De Minimis Rulemaking Could Be Issued Piecemeal If Clock Runs Out

If only one is ready, CBP will publish it, rather than wait to publish a single notice with both.

If proposed changes to the processing of low-value packages don't go forward then, officials expect that CBP will continue to work on changes to de minimis in the next administration. It's definitely needed, an official said.

One of three trade officials who recently spoke with International Trade Today on background said some business interests are arguing that barring goods subject to Section 301 tariffs from de minimis sharply hike the consumer cost of those goods, estimating a $25 broker fee plus a merchandise processing fee (see 2306210053). It's estimated that about $23 billion worth of goods subject to Section 301 tariffs entered under de minimis in 2023.

It's not known how many packages that represents, but, by reviewing Type 86 entries, which include Harmonized Tariff Schedule numbers (and represent about 60% of de minimis entries), CBP found that 82% of the products were subject to Section 301 duties -- 585.43 million products in 2023. However, one package could have multiple products inside. CBP officials don't know if the Type 86 stream is perfectly representative of the entire de minimis stream but think it's a fair approximation, given that the proportion of de minimis entries using Type 86 keeps getting larger.

The CBP official doubts the assertion by some business groups that a small package would owe a $25 broker fee. The official said many businesses are already paying broker fees for Type 86 entries, and those fees aren't that high. The same business groups have said that CBP would need to hire tens of thousands of officers to handle the changes.

CBP isn't ready to say how many more officers it would need if de minimis rules change, as it's in the process of finalizing a study on the matter, and it will report to Congress what it expects its staffing needs will be.

A CBP official said the agency would incur additional costs associated with changes to the treatment of small package imports. She said a $2 per package fee for all low-value packages, whether eligible for de minimis entry or not, is needed to buy more nonintrusive screening equipment for CBP facilities that handle air cargo arrivals, keep adding equipment at international mail facilities and express carrier hubs, and hire more officers. Express carriers already pay $1.31 a package (see 2410090040).

The $2 fee can't be added through rulemaking; it requires legislation. CBP is seeking that fee, a minimum $5,000 first-time penalty for packages that break the rules, as well as the ability to discard abandoned packages and packages with contraband through a streamlined process.

One of the agency's goals with its legislative requests and its rulemaking is to shrink the volume of goods entering in the small-package environment, but it's hard to project how the changes might affect business decisions, a CBP official said.

You can't assume that all the current de minimis packages that would no longer have that eligibility would become Type 11 entries, she said, because businesses may realize that bringing in a container of goods is more cost-effective, given the merchandise processing fees, transportation costs, duties and the greater ability to claim deductions when calculating valuation when importing in bulk. It's not reasonable to think it's not going to change at all, CBP believes, but knowing how much will change, and on what timeline is very difficult to know until the law changes.

CBP officials also talked about how a $5,000 minimum penalty would work. The agency has discretion on levying fines. However, the officials said they're not interested in going after consumers who bought goods online but didn't even know they were importing them directly. Rather, officials will be watching for a pattern of violations, asking a business to make changes to correct the behavior, and, if changes don't come, then they will build the case for a penalty.