Trade Experts Question Future of de Minimis

“There have been a lot of legislative efforts [and] a lot of lobbying efforts in the past 10 years to identify [de minimis] as a loophole, and that has been the thinking and on Capitol Hill and definitely within this [Trump] administration," said Cindy Allen, a trade consultant who heads the consulting firm Trade Force Multiplier. "So, I think we need to prepare ourselves for Section 321 going away, minimum for China, and then I think we'll start seeing it eroded more and more and more until it just is no longer a viable option for importation.”

Maggie Barnett, CEO of LVK Logistics, a 3PL specializing in apparel and beauty fulfillment, echoed Allen's sentiments.

“If the mandate [on Feb. 1 calling for tariffs on China] (see 2502030035) is to reduce fentanyl, increase revenues into the U.S. and increase U.S. jobs, why just stop at China?" Barnett said. She argued that a company should consider working with a 3PL "because we believe that there will just be that continued erosion. And you might as well just fast forward [through] that instead of trying to over-optimize and over-index in one country."

Trump's executive order calling for the removal of the de minimis exemption for goods made in China also would mean that these goods would need to be filed under Type 01 or Type 11.

While CBP could require a party that's filing a formal entry to also post a bond, it runs up against CBP's limited ability to regulate a foreign importer of record, Allen said.

To save on import costs, what some companies are trying to do now is clear everything on one entry, such as having 10,000 different shipments and grouping them by client and by Harmonized System code, ShipHero CEO Aaron Rubin said.

"Reducing the tariff is one thing, but actually reducing the brokerage cost is a significant cost. If you're going to do a formal entry and every line is going to be separate, you're going to run into a lot of brokerage fees," Rubin said. "The other question is around what cost. So, what we keep telling people is you need to work with a customs broker to figure out how to make sure that you are taking title of the goods in the country and your customers are not."

But one challenge for the industry will be keeping up with all the changes, which have seemed to come very quickly since President Donald Trump's inauguration on Jan. 20.

The whiplash of recent trade action is exhausting companies that are trying to keep up, according to Barnett, who recently attended Manifest, an annual supply chain and logistics conference.

"I'm fresh off of Manifest and having a lot of conversations with service providers as well as brands. And I'd say if I had to sum it up in one word, it's just fatigue around the conversation. They just want to know what the rules are going to be. ... They just want to be able to make decisions and start working again.”

Another challenge is ensuring open communication lines with regulating agencies, such as CBP and DHS, Allen said.

“I think the biggest change right now that I've seen in my entire career is that normal channels of communication, normal lobbying, normal reaching out to the agencies to help them understand how things are being impacted in the industry, are not working," Allen said. "All of the decision-making seems to be consolidated at the White House, and unless you have direct access to some of these individuals who have influence and sway with the president, it's very difficult to make a case that the industry is being impacted, or normal Americans are being impacted.

"The only thing that I see that they are actually hearing is, how many U.S. jobs is this tied to? How many is it going to create, and how do you bring back manufacturing in the sector to the United States? So [it's a] very, very different environment from any other administration that I've ever worked under or worked with," she continued.