Clark Packard
Clark Packard
In early February, the ever-protectionist Trump administration announced it would immediately eliminate the “de minimis exemption” for low-value shipments arriving from China, effectively raising taxes on American consumers and dramatically increasing shipping times. Within days, US ports of entry were overwhelmed with a backlog of packages. Realizing Customs and Border Protection (CBP) was unprepared to deal with the deluge of packages, the administration quickly backed off and instead announced it would create a process for eventually eliminating the exemption for China. Likewise, policymakers in Congress seem intent on eliminating the exemption. Such moves have serious implications for average Americans.
Background
The United States provides three customs processes by which foreign goods can arrive in the country: formal entry, informal entry, and de minimis exemption.
Formal entry applies to shipments valued above $2,500 and requires comprehensive documentation and oversight (think container ships arriving in US ports). Importers must file customs paperwork summarizing the shipment and its contents, including its valuation and country of origin. A customs surety bond must be posted to guarantee payment of duties and compliance with regulations. The process requires using a licensed customs broker to prepare and submit documentation, and importers pay an ad valorem merchandise processing fee of about 0.35 percent of the shipment value. Formal entries require proper classification using Harmonized Tariff Schedule codes, and detailed commercial documentation, and may face intensive customs examination.
Informal entry provides a simplified process for shipments valued between $801 and $2,500. While still requiring a summary of the contents and payment of applicable duties, the documentation requirements are less stringent. Instead of an ad valorem fee, informal entries pay a fixed merchandise processing fee ranging from $2.22 to $9.99 per shipment. A customs broker is still required, with an average fee of around $23, but no surety bond is needed. » Read More
https://www.cato.org/blog/high-costs-eliminating-de-minimis-shipping