CBP Tightens Regulations on Low-Value Imports from China
U.S. Customs has increased the enforcement of regulations on low-value imports from China, suspending several brokers to address non-compliance and control exploitation of the de minimis threshold.
U.S. Customs and Border Protection (CBP) has increased its monitoring of e-commerce low-value imports and suspended several customs brokers from a program that expedites such shipments. This coincided with a significant increase in e-commerce imports from China and India. With CBP processing nearly 4 million de minimis shipments daily at a value exceeding $50 billion, this presents enforcement challenges for the agency.
China is the primary source of low-value imports into the U.S., with most shipments entering the country through commercial aircraft and vessels. E-commerce shipments represent 50% of all airfreight volume leaving China.
Last Friday, CBP announced that some brokers were suspended for repeatedly failing to comply with requirements for the proper classification and valuation of goods and for late filing of the required data. It did not provide detailed reasons for the suspensions.
In 2016, the duty-free import threshold was raised from $200 to $800 per person per day—to accommodate the rise in online purchases and reduce the cost of collecting duties on low-value imports, which often cost more than the revenue generated.
Raising the duty exemption to $800 facilitated more e-commerce, as the average de minimis shipment is worth about $50 to $60. However, this resulted in a flood of packages from e-commerce giants like Shein and Temu, which left CBP unable to inspect all parcels effectively.
Shein and Temu ship an average of one million packages to the U.S. daily, and consumers purchasing from these Chinese merchants receive all-inclusive prices. The prices cover transportation, so consumers don't need to pay any additional freight charges.
Electronic retailers found they could avoid tariffs on Chinese goods by unbundling consolidated shipments, treating each consumer as a distinct consignee and shipping directly from the country of origin.
Some companies also use de minimis to avoid regulations against imported goods made with forced labor.
In 2019, CBP introduced a voluntary Entry Type 86 procedure, which allows brokers and self-filers to transmit shipment data electronically through its platform. Freight forwarders and customs brokers usually process Entry Type 86 in high volumes, which has opened the door to some cases of non-compliance.
According to news reports, six or seven freight forwarders or brokers have had their authorization to file Entry Type 86 entries revoked.
“CBP’s evaluation and suspension of non-compliant Entry Type 86 participants is part of a multi-layered enforcement approach to prevent abuse of the de minimis process, and ensure that businesses comply with applicable U.S. legal requirements,” stated CBP Acting Commissioner Troy Miller.
Seko Logistics was one of the companies affected by CBP’s suspensions and is prohibited from participating in the Entry Type 86 program for at least 90 days. The company claims a nearly 100% compliance rate and is suing CBP for an explanation of its suspension.
If you want to learn more about this story and how it affects U.S. imports, please reach out to one of our trade professionals.