Consultant’s Insight: Reduced de minimis threshold would harm air cargo industry

Regulations relating to United States de minimis imports will likely change with the second Trump administration, but any such changes will be secondary to other legislative priorities. [caption id="attachment_57146692" align="alignright" width="275"] Cathy Roberson, Cargo Facts Consulting senior consultant and Cargo Facts columnist[/caption] Several bills regarding de minimis sit in Congress. After being introduced, they have seen no further movement. These bills range from lowering the de minimis threshold — currently $800 — to eliminating it altogether or limiting its use only to countries that reciprocate. Under de minimis regulations, companies shipping goods into the United States are not required to pay tariffs on shipments valued at less than $800. Moves to alter de minimis Concerns regarding drugs, the use of slave labor in goods production and the growth of de minimis imports over the past few years led the Biden administration to issue an executive action in September on Section 321 de minimis trade. In the action, Biden called on Congress to pass legislation this year to reform the de minimis exemption by: Excluding all shipments containing products covered by tariffs imposed under Sections 201 or 301 of the Trade Act of 1974, or Section 232 of the Trade Expansion Act of 1962; Strengthening information collection requirements, including a ten-digit tariff classification number, to promote greater visibility into de minimis shipments and the person claiming the exemption; and Excluding import-sensitive products such as textile and apparel products from de minimis eligibility. “I would expect it’s very likely to see something [change with de minimis] through late November, maybe early December,” former White House Supply Chain Coordinator Tim Manning said in a Cart.com webinar on Nov. 1. Manning said he is “100% confident” that President Joe Biden’s chief of staff, Jeff Zients, “will drive this process to an announcement of proposed final rulemaking before the end of the administration.” To date, no action has been taken to fulfill the executive action or advance any U.S. bills pertaining to de minimis. Trump’s turn With no fulfillment from the Biden administration, it will be up to President-elect Donald Trump and his administration to pick up the baton and do something. But will he? Or will he instead rely on his tariff-led trade strategy to alleviate de minimis concerns? If Trump includes e-commerce in the tariffs he intends to impose on countries like China, it will not only slow the movement of goods because of conventional customs processes but could increase related costs to $50 from about $15, according to Judah Levine , head of research at digital booking company Freightos. Another possible “fix” could be a combination of tariffs and lowering the de minimis threshold. Several air cargo executives with whom I spoke at TIACA’s Air Cargo Forum last month agreed that the de minimis threshold will likely be lowered. In an extreme situation, we could see the elimination of the de minimis altogether. However, a report published in September by the nonprofit group American Action Forum noted that eliminating de minimis in the U.S. would result in between $8 billion and $30 billion in additional annual costs for consumers and taxpayers. This is the equivalent of a 14% to 55% import tax on more than 1 billion de minimis shipments valued at $54 billion. De minimis packages In fiscal 2023, 85% of the shipments U.S. Customs and Border Protection seized for health and safety violations were small packages. De minimis shipments account for 92% of all cargo entering the U.S. Last year, 88% of total shipments arrived by air via express carriers and as cargo on commercial airline flights. Any changes to de minimis will have a big impact on the air cargo market. E-commerce, which typically enters the U.S. market under de minimis rules accounts for up to 30% of total air cargo volumes. Without e-commerce volumes, the air cargo market will return to the days of excess capacity and potentially lower rates. Register now for Cargo Facts' essential regional events for industry stakeholders: Cargo Facts LATAM 2025 on Feb. 10-11 at the Pullman Sao Paulo Guarulhos Airport in Brazil; Cargo Facts Asia 2025 on March 24-26 at the W Shanghai in China; and Cargo Facts EMEA 2025 on May 6-8 at the Shangri-La Bosphorus in Turkey.

Consultant’s Insight: Reduced de minimis threshold would harm air cargo industry

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