Feldman: Significant Minority of Section 321 Shipments Exceed $800 a Day

Sandler Travis managing partner Lenny Feldman said that CBP decided to delay an ACE validation for de minimis shipments to a recipient that would exceed $800 a day, because "they realized when this hits, there's going to be a significant amount of cargo that's going to be above the threshold."

Feldman, in a phone interview with International Trade Today, estimated that about 20% of shipments that come in duty-free exceed $800.

"I don't think it's my 14-year-old son or my 94-year-old aunt" abusing the system, Feldman said. Instead, he believes it's small businesses that choose to import goods this way to avoid the tariffs.

How much that is curtailed depends on how the government decides to define "a person" who can receive up to $800 worth of goods, he said. If you are a store with five employees, can each one receive $400 worth of goods in a single day?

"I think lawfully, they all can be," he said.

However, he said, he expects CBP to decide that if multiple recipients are at the same address, they count as one entity for de minimis purposes, because they will want to avoid buyers treating the restriction like a "shell game" by putting a friend's name, a brother-in-law's name and their own name on packages all coming to the same location.

He noted that currently, it's not the buyer of these imports who is liable for exceeding the threshold, because they are not the importer of record. Instead, it's the customs broker or shipper who files the documents for CBP.

Feldman is not too worried about how the estimated date of arrival, which would trigger an ACE warning, will vary from the actual arrival date, which could result in packages being held at the port of entry if they exceed the limit.

However, he said, in practice, stopping those packages may be easier said than done. "Is it going to be right when the cargo is about to be offloaded from the cargo plane to trucks? How are you going to be able to recall it or stop it?"

Feldman noted that customs brokers could receive an ACE message that a de minimis package must be converted into an informal entry, and duties must be paid, but in many cases, the customs broker is not at the same company as the logistics provider, and he wondered if the company that actually has the package will be able to remove it from the supply chain promptly enough.

CBP has said that 25% of the time, when it asked for a de minimis package to be held for inspection, the package was already gone (see 2304170052).

Feldman said doing this kind of separation will be even trickier when goods are coming in from Canada or Mexico. "How are you going to take out the few shipments" in a truck that are violative, he asked, some of which might be abandoned. "Nobody wants to pay the duties," he added.

The ports of entry that serve trucks crossing from Canada and Mexico aren't as agile as the airports, he said.

CBP has said that the change in ACE will be live on Feb. 11, but Feldman said that's the earliest this could change, and he thinks CBP might need more time to figure out how to implement this.

While Feldman predicts this change will be "an abrupt awakening" for certain small businesses that have gotten used to importing duty-free, he said the change to exclude Section 301-tariffed goods from de minimis will be an even bigger shift.

Since the administration announced it will be making that change through rulemaking, Feldman expects that could happen as soon as the second or third quarter of 2025.

Sandler Travis represents the National Customs Brokers & Forwarders Association of America, and NCBFAA members during last week's fly-in asked the House Ways and Means and Finance committees' staffers about the prospect for legislation changing the de minimis statute.

Feldman said he thought there was a possibility Congress would pass a law restricting de minimis during the lame duck session, but he said he didn't think it was a "good possibility."

"I think there's still a lot of thoughts out there" in Congress on how to handle de minimis, he said. "I didn't sense there's any coming together."

When Section 301 goods are excluded from de minimis, that will affect 70% of apparel from China. "I think it's no secret that apparel from China is a big beneficiary" of de minimis, he said.

But Feldman said it remains to be seen how the economics of direct-to-consumer fast fashion are affected by duties and merchandise processing fees. Will those costs, combined with the cost of air cargo, make it more practical to send containerized shipments to domestic warehouses that will then deconsolidate the orders and send them to U.S. buyers?

"It's not like the merchandise is going to stop being purchased," he said.

Feldman doesn't think that shipments will shift to the international post to avoid reporting Harmonized Tariff Schedule codes that can identify the goods as Section 301 goods, as CBP will seek to have information parity in all streams of imports. And while some critics of proposals to restrict de minimis say it will cost far more for the government to collect duties than the revenue gained, Feldman disagrees.

A CBP official told International Trade Today on background that the agency believes it would need more port staff to handle such a change.

"De minimis duties [entry pathway] has become de maximus burden," Feldman said. "I think it's going to be easier for everybody."