US Senators Propose Changes to Section 321 De Minimis Imports

A bipartisan group of senators recently released the Fighting Illicit Goods, Helping Trustworthy Importers, and Netting Gains (FIGHTING) for America Act, a bill that could significantly curtail the use of Section 321 de minimis entry procedures for shipments from overseas suppliers to US consumers—with China being a main focus. The proposed changes reflect a growing bipartisan effort to enhance import regulations and ensure compliance with trade laws.

The legislation, sponsored by Senate Finance Committee Chairman Ron Wyden (D-OR), Senate Banking Committee Chairman Sherrod Brown (D-OH), Senate Appropriations Committee Ranking Member Susan Collins (R-ME), and Senators Cynthia Lummis (R-WY) and Bob Casey (D-PA), is the most recent development that suggests US Congress may seriously consider changes to the de minimis tariff exemption.

Section 321 Imports

Section 321 and its implementing regulations provide that US Customs and Border Protection (CBP) will admit imported merchandise without payment of duties so long as the aggregate value of articles imported by one person on one day does not exceed $800. Imports that qualify for Section 321 treatment are subject to expedited clearance processing because they do not need a CBP Form 7501 entry summary or other types of documentation required for formal entries.

Instead, they can be entered using only a bill of lading or a manifest, meaning that there is no “importer of record” for customs purposes. There are restrictions on the types of goods that may be imported using Section 321 procedures, including merchandise subject to antidumping and countervailing duties, merchandise subject to quota, and merchandise subject to a tax imposed by other federal agencies on imported goods, such as alcoholic beverages and cigarettes. 

While Section 321 procedures afford importers certain time and cost benefits, members of Congress have expressed concern that Chinese e-commerce companies are using Section 321 to provide less robust data to CBP, avoid tariffs, and minimize the likelihood that the goods will be screened for compliance with forced labor requirements. The large volume and fast growth of imports from China through Section 321 procedures since 2018 has led to heightened congressional scrutiny and proposed legislation like the FIGHTING for America Act.

Proposed Legislative Changes

The primary amendments to Section 321 proposed in the FIGHTING for America Act include:

• Prohibition of certain categories of products from being imported through de minimis, including goods designated as “import-sensitive” under the Generalized System of Preferences (e.g., textiles, apparel, and leather goods)
• Collection of additional data by CBP to better target unlawful imports
• Streamlined seizure procedures and increased penalties for violations
• A fee of $2 per shipment when using the de minimis exemption.

This is not the only proposed legislation that targets Section 321 reform. In July 2024, US House of Representatives Speaker Mike Johnson laid out his vision for addressing challenges to the US-led international order in a speech at the Hudson Institute. That speech heavily focused on China and previewed an anticipated “China Week” to take place in the House in September 2024.

Speaker Johnson noted that the House would consider bills aimed at combatting Chinese influence, as well as recalibrating the current US-China economic balance. One of the issues highlighted for consideration by Speaker Johnson was de minimis reform, likely H.R. 7979, the End China’s De Minimis Abuse Act, which was approved by the House Committee on Ways and Means in April.

Looking Ahead

At the time of this bulletin, the most likely path forward for de minimis changes in the 118th Congress would be inclusion in the annual National Defense Authorization Act or an omnibus appropriations bill, both of which would likely come together later this calendar year. While it is impossible to say whether any bill will become law, it is important to keep abreast of these developments given the wide-ranging and significant impacts de minimis reform could have on business operations in the retail and e-commerce industries.

In the meantime, recent CBP actions have signaled increased scrutiny on low-value shipments entering the United States to ensure that such imports comply with US laws and regulations even without Congressional action. In 2019, CBP implemented the Entry Type 86 Test, which is a voluntary program that allows shipments meeting de minimis criteria to be entered by electronically filing a new type of informal entry. In implementing this program, CBP put the responsibility on customs brokers to exercise responsible supervision and control over Entry Type 86 imports.

In May 2024, CBP announced that it was enhancing its enforcement efforts to ensure that all Entry Type 86 Test participants are held accountable for compliance with Section 321 requirements, and that it had suspended multiple customs brokers from participating in the test after determining their entries “posed an unacceptable compliance risk.” CBP noted that this suspension was “part of a multi-layered enforcement approach to prevent abuse of the de minimis process, protect the integrity of the supply chain, and ensure that businesses comply with applicable US legal requirements.” Although this stance does not affect all importers using Section 321, it is reflective of CBP’s overall initiative to tighten procedural gaps that may lead to compliance concerns.

How We Can Help

Morgan Lewis lawyers stand ready to discuss the potential impact of the FIGHTING for America Act and/or other proposed amendments to the de minimis exception. Considering a potential effort at de minimis reform, our team can help companies explore key questions such as:

• What forms might de minimis reform take?
• How can we prepare for possible shifts in business operations in the event of congressional de minimis reform, including supplier and vendor management?
• How would de minimis reform impact consumer-facing statements?
• Are our current import practices and assess compliance with CBP requirements designed to ensure that shipments can continue to enter US commerce with minimal disruptions?

Government Relations Specialist David Mendelsohn contributed to this LawFlash.