Ask An Attorney - Section 301 & De Minimis Updates
On September 13, 2024, the Executive Branch made two major announcements.
- The USTR finally released their decisions from their 4-year review of the Section 301 tariffs. Increases took effect on September 27, 2024.
- Also, the White House is proposing major changes to de minimis shipments. On the Legislative Branch side, Congress is considering de minimis restrictions including the removal of apparel from eligibility.
Section 301 - USTR Finalizes Action on China Tariffs Following Statutory Four-Year Review
The Office of the United States Trade Representative (USTR) announced final modifications concerning the statutory review of the tariff actions in the Section 301 investigation of the People’s Republic of China’s (PRC) Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation. The updates in the announcement include new timing and rates for tariffs on face masks, medical gloves, needles, and syringes; an exclusion for enteral syringes; a proposal regarding coverage of additional tungsten, wafers, and polysilicon tariff lines; an exclusion for ship-to-shore cranes ordered prior to May 14, 2024; an expansion of the scope of the machinery exclusions process to include five additional tariff lines; and modification of the coverage of proposed exclusions for solar manufacturing equipment.
With respect to tariff increases, the President directed increases on the following products:
• Battery parts (non-lithium-ion batteries) – Increase rate to 25% in 2024
• Electric vehicles – Increase rate to 100% in 2024
• Facemasks – Increase rate to no less than 25% in 2024
• Lithium-ion electrical vehicle batteries – Increase rate to 25% in 2024
• Lithium-ion non-electrical vehicle batteries – Increase rate to 25% in 2026
• Medical gloves – Increase rate to no less than 25% in 2026
• Natural graphite – Increase rate to 25% in 2026
• Other critical minerals – Increase rate to 25% in 2024
• Permanent magnets – Increase rate to 25% in 2026
• Semiconductors – Increase rate to 50% in 2025
• Ship-to-shore cranes – Increase rate to 25% in 2024
• Solar cells (whether or not assembled into modules) – Increase rate to 50% in 2024
• Steel and aluminum products – Increase rate to 25% in 2024
• Syringes and needles – Increase rate to no less than 50% in 2024
De Minimis Changes
The de minimis exemption allows CBP to pass free of duty and tax, merchandise imported by one person on one day that has an aggregate fair retail value in the country of shipments of $800 or less. According to CBP, the agency processes nearly 4 million de minimis shipments per day through U.S. ports of entry. The Biden-Harris Administration announced that it is taking new actions to address what it says is a “significant increased abuse of the de minimis exemption, in particular China-founded e-commerce platforms” and will implement new rules to more effectively “target and block” illicit shipments.
The new Executive Actions taken by the Administration against de minimis abuses include:
- New Rulemaking to Improve Accountability and Enforcement in De Minimis Shipments—The proposed rule would strengthen information collection requirements to promote greater visibility into de minimis shipments. That additional level of transparency would help CBP protect consumers from purchasing goods that do not meet health and safety standards, and protect U.S. workers and businesses—including retailers, importers and manufacturers—from unfair competition.
- New Rulemaking to Reduce De Minimis Volume and Strengthen Trade Enforcement—This proposed rule would make ineligible for the de minimis exemption shipments containing products subject to U.S. trade enforcement actions, such as those driving the increase from China-founded e-commerce platforms like low-value textiles and apparel, closing a major loophole. Those products would no longer enter the U.S. market duty free.
- Final Rule to Prevent De Minimis Shipments from Circumventing Safety Standards—This Consumer Product Safety Commission (CPSC) proposed final rule would require importers of consumer products to file Certificates of Compliance (CoC) electronically with CBP and CPSC. That would strengthen CBP’s and CPSC’s ability to target and block unsafe products and prevent foreign companies from abusing the de minimis exemption to circumvent consumer protection testing and certification requirements.