R48380 — Imports and the Section 321 (De Minimis) Exemption: Origins, Evolution, and Use

In 1938, Congress enacted Section 321(a)(2)(C) of the Tariff Act of 1930, (codified as amended at 19 U.S.C. §1321(a)(2)(C)) to authorize the Secretary of the Treasury to waive or reduce certain duties, fees, and other taxes “in order to avoid expense and inconvenience to the Government disproportionate to the amount of revenue that would otherwise be collected” on certain imported goods with a fair retail value in the country of shipment of $1 or less. Congress amended Section 321 several times to raise the threshold, ultimately increasing it to $800 in 2015. This provision is commonly known as the “de minimis” exemption. Although this report discusses the entirety of Section 321, it uses the phrases “de minimis” and “de minimis exemption” exclusively to refer to the exemption provided in Section 321(a)(2)(C). Congress initially enacted Section 321 in 1938 to improve administrative efficiency and to avoid expense and inconvenience to the government. Beginning in the 1990s, Congress expanded its policy rationale and recast Section 321 as a tool of trade facilitation aimed at reducing transaction costs for businesses and consumers. Two developments were central to this change: First, Congress increased the threshold to a level well in excess of inflation; second, Congress transformed the threshold from a ceiling to a floor. De minimis exemptions also increasingly became the subject of international negotiations, as Congress and successive presidential administrations encouraged trading partners to adopt provisions similar to de minimis in an effort to reduce trade barriers facing U.S. exports. The number of de minimis entries has increased from 153 million in 2015 to more than 1 billion in 2023. The increased volume of de minimis entries has, according to some Customs and Border Protection (CBP) officials, led to challenges in screening entries for imports that violate U.S. laws and prompted some Members of Congress to introduce bills amending Section 321 in order to, among other things, reduce the volume of small value entries. Some of those who favor Section 321 as currently written, however, have argued that the provision benefits small and medium-sized businesses and U.S. consumers by decreasing the cost of imported goods and reducing the cost to the government of formally processing imported merchandise. This report provides a history of Section 321, tracing its evolution from a measure to increase administrative efficiency to a tool for trade liberalization. It discusses the various amendments and policy changes to the de minimis exemption over the decades, reflecting shifts in U.S. trade policy and economic priorities. Finally, it highlights emerging concerns and legislative proposals aimed at addressing the challenges posed by the current de minimis framework, including potential reforms to improve import data collection, target high-risk shipments, and balance the benefits of trade facilitation with the effective enforcement of trade laws.

Curated by CRS — every bill listed in this report's relatedMaterials. Edge type cited_in_report, gold confidence.

• HR 10127 — Restoring Trade Fairness Act · 118th Cong
• HR 8059 — U.S. Foreign Trade Zone Parity Act of 2024 · 118th Cong
• HR 7979 — End China’s De Minimis Abuse Act · 118th Cong
• HR 7571 — Americas Act · 118th Cong
• S 5435 — DENIED Act · 118th Cong
• S 5329 — FIGHTING for America Act of 2024 · 118th Cong
• HR 4148 — Import Security and Fairness Act · 118th Cong
• S 4082 — Ensure Accountability in De Minimis Act of 2024 · 118th Cong
• S 3878 — Americas Act · 118th Cong
• S 3431 — Customs Modernization Act of 2023 · 118th Cong
• S 2004 — Import Security and Fairness Act · 118th Cong
• S 1969 — De Minimis Reciprocity Act of 2023 · 118th Cong