Update: White House Joins in Dialogue on De Minimis Reform

The Biden administration announced on September 13, 2024 its intention to use executive authority to limit the use of the de minimis exemption and encourage Congress to take comprehensive legislative action, adding to the recently elevated discussion about de minimis reform.

To reduce the volume of shipments under the de minimis exemption, the White House intends to issue a Notice of Proposed Rulemaking that would exclude from the de minimis exemption all shipments containing products covered by the tariffs in Sections 201 (steel, solar, and other imports) and 301 (textiles and apparel imports) of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.

The White House also proposes to issue a Notice of Proposed Rulemaking to enhance the information required for imports, including the 10-digit tariff classification number and the person claiming the de minimis exemption.

Both of these proposed rules align with the proposed Senate legislation Fighting Illicit Goods, Helping Trustworthy Importers, and Netting Gains (FIGHTING) for America Act, outlined in our earlier LawFlash. An additional rule aimed at product safety is to be proposed by the Consumer Product Safety Commission (CPSC) requiring importers of consumer products to file Certificates of Compliance (CoC) electronically with US Customs and Border Protection (CBP) and the CPSC at the time of entry, including for de minimis shipments.

The White House announcement further outlined legislative action to strengthen the proposed rulemaking and further amend and limit use of the de minimis exemption. Finally, the administration announced its intention to explore ways to protect American textile and apparel manufacturers and workers from unfair competition, including enhanced enforcement against unlawful imports by targeting small package shipments, joint trade special operations, increased customs audits and foreign verifications, and additions to the Uyghur Forced Labor Prevention Act Entity List.

Although no proposed rule or action in the announcement is immediately effective, it is important to note the growing chorus of bipartisan support for comprehensive de minimis reform. The White House announcement has received a positive response from Congress, including from Chairman John Moolenaar (R-MI) who stated, “The administration’s action today is a critical step toward gathering the information necessary to target illegal shipments and level the playing field for US retailers.”

Taken together with the proposed FIGHTING for America Act and H.R. 7979, the End China’s De Minimis Abuse Act, which was approved by the House Committee on Ways and Means, the focus on de minimis reform seems to be gathering momentum.

HOW WE CAN HELP

Morgan Lewis lawyers stand ready to discuss the potential impact of potential de minimis reform and how to respond, including filing comments during the rulemaking process, preparing for shifts in business operations when and if regulations are finalized, addressing consumer-facing statements, and assessing compliance with CBP requirements.