JFK Port Official: 'De Minimis Keeps Me Awake at Night'

PHILADELPHIA -- When CBP ran an audit to estimate how many packages that enter under de minimis violate Customs laws, it found about 9% did, either through misclassification, insufficient documentation, or more serious violations, like smuggling narcotics.

Some segments of de minimis were more compliant -- those coming from express shippers were only 2% violative -- and Type 86 entries, which include 10-digit HTS codes, looked worse, at 12% with violations.

But even at 2%, a panel at CBP's Trade Facilitation and Cargo Security Summit noted, that's a heck of a lot of packages. "If we were talking about a billion compliant shipments, it wouldn't be such a problem," said Jim Moore, a CBP headquarters official chosen to help shape national policy on de minimis.

The volume of packages entering under de minimis continues to grow at breakneck speed, with more than 1 billion in the last fiscal year, up almost 400 million from FY 2023 -- and CBP is projecting the country will receive 1.3 billion de minimis shipments in the current fiscal year. CBP also is seeing thousands of cases a day of importers switching what had been a formal entry to a Type 86 entry to save duties.

About 880 million of the entries come by air -- the amount coming in mail has dropped significantly, and the segment coming through commercial air, rather than express shippers, doubled from 2022 to 2023. Moore said that's synonymous with Type 86 entries.

Moore, whose official title is program manager, cargo and conveyance security, said "the whole point of de minimis is it's supposed to be insignificant," but because of the volume and the contraband risk, they aren't.

As a result, there is vocal lobbying to curtail de minimis, either through ending Chinese eligibility, by lowering the dollar threshold, or, in the most radical proposal, to return de minimis to its original design, for tourists' purchases and personal gifts. If that was done, no e-commerce purchases, no matter how inexpensive, would be duty-free.

Christopher Mabelitini, director of CBP's e-Commerce division, said: "This topic is very hot right now," with attention both from other agencies and "a lot of congressional attention."

In response to a question from International Trade Today on whether eliminating Chinese participation, lowering the threshold, or even changes that have not been proposed, such as prohibiting de minimis fulfillment from Mexican and Canadian warehouses, would help CBP manage the risk, Moore said that while there are "any number of ideas being floated around" in Congress, CBP is focused on how it can best enforce the law as it's currently written.

Some of the changes CBP is going to make to enhance that enforcement include programming ACE so that it will flag a consignee receiving more than $800 in goods in a day -- currently CBP cannot track whether the de minimis threshold is being honored.

Another change will be requiring "special instructions bonds" for container freight station operators, because CBP has so often found that service providers are not presenting merchandise for inspection if there was an early pre-clearance under Type 86.

Type 86 shipments, because they include advance data, can receive a notice of release far before the packages arrive in the U.S., but sometimes, after targeting, CBP rescinds that release and puts a hold on the packages. Importers aren't seeing those holds -- or they are, but are ignoring them -- and the packages leave before they can be inspected.

Andrew Renna, assistant port director for JFK, said the problem of presentation is common. "I can't tell you how many times my officers would come back from the field with nothing in his hands, [telling me] 'This one was released already, this one was released already.'"

Moore said the regulatory package that would make it mandatory for importers to submit advance data with de minimis packages -- rules written with the lessons of the Section 321 and Type 86 pilots in mind -- is with Treasury, and CBP hopes to put it out for public comment "as soon as we can."

He said that, and the customs modernization legislation CBP is seeking will help the agency across the board, not just with de minimis. One of the changes in that bill would give CBP the ability to receive information from sources other than exporters or importers -- e-commerce platforms, for instance -- and he said that "would help us a lot in this space."

JFK Airport in New York receives about 23% of the total de minimis shipments in a year. Renna said: "JFK is all de minimis all the time. I eat, sleep and think de minimis. De minimis keeps me awake at night."

He said bad actors are exploiting the de minimis exception and using it to harm Americans, whether economically, by undercutting local retailers, or physically, by smuggling synthetic opiates which are killing tens of thousands of Americans annually. While many overdose deaths are among those who habitually abuse opiates, Renna and his fellow panelists said they are haunted by the cases where a teen or young adult takes one pill that purports to be a prescription painkiller or anti-anxiety medication but is really fentanyl, and dies.

Renna shared several de minimis interdiction stories from his port:

• A package of $5,000 worth of rough diamonds whose shipper lied and said it was $17 worth of synthetic gemstones.
• A 1,762 kilo package that claimed to be $717 worth of jewelry and really was a mix of jewelry boxes, hats, and clothing.
• A package that claimed to be kitchenware and was six small switches that would turn Glock semiautomatic pistols into a fully automatic pistols.
• A 148 kilo package declared as footwear and men and women's jackets that was really prohibited pork, beef, poultry and other food.

In the case of the jewelry boxes, CBP sent back the clothing, which contained cotton, and collected $2,077 in duties for the jewelry boxes. He said if even 0.1% of de minimis packages owed that much in duties, it would be $1 billion in revenue. (He understated it -- it would be $2 billion in revenue).

"What each of these stories highlight is the struggles we face day in, day out," Renna said. "I'm proud of what we're getting. I'm more concerned about what we're missing."

The Glock switches were only discovered because CBP examined 100% of a 1,300-package shipment, he said.

Smugglers are constantly changing their tactics as they see what gets interdicted, the panelists said. Master carton smuggling is dropping. Fentanyl once came through the mail. Then Chinese shippers changed to master carton smuggling, and also switched to precursor chemicals. Pill presses were detected, and now they're broken down into parts, and those parts look just like bolts. With a surge in interdicted precursor chemicals, Manuel Garza, assistant director at CBP's targeting center, said they believe direct flights between China and Mexico laden with chemicals are more common.

Garza said CBP is deploying new equipment to detect synthetic opiates in a package without opening it up. But he said CBP needs help from brokers. He told the audience to be suspicious if a client is spending more on moving a low-value package from the U.S. to Mexico, because the transfer is in bonded status, than the package is worth. He said if they see that, call CBP.

Renna said JFK officers are seeing smugglers continuing to use de minimis to up their game -- now they're sending signal jammers. Those are illegal for civilian use generally, but CBP's concern is that they will be used to interfere with Bluetooth-enabled seals on cargo containers that alert CBP when someone has tampered with the seal to add contraband to a container after it's been inspected by the agency.

They're also seeing increases in interdiction of drugs that are being used to adulterate fentanyl, such as Xylazine, an animal tranquilizer that cannot only be deadly, as opiates can be, but also can cause flesh rot. Those drugs are coming from India and China, Renna said.

The panelists urged brokers to ask "the next question" -- do you have any information to back up the data you received from the exporter? Does the weight make sense for the claimed value? Do you have a legitimate name of a consignee? Mabelitini told the audience that there will be supplemental broker guidance soon on Type 86 entries, and said he hopes it will come out the first week in April.