CBP to Suspend Reg Limiting Informal Entries to $250 for Chapter 99 Goods, Notice Says

Currently, goods valued at less than $800, as long as they aren't subject to quotas or antidumping or countervailing duties, can enter the U.S. duty-free, if their owner only imports that amount or less in one day. Starting on May 2, products originating in China and Hong Kong will owe duties, or, if they come through the international mail, carriers will have the choice of paying $100 per postal item, or duties of 120%. The per-item fee, which can be applied even without any HTS submission, will climb to $200 on June 2.

The notice also said CBP is suspending the $250 limit on informal entries for goods in Chapter 99 (an exception to the normal $2,500 informal entry limit) because it would impede the agency's ability to effectuate the end of de minimis eligibility for Chinese goods.

Tom Gould, a customs consultant and member of the Commercial Customs Operations Advisory Committee, said he is pleased by the suspension of the regulation that said that goods in Chapter 99 have to make formal entry if they are valued at more than $250.

He said he isn't sure if it only applied to Chinese goods, or to all goods subject to tariffs imposed under the International Emergency Economic Powers Act, but its application to goods that previously qualified for de minimis "is the major impact."

The president had planned to end de minimis eligibility for Canadian and Mexican goods at the same time as Chinese goods, but reversed the policy after just a couple of days in April.

The return of the Chinese restriction comes after the Commerce Department said CBP was ready to manage the change.

"My thought is that I think Customs is ready," Gould said. "I think it’s all the other players involved that are not ready."

For instance, he said, customs brokers who filed Type 86 entries would submit a spreadsheet with a thousand, or even thousands, of listings, and most of the batch would be cleared at once. Even though the brokers were already sharing most of the information required for an informal entry, they will have to have systems that can send each one individually.

Informal entries are "a lot easier for Customs to administer," compared with formal entries, Gould said, and can also be cleared en masse, but he still expects warehouses at the airports and third-party examination stations may run out of room at the time of transition.

"I think of it like an escalator where somebody stops at the bottom of the escalator to tie their shoe and nobody goes," he said. "They’re going to keep getting on at the top because they can’t see the bottom."

Even though it's possible that using the international mail, and paying 120% of the value could make an import cheaper than using a freight forwarder, Gould said he doesn't expect a huge shift to mail, at least not right away. For one, importing a container full of shirts uses the cost from the factory, which is much lower than retail. So 120% of the retail price might be higher than 145% plus Section 301 tariffs plus most-favored nation (MFN) on the FOB (free on board) price.

Gould said he is quite concerned there will be a lot of fraud, as some U.S. company officials aren't sophisticated enough to understand the end of de minimis eligibility isn't just for packages sent from China, it's for any goods that have a Chinese origin, even if they are shipped from Canada, Vietnam, or elsewhere.

He said he's gotten calls where someone says, "Hey, my Chinese supplier told me we could do this, and it’s perfectly legitimate."

Gould says he replies: "No, it’s not," and the person who called him decides to cut off that supplier for being unethical.