De Minimis

Closing the Import Loophole: De Minimis Reform

De minimis entry (19 U.S. Code § 1321) allows duty-free importation of merchandise valued $800 or less, directly shipped from abroad to the US, managed by US Customs and Border Protection (CBP). Originally established in 1938, its purpose was to ease government burdens for low-value imports.

Impact of E-commerce
The rise of e-commerce has made de minimis entry a crucial avenue for businesses to avoid hefty tariffs and taxes, saving billions. However, it poses challenges, especially for US-based e-commerce warehouses, facing up to a 60% cost disadvantage per shipment compared to foreign counterparts.

Concerns and Challenges
CBP estimates over 2 million packages daily under de minimis, with a significant portion from China. The lack of detailed package information hampers CBP's ability to detect fraudulent goods, allowing counterfeit and illicit products to enter the US. This poses risks to American consumers and jobs.

Emerging Trends
An emerging industry in neighboring countries like Canada and Mexico exploits de minimis loopholes, urging US companies to relocate operations. This trend threatens US jobs and economic stability.

There is a growing bipartisan interest among lawmakers to revise the de minimis entry policy stemming from various factors, including media coverage highlighting issues related to de minimis, concerns about industries negatively impacted by online sellers—particularly from China—engaging in forced labor or failing to meet federal health and safety requirements.

The current de minimis system negatively impacts the Aftermarket sector of the RV industry. American companies cannot compete with goods being shipped from China and consumers are not always aware of the different between an American manufactured product versus one coming from overseas.  Overly broad tariffs with a lack of robust exclusion processes, coupled with supply-chain bottlenecks, have cost RV businesses millions of dollars and resulted in potentially poorer experiences for customers.

Three legislative proposals have been introduced:
S.1969 - The De Minimis Reciprocity Act of 2023, sponsored by Senators Bill Cassidy, Tammy Baldwin, and J.D. Vance.

S.2004 - The Importer Security and Fairness Act, introduced by Senators Sherrod Brown and Marco Rubio, alongside H.R. 4148, its House companion, led by Representatives Neal Dunn and Earl Blumenauer.

Notably, none of these proposals include permitting de minimis eligibility from U.S. Foreign Trade Zones (FTZs), although there is increasing support for its inclusion in future iterations.

Common themes among the proposals include rescinding eligibility for China, adding new data element requirements, and introducing other changes such as modifying the application threshold and imposing civil penalties for non-compliance.

Until Section 301 tariffs are eliminated, RVIA supports the reinstating of a robust tariff exclusion process so American businesses are not paying tariffs on products they cannot source elsewhere.