De Minimus -> De Maximus: New Duties on Chinese Imports: Understanding the Latest Tariff Changes on Section 321 Low Value Shipments

Yesterday's Mail Box

On April 28, 2025, the U.S. Customs and Border Protection (CBP) published a notice in the Federal Register implementing additional duties on products from the People’s Republic of China (PRC), including Hong Kong, pursuant to President Trump’s Executive Order 14256, “Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China As Applied to Low-Value Imports.” This notice eliminates the de minimis exemption for low-value imports from the PRC and Hong Kong, effective May 2, 2025, for postal items and June 1, 2025, for other shipments. This change significantly impacts importers, particularly those relying on e-commerce and low-value shipments. Below, we outline the key details, implications, and steps importers should take to navigate this evolving trade landscape.

Background and Context

The notice builds on a series of executive actions starting with Executive Order 14195 (February 1, 2025), which expanded the national emergency to address the PRC’s failure to curb the flow of precursor chemicals for synthetic opioids like fentanyl. The President declared this a threat to U.S. national security, foreign policy, and economy, invoking the International Emergency Economic Powers Act (IEEPA) and other authorities to impose tariffs. Executive Order 14256, issued on April 2, 2025, specifically targets low-value imports by eliminating the duty-free de minimis exemption under 19 U.S.C. 1321 for PRC and Hong Kong goods, following the Secretary of Commerce’s notification that systems are in place to collect tariff revenue efficiently.

Additionally, Executive Order 14259 (April 8, 2025) increased duty rates to prevent circumvention of other tariffs, such as the reciprocal tariffs announced on April 2, 2025, which include a 10% baseline tariff on most imports and a 125% tariff on Chinese goods. The elimination of the de minimis exemption aligns with these broader trade policies aimed at addressing trade imbalances and national security concerns.

Key Details of the Notice

• Effective Dates:

  • For postal items sent through the international postal network from the PRC or Hong Kong, the new duties apply to goods entered for consumption on or after 12:01 a.m. EDT, May 2, 2025.

  • For all other shipments from the PRC or Hong Kong, the duties apply to goods entered for consumption on or after 12:01 a.m. EDT, June 1, 2025.

• Elimination of De Minimis Exemption: The duty-free de minimis treatment, previously allowing low-value shipments (under $800) to enter without formal entry or duties, is eliminated for PRC and Hong Kong goods. This change requires formal entry and payment of duties for all covered shipments, significantly increasing costs for e-commerce and low-value imports.

• Harmonized Tariff Schedule (HTSUS) Modifications: The notice updates the HTSUS to reflect the new duties, with specific headings (e.g., 9903.01.63) modified to account for the elimination of de minimis treatment. Entry writers must use these updated headings for compliance.

• Scope: The duties apply to all products from the PRC and Hong Kong, except those covered by 50 U.S.C. 1702(b) (e.g., personal use items in accompanied baggage). Goods admitted to foreign trade zones after February 4, 2025, must be under “privileged foreign status” and subject to duties upon entry for consumption.

  
  

Implications for Importers

The elimination of the de minimis exemption has far-reaching consequences for businesses:

• Increased Costs: Importers of low-value goods, particularly e-commerce businesses, will face higher costs due to new duties and formal entry requirements. For example, goods subject to the 125% tariff on Chinese imports will see significant price increases.

• Supply Chain Adjustments: Companies relying on “China +1” strategies (e.g., sourcing from Hong Kong) will need to reassess supply chains, as Hong Kong goods are explicitly included. Sourcing from countries with lower tariffs may become necessary.

• Compliance Challenges: The requirement for formal entry for all shipments increases administrative burdens. Entry writers must ensure accurate HTSUS classifications and compliance with CBP guidance to avoid penalties.

• Market Disruptions: The policy aligns with broader reciprocal tariffs, which have already prompted retaliatory tariffs from China (up to 84%) and other nations. This could lead to higher consumer prices and supply chain disruptions.

  
  

Action Steps for Importers

To navigate these changes, importers should:

• Update Entry Processes: Train entry writers on the new HTSUS headings and formal entry requirements for PRC and Hong Kong goods. Refer to CBP’s guidance for compliance.

• Review Supply Chains: Assess reliance on PRC and Hong Kong imports and explore alternative sourcing options to mitigate tariff impacts.

• Monitor Developments: Stay informed on trade negotiations and potential extensions of the 90-day pause on other reciprocal tariffs, which ends July 8, 2025, as these could influence future duty rates.

• Engage Experts: Consult with customs brokers or trade advisors to ensure compliance and optimize cost management strategies.

  
  

Looking Ahead

The elimination of the de minimis exemption marks a significant shift in U.S. trade policy, reflecting a broader strategy to address trade imbalances and national security threats. While the policy aims to curb the flow of synthetic opioid precursors and bolster domestic manufacturing, it introduces complexity and cost for importers. Businesses must act swiftly to adapt to these changes, leveraging CBP resources and expert guidance to maintain compliance and competitiveness.

For tailored support or questions about the new duties, contact our team at brokers@fleischer-chb.com or visit the CBP website for the latest updates.