?

Eeman said it will be difficult to keep those goods out of the de minimis stream. "We're not opening those packages," he said of customs brokers. "We can only use the information that our customers provide."

He noted that CBP told brokers earlier this year that a customs broker who is lied to about the contents of a package won't be in trouble (see 2406210053).

But, he said, in court, Customs has had a very different approach, saying that for Type 86, customs brokers are the importer of record. He referred to the lawsuit by Seko, since dropped (see 2407110053 and 2409030031), over its suspension from Type 86.

"This broker has argued their case in court. I’m very sympathetic to their side," he said. If customs brokers will be the ones to pay a penalty if they help to bring in goods through de minimis that do not qualify, that has wide implications, he said. Should the shipper be liable? The consignee? "It’s not a fully settled question yet," he said.