321 De Minimis: Update and Alternatives

This is an evolving story. 

U.S. President Donald J. Trump, Mexico President Claudia Sheinbaum, and Canada Prime Minister Justin Trudeau put a collective pause on the trade tariffs set to take effect February 4, 2025. However, after multiple discussions took place between the dignitaries, and U.S. stock markets tumbled over tariff fears, little has changed to pullback shifting trade policies.  

Perhaps the best course of action is to understand the alternatives available to navigate business under the new shipping restraints and realign customer expectations—a feat not for the faint of heart. 

Resistance to 321 De Minimis Changes Makes It Costlier  

The effects of 321 de minimis rulings will impact foreign sourcing, manufacturing, carriers and ecommerce retailers differently. What makes this economic reset more challenging is its moving-target qualities. If tariffs are part of a larger trade negotiation strategy, ecommerce brands and their customers could be unwitting pawns. 

Here’s what we know thus far. 

As of today, Mexico, Canada, and the U.S. have agreed to hold off on imposing 25% tariffs for the next 30 days, allowing them time to work through other options. If the leaders are successful in their efforts, the deal points will override the longstanding free-trade agreement between them—meant to be in effect until 2026. 

For imports coming from China into the U.S., ecommerce retailers and their customers will pay a heavier price, since the 321 de minimis loophole’s removal; any shipment containing one or more goods (of any value) made in China or shipped through mail from China are subject to import fees and now requires following a formal customs entry protocol. This provision is in addition to Sections 201, 232, and 301 of U.S. Tariff law.  

Before the new ruling, ecommerce retailers and consumers could purchase products from China, with shipping limited to one single package per day per person, as long as the value was less than US $800, known as Entry Type 11, under the former 321 de minimis regulations.  

The ruling affects China products found and ordered online, priced 60% less than what’s instore in the U.S.; with new tariffs on China imports, those products aren’t the sweet deal they used to be, and the delivery is a not-so-fast reality to come. 

For U.S. retailers and resellers reliant on China imports, the financial headwinds are just beginning.  

321 De Minimis Removal Implications to Ecommerce  

The impact of tariffs and trade wars affect end-to-end supply chains, not just bi-directionally, but across the lifecycle of product order fulfillment. The cost to acquire products and move them will increase. As one tier of the supply chain raises pricing to compensate for the additional 25% (or more) in new charges, each tier will likely do the same or absorb those costs in part or in full.  

For companies that can afford some level of flexibility, there may be room to adjust anticipated conversion rates and pricing strategies to weather the trade storm. But many ecommerce retailers and resellers don’t have those buffer margins to work with, leaving no other option but to raise consumer pricing. In the DTC (direct-to-consumer) world, there’s little tolerance or discretionary spend left. 

So, what’s a business to do? 

321 De Minimis Alternatives to Keep Ecommerce on Track  

As we wait to see how the dust settles in U.S. trade discussions with America’s border countries, businesses may be wise in exercising calm and discretion in handling imports and logistics. 

Resiliency rests on agility and finding resolve through careful action. 

Alternative #1: Entry Type 86  

By removing the 321 de minimis loophole, ecommerce brands doing business with China will face tariffs, delivery delays, and intense oversight within the U.S. imports process. But there is a temporary workaround for transactions already in transit. To qualify for the time-limited exception, the importer must certify to U.S. Customs and Border Protection (CBP) that the goods were on the way before February 1.   

This applies to cargo in its final mode of transit or loaded onto a carrier at the port of loading (before February 1, 2025, 12:01 a.m. EST), and entered for consumption or removed from the warehouse for consumption from February 4, 2025, at 12:01 a.m. ET and before by 12:01 a.m. ET on March 7, 2025.

But customs brokers are under more scrutiny under this formal customs entry. When filing Type 86 entries, customs brokers act as the importer of record for the person receiving the goods. They must adhere to responsible supervision and control of the shipment throughout the process and have detailed documentation supporting the classification and the merchandise value.  

Alternative #2: Entry Type 11 

Entry Type 11 is classified as an informal customs entry, helping ecommerce brands move products, lower duty payments, and tariff costs. Instead of declaring the value of products based on the retail price, you can defer to the manufactured cost instead, which is typically lower, keeping shipments within the de minimis value threshold of under $800 per package.   

One key difference to Entry Type 11 is the mandatory filing of CBP Form 7501. The documentation provides a summary of each shipment, including: 

• Importer of record 

• Entry information 

• Details of transport and shipment contents 

• Classification of merchandise 

• HTS code for each item 

• Merchandise and duty valuations 

• Specific declarations and certifications 

Required duty deposits must be received within 10 days of the merchandise release date, with manifest information available before the arrival of all cargo. 

Alternative #3: Entry Type 1 

For companies importing high-value commercial products, typically meant for business operations or reselling for business use, Type 1 is the corresponding customs entry. When commercial shipments are valued over $2500 and/or subject to specific regulations, allowances, or additional payments, Type 1, is used and classified as a formal entry.   

Goods shipped under these guidelines include FDA-regulated products and goods shipped from China. Products brought to and held in Foreign Trade Zones (FTZ) can also use entry Type 1, though U.S. import tariffs and federal excise taxes will apply once received in the U.S.  

The added steps for customs clearance include more documentation, receipt of a customs bond, and extensive CBP review, extending the timeline it takes to receive goods. 

Alternative #4: U.S. Onshoring Could Hold the Prize 

Many global supply chains and North American-based companies have put regionalization strategies to work, well in advance of the 321 de minimis cancellation. With sourcing, manufacturing, and distribution centers moving closer to home, time and miles saved in transit could hedge against some of the trade costs on the horizon. 

Ongoing trade talks have the same characteristics as other types of negotiations: anything can happen, and deals change. That being said, until there is finality to the shifting global trade environments, making hard and fast decisions to move logistics strategies forward can present other challenges to ecommerce brands. 

What to Expect in Cross-Border Shipping 

The benefits of North America’s cross-border shipping model favored ecommerce brands and their customers providing quick and easy access to affordable goods, many transported in bulk. With the 321 de minimis change, all product imports coming into the U.S., including those from Mexico and Canada, will engage the following before entry: 

• Newly imposed formal customs entries, requiring a 10-digit HTS (Harmonized Tariff Schedule) code, country of origin, and details about product 

• More administrative oversight adding paperwork and increasing processing times  

• Likely inspections 

• Payment of fees related to product import entry ($15 to $50), plus applicable tariffs or surcharges 

• Longer transit, longer delivery 

With temporary holds on some import tariffs, and the chance for more changes to come, the impact on ecommerce businesses has yet to unfold. 

The State and Rates of Freight

Unless businesses purchase affordable materials and ready-to-market products within the U.S., air freight has been a big part of every logistics story, and typical for the ecommerce industry. U.S. Customs and Border Control reported processing 4 million de minimis shipments every day in 2024—good for China and U.S. air cargo, more than doubling air shipping rates since 2023 over a near two-year period. But that was then. 

The end to 321 de minimis means the ecommerce boom of affordable China-made products to U.S. buyers is now subject to tariffs, filing fees, and processing, reporting, and inspections, not to mention the added time spent needed to clear customs.  

Less air shipments could lead to lower air freight rates, but at what cost to air carriers and their customers? 

If ecommerce brands look to ocean carriers for rate relief, subtle pricing shifts compared to current market rates could take place, but time will tell.  

Partner with a 3PL That Can Help You Navigate  

Work toward creating an alternative plan of action combining elements of alternatives 1, 2 or 3, noted earlier. A slower yet proactive acceptance of trade commerce shifts provides ecommerce businesses with a gradual integration of necessary adjustments, while identifying areas supporting cost-savings and operational efficiencies.  

No matter how retail brands choose to address these trade challenges, it’s important to remember how business response affects customers. Just when global business couldn’t possibly upend operations strategy with another disruption—new tariffs and customs regulations arrived. But the right 3PL partner has seen, heard, experienced, and sailed through it all before, and will continue to make it through.  

This is when a 3PL relationship makes a big difference in helping reset order fulfillment and delivery methods to meet the new trade requirements, with minimal disruptions. This could be a good time to rethink the logistics strategy: Would expanding the inventory footprint to multiple warehouse locations help? Can other modes of transit move products from coast-to-coast faster or offer more attractive pricing? Every decision across the order fulfillment cycle is another opportunity to recoup some of what increasing tariffs could cost the bottom-line. 

For tailor-fit ecommerce order and fulfillment solutions, chat with a WSI Fulfillment expert now.