The Biden-Harris administration has announced plans to limit the types of goods that can be shipped under the de minimis exemption. This exemption currently allows companies to avoid duties and taxes for imports below $800. The administration also plans to enhance information collection for such shipments. Although the official notices of proposed rulemaking have not been issued, the administration plans to exclude shipments containing products covered by certain tariffs from using the de minimis exemption. This would require additional data, such as tariff classification numbers and the filing of Certificates of Compliance, at the time of entry.
Call for Legislative Reform
The administration is urging Congress to pass reform legislation by the end of this year. The proposed legislation specifically calls for the exclusion of import-sensitive products like textiles and apparel from de minimis eligibility. This move comes after more than a year of mounting pressure to reform or eliminate the de minimis exemption. House Democrats have recently asked President Joe Biden to use executive authority to update policy related to the exemption.
Implications for U.S. Imports
According to the administration, Section 301 tariffs make up roughly 40% of U.S. imports. The proposed rulemaking would eliminate de minimis eligibility for such shipments, as well as those covered by Section 201 and 232 tariffs. The Retail Industry Leaders Association stated that these new rules would ensure that foreign businesses cannot exploit the de minimis privilege, thereby protecting American consumers and disadvantaged American companies.
Enhanced Information Collection
In terms of enhanced information collection on de minimis shipments, the Biden-Harris administration is proposing the inclusion of 10-digit tariff classification numbers and the name of the person claiming the exemption with each shipment. This action is expected to improve targeting of de minimis shipments and facilitate expedited clearance of lawful de minimis shipments.
Future Reforms and Congressional Action
The Biden-Harris administration has stated that further comprehensive de minimis reforms are needed, specifically by congressional action. The administration is also calling on Congress to pass previously proposed de minimis reforms related to fentanyl shipments. To date, multiple pieces of legislation have been introduced in both chambers, but no legislation has been passed by either the House or the Senate.
Impact on U.S. Textile and Apparel Manufacturers
The administration specifically noted the negative impact the de minimis threshold is having on U.S. textile and apparel manufacturers. As part of its proposed reforms, the administration announced its intention to increase procurement from U.S. sources and to continue to prioritize enforcement efforts against illicit textile and apparel imports. The National Council of Textile Organizations, a vocal supporter of eliminating the de minimis exemption, has welcomed this move as an important, common-sense reform and a critical first step.
