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Customs Proposes to Apply Section 301 Duties to De Minimis Entries

Sept. 7, 2020
By: David G. Forgue


Starting in 2017 the Trump Administration began investigating certain practices by the Chinese government with respect to its technology transfer, intellectual property, and innovation policies. Ultimately the United States Trade Representative’s office determined that China’s policies warranted action by the United States. Consequently, duties of up to 25% were imposed on a range of Chinese imports.

To this point importers of shipments valued below $800 were exempt from Section 301 duties. However, on September 2, 2020 Customs sought regulatory review from the Office of Management and Budget for a proposal entitled “Excepting Merchandise Subject to Section 301 Duties from the Customs De Minimis Exemption.” This appears to be an effort to remove the de minimis exception from low-value entries.

There are indications that the proposed change is intended to target online commerce shipments that are collectively high volume, but individually below the $800 threshold. Be that as it may, removing the de minimis exemption creates a host of compliance issues for importers of low value goods. First, the tariff classification becomes more relevant because Section 301 does not apply to all tariff provisions equally. Second, the country of origin of the imported goods becomes more relevant. Section 301 China duties apply only to goods on Chinese origin. As such, importers who assumed that goods were of Chinese origin may now need to evaluate the production processes and inputs of their goods to ensure that they are of Chinese origin.

Any change in the treatment of low value shipments would take place after the regulatory review. If you have any questions about the application of Section 301 to your imports please contact any attorney at Barnes, Richardson & Colburn, LLP.