Updated – August 25th, 2025
Section 321 is a U.S. Customs and Border Protection rule that historically allowed goods valued at $800 or less to enter the U.S. tax and duty-free. However, recent legislative actions have dramatically reshaped the future of this exemption, significantly impacting businesses across the supply chain. Here’s what you need to know about the latest developments.
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2025 Update: Section 321 after August 29
Effective 12:01 a.m. Eastern Daylight Time on August 29, 2025, duty-free de minimis treatment under Section 321 is suspended for all non-postal shipments worldwide. Every low-value commercial parcel now needs a customs entry in the Automated Commercial Environment (ACE) and will incur duties, taxes, and fees. U.S. Customs and Border Protection (CBP) Entry Type 86 no longer provides duty-free clearance.
Postal parcels are dutiable. Carriers must collect duty as either an ad valorem charge tied to the origin’s effective International Emergency Economic Powers Act (IEEPA) tariff rate, or a temporary flat fee per parcel for six months: $80 if the IEEPA rate is under 16 percent; $160 if 16 to 25 percent; $200 if above 25 percent. After six months, postal uses ad valorem only.
Scope
China and Hong Kong lost duty-free 321 on April 2, 2025. A July 30, 2025 Executive Order extends the suspension globally and covers Canada- and Mexico-routed parcels. Treat duty-free commercial use of Section 321 as unavailable.
What to do now
• File informal or formal entries in ACE for low-value imports.
• Use Delivered Duty Paid (DDP) pricing and consider U.S. warehousing or Foreign-Trade Zones (FTZs).
Prior Developments: De Minimis Exemption Scheduled for Repeal in 2027
On July 10, 2025, President Trump signed the expansive “One Big Beautiful Bill Act” into law, permanently eliminating the de minimis exemption effective July 1, 2027. This repeal will mean that all previously exempt shipments valued at $800 or less will be subject to tariffs and taxes upon entry into the U.S., with exceptions limited strictly to eligible items purchased during travel or genuine gifts from foreign citizens to U.S. residents.
Further, the bill introduced significant civil penalties for misuse of the de minimis entry process. Starting August 2025, violators will face fines of $5,000 for an initial offense and up to $10,000 for subsequent violations.
Earlier Actions and Tariff Measures (As of July 2025)
These legislative shifts build upon several earlier actions taken by the Trump administration in early 2025:
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Chinese-Origin Shipments: As of May 2, 2025, the administration removed the de minimis exemption entirely for goods originating from China and Hong Kong, impacting platforms like Shein and Temu, which previously leveraged this provision for duty-free shipments.
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Canadian and Mexican Imports: Tariffs of 25% remain temporarily paused for Canadian and Mexican imports pending further negotiations, while Canadian energy products continue at a reduced 10% tariff rate.
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Steel and Aluminum: A 25% additional tariff remains in effect for all steel and aluminum imports.
Implications of the De Minimis Repeal
The upcoming repeal will undoubtedly impact companies relying heavily on the de minimis exemption for e-commerce logistics:
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Shift in Supply Chain Strategies: Businesses previously benefiting from duty-free low-value imports must rethink sourcing and logistics strategies, potentially moving toward bulk import models or establishing expanded domestic fulfillment operations.
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Cost and Pricing Pressures: Companies will need to prepare for increased duties, taxes, and administrative compliance costs, likely putting pressure on margins and necessitating pricing adjustments.
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Operational Adjustments: E-commerce platforms may need significant operational adjustments to adapt to traditional shipping models and manage new compliance requirements.
Strategic Recommendations for Businesses
To proactively manage these regulatory changes, businesses should:
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Diversify Sourcing and Fulfillment: Explore alternative sourcing locations and consider expanding U.S.-based fulfillment capabilities to mitigate potential disruptions.
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Enhance Compliance Programs: Invest in improved systems for accurate tariff classification, reporting, and compliance management to avoid penalties and operational disruptions.
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Policy Engagement: Actively participate in policy discussions and consultations with regulators and industry associations to influence future trade policies and prepare for upcoming legislative shifts.
