Administration Efforts to Exclude Section 301 Goods from De Minimis Exemption Attract Pushback from Lawmakers

U.S. customs laws and regulations provide for a duty exemption for goods manifested at less than US$800 fair retail value in the country of shipment if imported by one person on one day. The so-called de minimis exemption was raised from US$200 in 2016 and applies to not only base MFN tariffs but also Section 301 tariffs such as those currently in place against imports from mainland China. Use of this exemption has skyrocketed alongside the growth of direct-to-consumer (B2C) e-commerce, which has further accelerated as more consumers shop from home due to the COVID-19 pandemic.

U.S. Trade Representative Robert Lighthizer has repeatedly suggested carving out an exception to the de minimis threshold for entries from mainland China that would otherwise be subject to additional tariffs under Section 301. In the waning days of the Trump administration, regulatory changes are being made by many agencies and the U.S. Treasury Department is considering a rule that would exclude goods subject to Section 301 tariffs from the de minimis exemption. However, administration efforts in this regard are facing pushback from various lawmakers.

Specifically, Senate Finance Committee Chairman Chuck Grassley (Republican-Iowa) sent a letter on 23 December 2020 to the U.S. Office of Management and Budget asking for a full examination of this issue under the Regulatory Flexibility Act before any such change is implemented. Sen. Grassley and seven other Finance Committee members from both parties wrote that “Congress did not include any exception for merchandise that was subject to action under Section 301”, cautioning that any change in the de minimis requirements “would require the submission of customs entries for millions of additional shipments and increase taxes on numerous small businesses.” The lawmakers insist that such a change be subject to a regulatory flexibility analysis, including a 60-day public comment period, a cost-benefit assessment, and an assessment of feasible alternatives. The senators are urging OMB to “designate this rule as economically significant to correct that problem and ensure robust analysis of its effects.”