Removing de Minimis as an Option Could Give Rise to More B2B2Cs, NCBFAA Panelists Say

“A couple weeks ago, when we first planned our panel, I think there were lots of open questions about what’s going to happen with de minimis, but I think a lot of those are answered,” said Rob Fickeisen, customs brokerage compliance supervisor for UPS Supply Chain Solutions and member of the NCBFAA regulatory agencies committee, speaking on a panel discussion April 9.

“I mean, we have executive orders telling us, as soon as the government has the ability to collect everything, that it’s not gonna be there” and instead, goods will have to be filed using a formal or informal entry, Fickeisen said.

As a result of the potential disappearance of the de minimis exemption, a business model that could arise is B2B2C, wherein an entity between the importer and the private citizen serves as the party that will be on the record for paying the duties, according to panelist Amber Hagewood, senior manager of regulatory compliance for FedEx Logistics and NCBFAA customs committee member.

This is because private citizens may be the ones responsible for paying the duties for low-value goods, but private citizens may be hesitant to provide their Social Security numbers as an identifier and serve like an importer of record.

“I do think there’s going to be a shift consolidation in the B2B2C space. So I think you're going to see a lot more formal entries as a result for de minimis,” Hagewood said. “This could be a negotiating tool, just like the tariffs, with other countries. There are ACE edits in place that can prevent a particular country from going through as de minimis.”

The B2B2C concept is similar to trade practices employed in Europe, according to panel moderator Lenny Feldman, managing partner at Sandler Travis and NCBFAA customs and general counsel. Customs brokers are able to see in the transaction what is being imported, while the business in the middle of this relationship serves as an importer of record.

Instead of e-commerce orders being directly fulfilled by an overseas seller, orders are made through a U.S. business, Hagewood said. The U.S. business makes the purchases from an overseas supplier, and that supplier ships many small orders in bulk to a distributor. The distributor maintains title to the goods until after they're imported.

However, what is uncertain is the type of business that could serve in this function, including whether it could be a foreign entity or a marketplace entity such as an e-commerce platform or a money merchant, according to panelists.

“We’re seeing a lot of foreign parties who are wanting to set up business in the U.S. and be a U.S. importer of record,” Hagewood said.

There also are some challenges that come with the B2B2C model, according to Hagewood. For instance, if one shipment receives a detention notice, then all goods under the entry could be held up. There are also liabilities that come with serving as the importer of record, including adhering to CBP’s expectation that there is no forced labor in the supply chain. Importers of record also must meet standards for reasonable care or else face penalties, she said.

“We need to be having proactive customer conversations to help them understand the impact of their business, educate them on the changing requirements. … This is a very large business opportunity for the broker. … More formal entries are to be required, which means more business for brokers, whether that’s filing entries or expanding advisory or consulting services,” Hagewood said. “So, as brokers, we can position ourselves as subject-matter experts and provide that value to your clients by helping them adjust and stay ahead of these regulatory changes. You want to ensure that your solutions are scalable, so evaluate your systems, your workflows, [and] consider whether automation [can] reduce friction and help increase efficiency in the face of these higher volumes.”