According to some business owners, there is almost nothing worse than being forced to spend money on getting overseas goods across the US border and into the country. This got noticeably worse in 2016. President Trump introduced a number of import tariffs that made it exceedingly more expensive to import products from China.
These increased costs obviously made it much harder for US businesses to turn a profit. This also meant an increase in the costs of their products. In fact, it is believed that these additional costs were passed onto US consumers to the value of a whopping 57 billion dollars per year.
Consequently, consumer confidence in the market declined, leading to widespread economic loss in America. However, this all led to a new importation solution known as Section 321.
The De Minimis value for imported goods was increased from 200 to 800 US dollars after the introduction of the new import duties and tariffs.
This is the maximum value a shipment can be imported into the US without incurring importation duties.
This was something that previously only applied to a certain type of imported good.
When did Section 321 start?
What is Section 321 Really?
Section 321 is a category of shipment that sits below the de minimis value of $800. If an e-commerce entrepreneur can get their goods classified as Section 321, they can completely remove Trump’s tariffs.
For a given order to qualify, its total retail value must not exceed $800. And, this is for a single order or contract. A large order won’t qualify if it’s broken up into smaller shipments.
How To Declare Section 321
Let’s say you have product that’s shipping in from China. How can you declare section 321 and avoid paying the import tax?
It is important to note that despite the limitations that are noted in this post, small e-commerce enterprises across the nation have found a way to gain Section 321 classification through third party fulfillment.
Third party fulfillment helps your shipments of overseas goods sent to a third-party warehouse in Canada. The products are shipped directly from the warehouse to your customer after they’ve ordered. This allows them to gain Section 321 classification. (Be sure to get this process officially verified before trying it – there are certainly other I’s to dot and T’s to cross).
This process completely eliminates the cost of import tariffs.
It also simultaneously removes the need to hire staff, rent warehouse space, and pay for freight charges. All of these costs could have a profound impact on profit margins.
Canadian-based order fulfillment companies provide a direct-to-consumer sales process that can help as well.
Now, this is not a free service. But, it can still save you a HUGE amount of money in the long run. Then, you can pass on the savings to your consumers.
Is a shipping fee included in de minimis?
No. There aren’t any additional shipping fees as long as your shipment stays under $800 (or unless you ship into Canada).
What You Need To Know
With Section 321, shipments receive clearance quicker and require less paperwork overall. But there are still rules to follow.
US Customs Regulations with Section 321
Not sure what you can’t ship with Section 321?
Here are a few restrictions:
- Products that require customs inspection
- Goods that fall under the Countervailing or Anti-Dumping Duty.
- Products that are regulated by government agencies
- Cigars, cigarettes, and alcoholic beverages.
You also must provide proof of the items’ retail value, and every shipment needs a consignee name and address.
Limited to One Shipment Each Day
A business can transport low-value shipments across the US border, but there are restrictions. Section 321 has the restriction as one shipment per person (i.e., the company) per day.
Benefits To Keep In Mind
As an example, the import costs of a normal t-shirt is approximately 32%. If this shirt was coming from China, it would incur an additional tariff of approximately 7%. That would mean a total of 39%.
As a result, e-commerce stores that use third party fulfillment and the Section 321 model can sell their products for 39% less than traditional stores.
These additional savings are obviously a massive positive for US consumers. But even more than that, they have had a marked impact on consumer confidence in e-commerce. In return, this created a business boom for online stores across the country.
In fact, e-commerce retail sales in the USA increased from 598 billion dollars in 2019 to 792 billion dollars in 2020. More importantly, they are also projected to increase all the way up to 908 billion dollars in 2021 – an absurd number that is almost entirely driven by Section 321.
To prove this point even further, America US Customs are believed to be receiving more than 1.8 million small packages under the this classification every single day — a number that is 50% higher than the 1.2 million they were receiving in 2017.
Should You Rely On This Loophole?
Taking all of this information into consideration, it should be apparent that Section 321 has become increasingly important to US consumers and businesses — while also having a significant impact on the economy.
Do you want to make the most of your business and survive in the world of e-commerce? If so, it’s important to take advantage of Section 321 and third-party fulfillment.
AUTHOR Kimberly Studdard
Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.