AMERICA’S DE MINIMIS program

HAS BEEN HIJACKED

U.S. customs law provides significant economic and administrative advantages to foreign e-commerce distributers at the expense of American companies and workers.

  • DUTY-FREE (including Section 301 China tariffs), direct-to-consumer shipments from foreign e-commerce distributers are undercutting American retailers.

  • Limited U.S. Customs and Border Protection (“CBP”) oversight on these shipments allows bad actors to more easily skirt anti-dumping and countervailing duties, bans on products made from forced labor, and consumer health and safety standards.

cbp Estimates 1 billion packages entered the united states under de minimis shipments in FY2023

amounting to nearly 3 million packages a day

See CBP Data on E-Commerce Statistics Here

U.S. E-commerce sales ACCOUNTED FOR 15.6% of RETAIL Sales In Q3 2023

comared to 8.1% in 2016

See U.S. Census Bureau Retail Trade Data Here

BACKGROUND

  • What is de minimis entry?

    Established by the Smoot-Hawley Tariff Act of 1930, and now codified under 19 U.S. Code § 1321(a)(2)(C), de minimis entry was created to ease the administrative burden, reduce costs and accelerate the clearance process for low-value shipments and travelers crossing the U.S. border. Although the provision has evolved since its creation, its intent remains the same.

    Today the provision is largely used by travelers returning home with souvenirs purchased on vacation and for e-commerce shipments.

    For the latter to qualify, shipments must be valued at $800 or less, and be directly shipped to one buyer, on one day.

    Eligibility is assessed when the good is physically imported into the United States.

  • What are U.S. FTZs?

    Congress created the U.S. Foreign Trade Zone (“FTZ”) program in 1934 to encourage U.S. companies to maintain and expand domestic operations. These are designated geographical areas in which commercial merchandise is treated as if it is physically outside the customs territory of the United States.

    U.S. FTZ benefits include streamlining logistics, improving compliance controls, increased competitiveness for U.S. manufacturing, reducing certain CBP fees, and quota management, etc.

    In 2022, there were 197 active FTZs in the U.S. encompassing over 3,400 companies and employing about 500,000 Americans.

PROBLEM

INCENTIVIZES MOVING AMERICAN JOBS OFF-SHORE

De minimis entry’s economic advantages are incentivizing companies to open new or expand e-commerce fulfilment operations in offshore locations instead of within the United States, primarily just across the border in Mexico or Canada.

Foreign Third-Party Logistics Providers (3PLs) are taking advantage of this opportunity and are aggressively advertising the duty-savings benefits to companies, especially those selling high-duty products like apparel, footwear and travel goods.

U.S. E-commerce distribution operations face an existential threat if the law is not amended.

ALLOWS Bad Actors TO EASILY send illicit or counterfeit goods DIRECTLY TO U.S. CONSUMERS

Shipments sent using de minims entry do not contain detailed information about their chain of custody or contents, making it difficult for CBP to distinguish legitimate from illegitimate goods.

De minimis shipments are sent straight to the consumer.

Most foreign warehouses are not regulated or inspected by U.S. CBP. 

Pending legislation to curb sales of counterfeit and illicit goods does not address this issue.

Failure to change the law puts American consumers’ health and safety at grave risk from accidently purchasing and subsequently receiving a fraudulent good.