22 January 2025

US Customs and Border Protection proposes rule that would eliminate duty exemption for goods subject to punitive tariffs

  • The proposed rule would eliminate exemption for certain low-value shipments subject to "specified trade or national security actions."
  • The proposed changes could affect a large number of US imports, with potentially greater impacts if the Trump Administration imposes increased tariffs.
  • Public comments on the proposal are due by 24 March 2025.
 

United States (US) Customs and Border Protection (CBP) issued a Notice of Proposed Rulemaking (NPR) on 21 January 2025, which is available for public comment, proposing that merchandise subject to specified trade or national security actions be ineligible for the administrative exemption for certain low-value shipments not exceeding US$800 per person, per day.1 This proposed rule is the second of the two NPRs outlined by the Biden-Harris Administration in September 2024.2

Background

Section 321(a)(2) of the Tariff Act of 1930 (19 U.S.C. 1321(a)(2)), as amended by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), Section 901, Public Law 114-125, 130 Stat. 122 (Section 321), authorizes administrative exemptions from duty and tax for items valued at US$800 or less per person, per day that fall into three categories:

  1. Bona-fide gifts valued at US$100 or less (US$200, if the gift is from certain island possessions) sent from persons in foreign countries to persons in the United States
  2. Certain personal or household articles valued at US$200 or less accompanying persons arriving in the United States
  3. Other imported articles when the value of the article is US$800 or less

These shipments are commonly referred to as de minimis shipments.

Specified trade and national security actions

The NPR aims at eliminating duty exemption for shipments subject to "specified trade or national security actions" falling under Section 232 of the Trade Expansion Act of 1962 as well as Section 201 and Section 301 of the Trade Act of 1974. By making them ineligible for the administrative exemption, the goal is to prevent certain threats that could affect national security or domestic industries while ensuring that the administrative exemption eligibility for products covered by specific trade or national security actions are consistently applied under other US trade laws. Products ineligible under the administrative exemption should be entered under appropriate formal or informal entry process for applicable tariff collection.

HTSUS classification and US Postal Service

For certain shipments that qualify under the exemption, a 10-digit harmonized tariff schedule of the United States (HTSUS) classification will be required. Additionally, CBP is requesting comments to determine whether these proposals should include bona-fide gifts valued at US$100 or less (US$200, if the gift is from certain island possessions) that are sent from a person overseas to a person in the US and/or certain personal or household articles valued at US$200 or less that accompany a person arriving in the US.

Finally, CBP would like the public to specifically address how the proposed rulemaking on these shipments to the US will affect the operational feasibility of international mail shipments for the US Postal Service (USPS). The USPS plans to provide comments for the rulemaking record to help determine if sufficient reasons exist as to why these types of postal shipments should be treated differently.

The federal rulemaking portal at https://www.regulations.gov provides instructions for comment submissions that should include the agency name and docket number USCBP-2025—0003 with a due date of 24 March 2025.

The Trump Administration, which initiated a review of the de minimis exemption in its 20 January 2025 America First Trade Policy Memorandum, is anticipated to consider a similar regulatory change.3 These proposed changes could affect a large number of US imports, with potentially greater impacts if the Trump Administration imposes increased tariffs.

Action for businesses

Given the proposals relating to goods subject to punitive tariffs, businesses must take proactive steps to ensure compliance with the new requirements. The following actions would help businesses prepare for and adapt to these regulatory changes:

  • Review the proposals for trade and national security actions as they relate to low-value shipments to understand the new regulations and requirements and prepare to use the appropriate certification portals and systems for compliance.
  • Review and update current processes to maintain compliance with the current requirements, including updated recordkeeping, reporting and fee provisions.
  • Participate in the public comment process and provide feedback on the new regulations; stay informed about effective dates and compliance deadlines to ensure timely adherence.
  • Watch for any further updates or changes to the regulations and adjust processes as needed.
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Endnotes

1 See here.

2 See EY Global Tax Alert, US White House publishes Fact Sheet outlining proposed changes to de minimis shipments exemption, dated 19 September 2024.

3 See America First Trade Policy — The White House.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young LLP (United States), Global Trade

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2025-0292