The U.S. Customs has introduced new regulations to tighten control over low-value imports, especially small packages, through the Air Cargo Advance Screening (ACAS) system. Effective October 3, these rules require detailed information submission for 86 transactions before goods arrive at U.S. ports. This move imposes new fees, including a $2 levy on small-value goods and a hefty fine of at least $5,000 for non-compliance with the regulations. Understanding and adhering to these rules is crucial for businesses and individuals involved in cross-border trade to avoid penalties and maintain smooth operations in the competitive e-commerce landscape.
Overview of the New U.S. Customs Rules
The new U.S. Customs regulations, implemented through the Air Cargo Advance Screening (ACAS) system, took effect on October 3. These regulations introduce stricter measures for monitoring and screening low-value imports, particularly small packages. Under ACAS, 86 different types of transactions now require the submission of detailed information before goods arrive at their first U.S. port of entry.
This proactive data submission is designed to bolster the collection of import data and improve inspection processes, especially for low-value goods that have historically slipped through customs with minimal oversight. The overarching goal of these changes is to enhance security, reduce illegal imports, and ensure that low-value packages adhere to proper customs protocols before entering the U.S.
Key Changes Under the New Regulations
The new U.S. Customs regulations bring significant changes aimed at tightening control over small-value imports. Among these changes is introducing a $2 levy on minimum-value goods, which increases the cost for businesses importing low-value items. Additionally, the regulations impose a hefty minimum fine of $5,000 on small packages that do not comply with the new submission requirements, creating a higher financial risk for non-compliant imports.
Another critical change is reducing the voluntary waiver period for small packages from 30 to 15 days. This shorter window significantly increases the urgency for businesses and individuals to promptly ensure their shipments meet the new regulations to avoid penalties. These adjustments collectively aim to improve compliance and tighten control over the influx of low-value goods into the U.S. market.
The “Small Exemption” Rule: Origins and Purpose
The “Small Exemption” rule refers to a provision that allows imports below a specified value to bypass taxes, customs duties, and the standard customs declaration process. This exemption simplifies the process for low-value goods, promoting ease of trade and reducing the administrative burden on businesses and customs authorities.
In the United States, this rule originates from Section 321 of the U.S. Tariff Act of 1930, which permits goods with a retail value of under $800 to enter the country without import duties or rigorous inspection by U.S. Customs and Border Protection (CBP). This threshold has been critical in facilitating small-value imports, especially in the growing e-commerce sector.
According to the Global Express Association, Globally, different countries have set varying thresholds for small exemptions. Duty and taxes kick in after the first USD 1,000 in Australia. In Canada, it’s USD 20; in some other countries, it’s USD 5. The average is about USD 190 in Europe. However, it may vary considerably from country to country. These exemptions are designed to ease the flow of goods across borders. Still, they also present challenges, as they are increasingly used by e-commerce platforms to import large volumes of small-value goods, particularly from low-cost markets. The U.S. exemption limit of $800 has played a significant role in promoting the growth of cross-border trade but has also raised concerns about loopholes and regulatory oversight.
The Surge of Low-Value Imports: The Role of E-commerce
E-commerce platforms like Temu and Shein have leveraged the “small exemption” rule to fuel their rapid entry into the U.S. market. Shipping low-cost goods under the $800 exemption limit set by Section 321 of the U.S. Tariff Act allows these platforms to bypass duties and customs inspections, offering American consumers affordable products with minimal regulatory hurdles. This strategy has allowed them to scale quickly, capitalizing on the high demand for budget-friendly items while keeping operational costs low.
During the 2023-2024 fiscal year, the impact of this tactic became evident. According to U.S. Customs and Border Protection (CBP), 94% of all import transactions entered the U.S. through the “small exemption” rule. This influx was mainly driven by e-commerce platforms using bulk shipping methods, splitting larger orders into multiple smaller packages to fall under the $800 threshold. The result has been a massive increase in the volume of low-value goods entering the country, with these transactions accounting for a significant portion of the overall import activity. However, this surge has also raised concerns about the potential for abuse, as such shipments have been linked to a growing number of illegal and counterfeit goods entering the U.S.
Impact on Businesses and Consumers
The new U.S. Customs regulations will significantly impact businesses and consumers, as well as tiny businesses and e-commerce sellers that rely heavily on low-value shipments to the U.S. market. These sellers, who have built their models around affordable goods that fall under the “small exemption” threshold, will now face higher operational hurdles. The $2 levy on minimum-value imports and the potential for a $5,000 fine for non-compliance means that businesses must adopt more stringent shipping practices, raising their compliance costs. These additional costs could come in the form of new systems for filing required data, engaging customs brokers, or handling potential fines.
The reduced voluntary waiver time from 30 to 15 days adds further pressure for businesses exporting to the U.S., as they must ensure timely and accurate submission of shipping information. The added administrative burden may lead to slower shipping times and increased shipping costs, particularly for those dealing with large volumes of small packages.
Consumers, in turn, are likely to feel the financial strain as these added costs are passed on in the form of higher prices for low-value goods. The stricter scrutiny on small packages may also result in delays in shipping times, affecting the fast and low-cost delivery models that many e-commerce platforms have thrived on. Ultimately, higher fees, compliance costs, and potential delays could make it harder for businesses and consumers to maintain the cost-effective trade that has characterized cross-border e-commerce in recent years.
Steps to Stay Compliant with the New Customs Rules
To avoid hefty fines and ensure smooth operations under the new U.S. Customs rules, businesses dealing with low-value shipments must adopt a proactive approach. Here are practical steps to stay compliant:
- Submit Shipping Information Early: Ensure all required details for the 86 types of transactions are accurately submitted before the goods arrive at the first port of entry. This includes product descriptions, values, and origin details. With the reduced voluntary waiver time from 30 to 15 days, timely submission is crucial to avoid penalties.
- Utilize Automated Shipping Solutions: Implement digital tools or software that streamline the process of submitting customs information. This helps reduce the risk of human error and ensures that the necessary data reaches U.S. Customs well before shipment arrival.
- Work with Customs Brokers: For businesses unfamiliar with the complexities of customs regulations, partnering with a licensed customs broker can provide valuable expertise. Brokers can handle the compliance process, ensuring all paperwork is in order and avoiding costly delays or fines.
- Partner with Third-Party Logistics Providers (3PLs): Engaging a 3PL can help businesses navigate the new rules more efficiently. These providers have experience managing customs submissions and can ensure that small packages comply with the new requirements.
- Monitor Changes and Stay Informed: Customs regulations can evolve, so it’s important to stay updated on any further adjustments. Subscribing to customs newsletters or working with industry experts can keep your business informed and compliant.
Conclusion
Staying informed and compliant with the new U.S. Customs regulations is essential for businesses involved in cross-border trade, especially with the stricter requirements for low-value shipments. These changes will impact e-commerce businesses, international trade, and consumers through higher fees, increased scrutiny, and potential fines. To avoid penalties and maintain smooth operations, businesses must adapt quickly by submitting timely shipping information and leveraging expert help.
Dropship China Pro plays a crucial role in helping businesses navigate these changes by offering comprehensive third-party logistics (3PL) services. With expertise in customs compliance and shipment management, Dropship China Pro ensures that your goods meet all regulatory requirements, helping you avoid fines and streamline your supply chain.
Anesu Masamba is a seasoned Sales and Marketing professional with over three years of experience in the dropshipping industry. Leveraging his expertise in e-commerce, he has helped businesses streamline their operations and thrive in competitive markets. Anesu is also a dynamic Motivational Speaker and the author of the acclaimed book “I Can Do This,” inspiring individuals to unlock their full potential.
