77% of Low-Value Packages Would Owe Duties Under Proposed Rule

The notice says that CBP estimates, based on a random sample of more than 6 million Type 86 entries, that 77% of shipments that entered under de minimis would owe duties under the proposal -- and the average duty would be 21.2%, their analysis said.

It would be up to the Trump administration to promulgate the final rule. His first administration was working on a similar rule, but never got to the notice of proposed rulemaking stage. The Republican-controlled House of Representatives also passed a bill along these lines last year.

Because CBP needs to know the classification to determine if goods can enter duty-free under this regime, CBP is proposing to require a 10-digit Harmonized Tariff Schedule code on all packages -- including those cleared off manifest, in addition to packages in the "enhanced entry" stream the agency described in an earlier proposed rule that would replace the Type 86 process. It called this a modification of the previous proposed rule.

It is not clear whether this rule also modifies the element of the previous proposal which would have allowed some companies, with a history of accurate classification and identification of goods subject to partner government agency review, to apply for a waiver to the HTS submission requirement for enhanced entry.

CBP was not able to provide a clarification by deadline; the de minimis expert at the National Foreign Trade Council also said the notice of proposed rulemaking was unclear on that point.

The agency anticipates that fewer exporters will choose to ship direct to consumers, given the fact that there will be broker fees ranging from $1 to $30 per package, depending on the type of carrier, a $2.53 merchandise processing fee, and, in a majority of cases, there will no longer be tariff savings. They did not make a precise estimate of how many goods would shift to containerized imports and distribution within the U.S., but said, "absent the ability to avoid tariffs, importers are likely to be incentivized to reduce per-unit shipping costs by consolidating items in bulk shipments."

Because of the uncertainty of how the market -- and consumers -- would adjust, the agency modeled two scenarios. One is where all the goods that aren't using Type 86 now, leave de minimis, and therefore, the primary cost to consumers is just the additional tariffs. The other scenario assumes direct importation from China continues apace, and customers have to pay broker fees, MPF and tariffs on each package. The first scenario means $10 billion additional costs to consumers in 2025; the latter results in more than $18 billion in additional costs.

The agency models that it would collect $7.8 billion in new tariff revenues in the first scenario, but only $5.9 billion in the other, because consumer demand would fall because of the higher prices.

But in either case, the government said that because the revenue from these tariffs would be so substantial, it "anticipates that the amount of additional revenue to be collected under the proposed exception would substantially outweigh the expense and inconvenience to the U.S. Government of collecting the duties."

While the cost to consumers is higher than the monetary gain to the government, the agency says the changes are justified by both the improved security position CBP would have and the protection for U.S. companies competing with Chinese firms. CBP has said that attempting to screen 1.36 billion de minimis shipments in FY 2024 makes it hard to find contraband such as pill presses, fentanyl and chemical precursors to synthetic opioids.

“We cannot let Chinese-founded e-commerce platforms gain an unfair trade advantage while American businesses play by the rules,” National Economic Adviser Lael Brainard said in a press release announcing the rule. “Today’s actions are an important step forward to level the playing field for American workers, retailers, and manufacturers and to enforce U.S. laws that protect the health and safety of our consumers.”

The rule says about 50% of the value of de minimis shipments is textiles and apparel subject to Section 301 goods -- and that almost 16% of imports that would be subject to those tariffs are avoiding them by entering this way, lowering the effectiveness of the action.

National Council of Textile Organizations CEO Kim Glas said her group welcomes the proposal, which she called "significant and meaningful," and said the flow of apparel is costing American jobs. "This is an important and much overdue reform," she said. "We urge CBP to expedite the rulemaking process to the fullest extent possible and appreciate the agency’s strong engagement with our industry. Further, we strongly urge the incoming Trump administration to not only endorse this proposed rulemaking but to expeditiously implement a comprehensive solution to the growing de minimis problem beyond the action announced today."

Glas called on Congress to work "on a permanent and comprehensive solution to immediately close this disastrous loophole once and for all," while also calling on the new administration to end de minimis entirely through an executive order. Rep. Rosa DeLauro, D-Conn., also asked Trump to do this in a letter she released to the public Jan. 16, before the rule was released.

John Pickel, senior director of international supply chain policy at the NFTC, said in a response to an e-mailed request for comment: "Degrading de minimis in this way will increase inflation, cost the government more than it would collect, damage U.S. supply chains, and won’t enhance enforcement capability. The current $14 billion benefit of de minimis is that it lowers the cost of everyday items for American consumers in the lowest income zip codes, and this change could substantially undo that benefit."

The agency referred to an academic study that said poorer households buy more from places like Temu and Shein, and said those households would have 25% more of a financial hit than the typical household. However, it projected that the overall effect on inflation would be quite small -- increasing the average cost of imported goods by less than a third of one percent if more goods shift to containers, and increasing the cost by a half-percent if current business trends continue.

Pickel argued: "Government capacity to process cargo at entry ports is already experiencing a 5,000-officer deficit. The officers that would need to enforce this change are the same officers that enforce immigration laws at our ports. Requiring the inclusion of Harmonized Tariff Schedule classification for products that average $54 in value amounts to spending $20 in already-scarce resources to collect $13."

The rule discussed how 58% of de minimis shipments are brought via commercial non-express Type 86 entries with an additional 1% of Type 86 entries filed by express carriers. Entries brought in by express carriers and cleared off the manifest, which currently do not require HTS codes, cover 17% of the volume, with another 16% non-express carrier manifest entries. About 8% of de minimis shipments come by international mail.

It said it expects release from manifest to become much less common, since "this proposed rule would require a 10-digit HTSUS classification under both the basic and enhanced entry process. As a result, importers will likely opt for enhanced entry, with its faster clearance times, given that the difference in administrative costs between the basic and enhanced entry processes will become negligible."

Goods that are subject to Section 301 or Section 232 duties, but have exclusions, would also be barred from de minimis, and would have to be entered through an informal or formal entry -- but the exclusions would be honored, so no special duty would be collected, CBP said.

The agency acknowledged that applying this new regime to international mail would be challenging. "While CBP has included international mail in the scope of this proposed rulemaking, CBP seeks public comments that address the operational feasibility in the international mail environment," the notice said.

It may exclude international mail from this rule, it said, but it would undertake additional rulemaking on the issue specifically for mail.

Pickel added: "This dynamic will also push volume to the mail environment where there are actual documented enforcement and compliance challenges. The proposal even notes that special processes will be needed in the postal environment, so CBP may not ultimately apply these requirements to international mail."

Comments on the rule are open for 60 days after the Jan. 21 publication in the Federal Register, and can be submitted at https://www.regulations.gov, docket number USCBP-2025-0003.