Most Comments Oppose Ending De Minimis for 301 Goods; Almost All Ask for Long Transition

The proposed rule, dropped just as the Biden administration left office, echoes a bill that passed the House Ways and Means Committee last year. It didn't cover the new tariffs on China, which President Donald Trump also intended to exclude from de minimis eligibility. However, that move to terminate de minimis for Chinese products had to be postponed after just a few days, when the system was overwhelmed by the sudden change.

Several groups suggested that the foreign-trade zones system be used to process low-value direct imports, including the Ecommerce Innovation Alliance, a new trade group, as well as the National Association of Foreign-Trade Zones.

The EIA also asked that the goods carved out be narrowed, such as "certain categories" of goods from China that are more risky for trade violations, or targeting "known bad actors that have been found to violate forced labor laws or abused the de minimis exception."

Businesses will need months or a year to adjust, depending on how broad the changes will be, EIA wrote.

The American Apparel and Footwear Association didn't take a position on whether Section 301 goods should be excluded, but said FTZs should be allowed to send goods from within the zones to consumers under de minimis, and asked CBP to revoke its headquarters rulings banning that practice.

It noted that 960 million packages annually would require another entry type if Chinese goods are not eligible, and asked for at least a one-year delay between the publication of a final rule and its implementation.

The International Mailers Advisory Group, the EIA, the U.S. Chamber of Commerce, the National Foreign Trade Council and the Express Association of America all argued that the rule should be jettisoned because of its cost to consumers, particularly lower-income consumers, and the broader economy. Like many groups and Ebay, it noted that individuals would have no way to classify imported goods, but it suggested a solution, other than abandoning the effort -- requiring the merchant to calculate and collect revenues. "Platforms have the easily auditable retail sales value of each package and are not inclined to undervalue the item," IMAG argued.

How packages sent through the mail would be treated was a hot topic in the comments, as CBP itself suggested it would be challenging to apply the same rules to the U.S. Postal Service and commercial carriers.

IMAG said if packages sent through the mail either don't owe duty, or have fewer data requirements, the mail will become "the default channel for de minimis shipments once again, which does not resolve any of the concerns CBP has raised in the notices of proposed rulemakings. And yet, the global postal network does have challenges, which has caused it to lag in its ability to meet the standards of the other providers."

Since 75 million of the annual 1 billion or so de minimis packages come through the international mail, this matters, IMAG wrote. The USPS can collect duties -- it leaves a note for the recipient, who has to go to a post office to pay $8.85 in fees to USPS as well as the duties. But there needs to be a more efficient collection mechanism, IMAG wrote, so changes for the rest of the shipping sector should wait until that's ready.

The National Customs Brokers & Forwarders Association of America said this regulation "will not achieve the level of visibility and compliance needed to address the flow of illicit goods, including fentanyl or contraband, nor counterfeit or inadmissible goods threatening our national security," and said it was not realistic nor administrable.

The NCBFAA also noted that the administration had proposed carving out goods subject to the International Emergency Economic Powers Act from de minimis, so if the agency proceeds "it should at least promulgate regulations that promote clarity and certainty as to the range of circumstances that could preclude de minimis and not leave the trade to wonder or guess how CBP will handle such shipments." It said given the changeability in de minimis, the importer of record, with a bond, should be the same across all modes of entry.

The group, like some others, raised the problem of hybrid shipments, such as a package that has both a Chinese product and a Vietnamese product, one eligible, one not. "CBP should be able to collect duties and tariffs on the dress excluded from de minimis, while allowing for duty-free entry of the purse eligible for de minimis."

The National Foreign Trade Council wrote that for mail packages to have duties assessed, CBP will have to open each box, determine classification and which duties apply, make a manual mail entry, "and rely on the U.S. Postal Service to collect the assessed duties -- a documented area of underperformance for the U.S. Postal Service."

The NFTC said a $32 product no longer eligible for de minimis would cost $82 with a $32 customs broker payment and $15.20 in Section 301, IEEPA and most-favored nation, or MFN, combined duty.

It asked CBP to abandon this rule and said it would work with CBP to improve the first de minimis rule.

The U.S. Chamber of Commerce praised the first CBP de minimis proposed rule, which codifies and extends the Type 86 and 321 data pilots' approach, calling it "collaborative and deliberative," but said this rule is the opposite.

Like express shippers and the NFTC, the Chamber argued that this rule didn't comply with Executive Order 12866, which puts guardrails around planning new regulations, and said it should be canceled and resubmitted after careful deliberation.

The Chamber said that, currently, imports valued between $800 and $2,500 can use the informal entry process, and pay a processing fee of $2.62, but said that Chapter 99, which covers the trade remedies carved out from de minimis under this rule, cannot use informal entry, which would mean they'd incur a $32.71 merchandise processing fee.

The Express Association of America wrote that it asked for a meeting with the Office of Management and Budget's Office of Information and Regulatory Affairs when it saw the proposed rule on OIRA's list of actions under review, but was told on Jan. 14 that the review was already concluded.

"OMB normally takes up to 90 days to review a rule of this significance -- and, in our general experience, sometimes more than 90 days -- and to claim their review was completed in less than four days (most of which [comprised] a weekend) reflects a highly unusual action, if not outright impropriety," EAA wrote. It also said, "It is highly unusual for an economic benefit of the first NPRM to be removed by the second NPRM, all from the same agency during the same administration."

EAA tackled all of CBP's rationales for the rule in turn. It said it's unlikely that China would be more inclined to change its practices that the Section 301 tariffs are aimed at, given that it would only impose $6 billion to $8 billion in tariffs annually on Chinese goods. Since Section 301 began, EEA said, Chinese exports to the U.S. fell $99 billion, but its exports to other countries increased $1.1 trillion during 2018-2024.

EAA said that adding Section 301 duties to $20.5 billion in textile imports wouldn't change the competitive position of the domestic textile industry. The rule "estimates that 'sectors that benefit from the proposed rule, like apparel, textiles, and leather … would employ 5,900 more people in year 1,'" only 1.2% more than current employment. The same analysis said there would be about 97,000 fewer jobs across the country as a result of the changes.

"EAA agrees the imposition of 301 tariffs will cause former de minimis shipments to be consolidated into Type 01 and Type 11 entries, but whether this improves CBP’s inspection efficiency is questionable," the comment said, and argued that there will be less data on consignees under those modes of entry. "Since targeting is CBP’s only way to achieve inspection efficiency, we believe this is an important factor the agency has failed to consider in this NPRM."

The group said it's not clear whether express carriers would be required to submit 10-digit Harmonized Tariff Schedule codes for all packages, or could get a waiver, as described in the other de minimis rule. The companies want to retain that ability.

EAA argued that goods in Chapter 99 should be allowed to enter as informal entries if this rule goes forward, since it won't impact duty collection. It noted that CBP, in estimating how much the change would cost consumers, used the $2.62 MPF for informal entries, even though Chapter 99 goods aren't allowed to make informal entry. That mismatch is another reason the rulemaking should be withdrawn, it argued.

It suggested that CBP impose a flat fee on de minimis shipments to generate the same amount of revenue as the 301 tariffs, which would allow the goods to avoid broker fees and "burdensome paperwork processes."

Whatever the final rule looks like, "CBP must include a delayed effective date, followed by a lengthy period of informed compliance environment, to avoid chaotic effects at the border, including backlogs of millions of shipments."

The U.S. Postal Service wrote that it is obligated to accept parcels under international mail treaties, and it can require advance data on those shipments, but they are only allowed to prevent smuggling and for risk assessment targeting, not for assessing duties or as a requirement for entry.

The USPS said that if there are duties owed, its workers would have to collect the duty, $7.20 in customs fees to CBP, and $8.85 for its own customs clearance fees.

"If addressees refuse to pay those duties and fees, then USPS can be left with the unreimbursed costs," such as the cost to store and return the items abroad, and potentially, it would still owe duties to CBP.

It said sending exports subject to Section 301 duties would be more expensive by mail, companies would choose other avenues, "thus causing a likely steep decline in USPS business and a significant increase in shipping costs to American businesses and addressees."

It also noted that the restriction applies not to packages coming from China, but Chinese goods, no matter what country they're coming from -- and advance data does not cover country of origin. USPS said it can require purchases to include a six-digit HTS code beginning Sept. 1, but has no way to report to the level tied to 301 tariffs.

It asked CBP to create "a feasible means for collection of duties and any related data transmission from the originating countries that occurs prior to dispatch, including the continued transmission to the destination operators and CBP of certain data elements about the items in advance of dispatch from their countries."

FedEx argued that USPS does not have to accept all foreign packages up to 20 kg, as it can ban categories of prohibited items, and can "prohibit or regulate importation of merchandise that does not comply with trade or national security policies."

However, if it's going to continue to be an avenue for imported packages with Chinese goods, the rule should apply equally to postal and non-postal shipments, FedEx argued, citing 39 U.S.C. 407(e)(2). The idea that it would cause the USPS unreimbursed costs is not a good argument, FedEx wrote, as USPS could increase its $8.85 customs fee to cover those costs. It contradicted CBP's assertion that USPS is to be financially self-sufficient, noting it lost $9.5 billion in its most recent fiscal year.

FedEx said senders could pre-pay duties if destination postal operators agree, but USPS hasn't taken advantage of that. The company said that if rules are less in the postal environment, or if the Section 301 carve-out doesn't apply to mail, more goods will arrive through that channel, without the data elements required for effective screening "which would be completely contrary to the stated goals of this NPRM and the other CBP NPRM this one amends."

eBay argued that if it had to help its users determine 10-digit HTS codes, "it would be incredibly resource intensive." Adding duties under Section 301 "would likely take the consumer by surprise and likely wash out the value proposition of the item."

It argued that microenterprises with less than $25,000 in sales should be spared the requirements -- and that there should be an exception for used goods. It also asked for at least 18 months before the rule takes effect.

There were some comments in support of restricting de minimis among the 70 submissions, which closed March 24.

The National Council of Textile Organizations supports the carve-out, but wants a complete end to de minimis. If it is limited to Section 301, however, that will still cover about 75% of the shipments, based on a sample CBP did of Type 86 entries a few years ago. It noted that's 16% of all the goods that are covered by Section 301 tariffs.

The Committee to Support U.S. Trade Laws also supports the Section 301 carve-out in this rule, and IEEPA carve-outs proposed by the president. It asked that even imported gifts be required to report HTS codes.

Logitech said that with de minimis, companies that import goods in bulk are disadvantaged. "We strongly support CBP’s initiative to reduce the volume of de minimis shipments," the company wrote, and asked that IEEPA and balance of payments issues be part of future policy guidance.