For years, e-commerce businesses have relied on Section 321 to import products with a retail value of up to $800 into the U.S. duty-free. This provision, known as the de minimis exemption, was a cornerstone of many international supply chains and fulfillment strategies.
That era is over. The U.S. government has suspended the de minimis exemption for all commercial shipments, effective August 29, 2025. This is one of the most significant shifts in U.S. trade policy in years, and it directly impacts how you source, ship, and sell your products, especially for ecommerce brands.
This guide has been updated to explain what this change means, what the new rules are, and how you can adapt your supply chain to thrive in this new regulatory environment.
What was Section 321? A look at the suspended customs rule
Section 321 of the Tariff Act of 1930 allowed businesses to import a shipment of goods into the U.S. free of customs duties and taxes, provided its aggregate fair retail value was $800 or less (the “de minimis threshold”). This was designed to save U.S. Customs and Border Protection (CBP) the administrative burden of collecting small amounts of tax on low-value shipments.
For e-commerce companies, this was a massive advantage. It enabled a direct-to-consumer model where individual orders could be shipped from overseas factories straight to a customer’s door without incurring tariffs. However, the program’s use exploded, leading the government to suspend it for three primary reasons:
- Curbing Illicit Imports: According to the White House, the de minimis provision became a primary channel for illicit goods, including fentanyl, counterfeit products, and unsafe items, to enter the U.S. with less scrutiny. In FY2024, de minimis shipments accounted for 90% of all cargo seizures.
- Leveling the Playing Field: The exemption created a significant advantage for foreign e-commerce giants over U.S.-based retailers, who have always been required to pay duties on their imported goods. The suspension aims to restore competitive fairness for American businesses.
- Exploding Volume and Lost Revenue: The number of de minimis shipments surged from 134 million in 2015 to over 1.3 billion in 2024. This massive volume overwhelmed CBP’s inspection capabilities and resulted in significant lost tariff revenue for the United States, creating a need for enhanced compliance.
The new reality: formal entry and new duties for all shipments
The suspension of the de minimis exemption fundamentally changes the import process for all low value imports. The old, simplified process is gone, replaced by a more formal and costly system which requires a new approach to customs procedures.
- No More Duty-Free Shipments: The core change is simple: shipments valued at less than $800 that previously qualified for Section 321 are no longer duty-free. All commercial goods entering the U.S. are now subject to applicable tariffs and taxes, regardless of their value.
- Formal Customs Entry is Required: Every commercial shipment must now be cleared through a formal customs entry. This requires detailed documentation, including accurate Harmonized Tariff Schedule (HTS) codes, verified country of origin, and precise valuation. The days of informal, low-documentation entry for these goods valued under the threshold are over.
- A New Duty Structure is in Place:
- For Private Carriers (e.g., FedEx, DHL, UPS): Shipments will be subject to the standard duties and tariffs based on the product’s classification and country of origin (ad valorem).
- For the International Postal Network: These shipments face a transitional duty structure. For the first six months, a flat fee ranging from $0.80 to $2.00 per item will apply, depending on the origin country’s tariff rate. This will later shift to a full ad valorem system.
- Limited Exceptions Remain: The suspension does not affect non-commercial exemptions. U.S. travelers can still bring back up to $800 in personal items, and individuals can receive bona fide gifts valued at $100 or less, duty-free.
What about Entry Type 86?
You may have previously used or heard of “Entry Type 86,” which was the specific electronic entry process in the Automated Commercial Environment (ACE) designed for <u>Section 321</u> shipments. It allowed for the streamlined, duty free entry of these low-value goods.
With the suspension of the de minimis exemption, the function of Entry Type 86 has fundamentally changed. While the entry type may still exist within ACE, shipments filed under it are no longer duty-free. They are now subject to the same duties and formal entry requirements as any other commercial import, and may require partner government agency coordination for certain products. This change is a critical part of the new compliance landscape.
Strategic pivots: adapting your supply chain to the end of de minimis
The business model of shipping individual, low-value parcels directly from overseas is no longer economically viable. To succeed, businesses must strategically adapt their supply chains for greater cost savings.
- Shift from Parcel to Freight (Consolidation is Key): The single most important strategy is to stop thinking in terms of individual packages and start thinking in terms of bulk freight. Shipping individual orders from overseas will now incur duties and fees on every single parcel, destroying margins. The new winning strategy is to consolidate your products into larger freight shipments (Less-than-Container Load or Full Container Load) to be imported into the U.S. at once. This drastically reduces the per-item customs processing costs.
- Embrace Domestic Fulfillment: With consolidation as the new import model, having a U.S.-based fulfillment center is no longer a luxury—it’s a necessity. By importing goods in bulk to a 3PL partner like Red Stag Fulfillment, you can warehouse your inventory domestically. This allows you to pay duties once on the bulk shipment and then fulfill orders to your customers quickly and efficiently from within the U.S., completely avoiding the new per-package complexities.
- Recalculate Your Landed Costs: Your product pricing must be updated. The true landed cost of your goods now includes not only the product cost and shipping but also the newly applied tariffs and duties. Failing to account for these will lead to unsustainable losses. You must re-evaluate your margins and adjust your consumer-facing prices accordingly.
- Prioritize Customs Compliance: With formal entry required for all shipments, the risk of costly delays, penalties, and seizures for incorrect documentation is higher than ever. Ensure your HTS classifications are correct and your valuations are accurate. Partnering with experienced customs brokers and 3PLs who understand these new regulations is critical to avoiding compliance issues and ensuring full supply chain visibility.
Frequently asked questions about the Section 321 suspension
What is the difference between Section 321 and de minimis?
De minimis is the legal principle that something is too minor to be meaningful. Section 321 of the Tariff Act of 1930 was the specific U.S. law that established the de minimis value threshold for imports, which was most recently set at $800. In practice, the terms are often used interchangeably to refer to the de minimis treatment rule that has now been suspended.
Can I still import one shipment per day under the old rules?
No. The “one shipment per person per day” rule was a condition of the Section 321 exemption. Since the exemption is suspended, this rule is no longer relevant for avoiding duties. All commercial de minimis imports are now subject to duties regardless of how many are sent per day.
Does this suspension affect shipments from all countries?
Yes. While the de minimis exemption was first suspended for China and Hong Kong (affecting many chinese goods), the executive order effective August 29, 2025, applies to commercial shipments from all countries.
What happens if I don’t comply with the new rules?
Non-compliance with formal entry process procedures can lead to significant penalties, including fines, seizure of your goods, and lengthy shipping delays. Given the increased scrutiny from US customs, prioritizing customs compliance is more important than ever.
The suspension of the de minimis exemption has made the U.S. import landscape more complex and costly. Navigating this new environment requires a strategic partner government agency with the right infrastructure and expertise. At Red Stag Fulfillment, our expertise is in providing a robust, U.S.-based fulfillment network that is now more critical than ever.
Instead of dealing with the cost and complexity of paying duties on every single package, we help you import your goods in bulk. By warehousing your products in our strategically located fulfillment centers, you can leverage a more cost-effective import strategy and ensure your customers continue to receive their orders quickly and reliably, without the uncertainty of cross-border customs.
Let us help you adapt your supply chain to this new reality and maintain your competitive edge.
