As Section 321 changes, the global e-commerce scene is seeing a seismic upheaval. This critical customs provision has been the backbone of cross-border ecommerce, allowing millions of low-value shipments to enter the US duty-free. Understanding what Section 321 means for e-commerce businesses and global trade has never been more urgent as we approach a complete overhaul of these regulations.
With over 4.2 billion packages entering the US annually under Section 321 by 2024, according to ALS International, the upcoming changes will fundamentally reshape international shipping economics and force businesses to rethink their fulfillment strategies.
What are Section 321 De Minimis Provisions?
Section 321 refers to a provision in the US Tariff Act that allows for duty-free entry of shipments valued under $800. This de minimis threshold was established to facilitate trade by reducing paperwork and costs for low-value imports.
The evolution:
- Originally set at just $200
- Raised to $800 in 2016 as part of the Trade Facilitation and Trade Enforcement Act
- This increase dramatically expanded the scope of eligible shipments
- Became a cornerstone of cross-border ecommerce strategy
The provision was designed to streamline customs clearance for personal shipments and gifts. However, it quickly became a strategic advantage for e-commerce businesses, allowing them to ship products directly to US consumers without incurring duties or formal entry requirements.
Direct-to-consumer brands and marketplace vendors dependent on foreign manufacturers especially benefit from this clause. By keeping individual shipment values under $800, these businesses have been able to offer competitive pricing while maintaining healthy margins.
Last Changes to Section 321 (2025 Updates)
The era of duty-free low-value shipments is coming to an end. In a sweeping policy change, the US government has announced the suspension of Section 321 de minimis exemptions, fundamentally altering the economics of cross-border ecommerce.
The suspension will be implemented in phases, with complete elimination scheduled by July 2027. This represents the most significant change to import regulations in decades and will affect millions of shipments annually.
China and Hong Kong Restrictions
The first phase of changes specifically targeted imports from China and Hong Kong, which accounted for approximately 60% of all de minimis shipments according to ALS International.
In February 2025, Section 321 benefits were eliminated for all shipments originating from these regions. This implies that even low-value packages from Chinese vendors now demand formal entry and are liable to relevant taxes and fees.
This targeted approach reflects ongoing trade tensions and concerns about unfair competition from Chinese manufacturers and retailers like Temu and Shein, who have built business models heavily reliant on Section 321 benefits.
Global Suspension Timeline
The changes extend far beyond China. Section 321 de minimis exemption will be suspended globally for all commercial shipments effective August 29, 2025.
What this means:
- Regardless of the origin country, all commercial imports will require a formal entry
- Payment of applicable duties is now mandatory
- The only remaining exemptions will be for genuine personal shipments and gifts
- Even personal shipments will face increased scrutiny
The complete elimination of Section 321 by July 2027 will end a century-old provision that has facilitated global trade of low-value goods—an era is closing.
How Impact on E-commerce Businesses
The suspension of Section 321 will fundamentally alter the economics of cross-border ecommerce. Businesses that have built their models around direct shipping from overseas suppliers will face significant challenges.
For many e-commerce businesses, particularly smaller operations with thin margins, the changes could threaten their very existence unless they adapt quickly and strategically.
Increased Costs and Documentation Requirements
The most immediate impact will be financial. US Customs and Border Protection (CBP) processed over 1.3 billion low-value shipments under Section 321 in fiscal 2024 alone, according to Speed Commerce.
All these shipments will now incur:
- Import duties based on product classification
- Merchandise Processing Fees (MPF)
- Harbor Maintenance Fees for ocean shipments
- Additional carrier fees for customs clearance
Beyond costs, businesses will face increased documentation requirements, including:
- Commercial invoices
- Packing lists
- Certificates of origin
- Proper HTS code classification
Shipping Delays and Customs Clearance Challenges
The end of Section 321 will likely create significant bottlenecks in the customs clearance process. With millions of additional shipments requiring formal entry, delays are inevitable.
Businesses should prepare for:
- Longer transit times for international shipments
- Increased instances of customs holds and examinations
- Higher rates of shipment rejection due to documentation errors
- Customer service challenges related to delivery delays
With our EP Logistics’ international customs brokerage services, we can guide you through these challenges with expert guidance on documentation requirements and compliance procedures.
3 Strategic Fulfillment Alternatives
1. US-Based Fulfillment
Domestic warehousing and distribution offers the most straightforward solution to Section 321 changes. By importing goods in bulk and distributing from US facilities, businesses can:
- Spread duty costs across larger shipments
- Reduce per-unit customs clearance fees
- Maintain fast delivery times to US customers
- Simplify returns processing
This approach requires upfront investment but provides long-term stability. Working with established ecommerce fulfillment companies can reduce the capital requirements while providing scalable solutions.
2. Foreign Trade Zone (FTZ) Warehousing
Foreign Trade Zones offer a powerful alternative for businesses importing high volumes of goods. These special economic zones allow for:
- Deferral of duty payment until products leave the FTZ
- Elimination of duties on goods that are re-exported
- Reduced duties on finished goods compared to parts
- Streamlined customs procedures
At EP Logistics, we offer strategic warehousing solutions near key border crossings, including FTZ benefits that can help mitigate the impact of Section 321 changes.
3. Inventory Distribution Strategies
Strategic inventory placement across multiple countries can help optimize duty costs and delivery times. This approach involves:
- Maintaining inventory hubs in key markets
- Using regional fulfillment centers to serve specific territories
- Implementing intelligent order routing based on inventory location and customer destination
- Leveraging trade agreements between specific countries
This distributed approach requires sophisticated inventory management but can significantly reduce overall duty exposure while maintaining competitive delivery times.
Compliance and Documentation Best Practices
As Section 321 benefits are phased out, compliance becomes even more critical. Businesses must develop robust processes to ensure smooth customs clearance.
HTS Code Classification
Proper Harmonized Tariff Schedule (HTS) code classification is the foundation of customs compliance. These codes determine:
- Applicable duty rates
- Eligibility for trade agreements
- Documentation requirements
- Potential restrictions or prohibitions
Misclassification can lead to penalties, shipment delays, and unexpected costs. Investing in professional classification services or training staff on proper classification procedures is essential.
Customs Documentation Requirements
Complete and accurate documentation is critical for avoiding clearance tips and delays. Essential documents include:
- Commercial Invoice with complete product descriptions, values, and country of origin
- Packing list detailing contents, quantities, and weights
- Bill of Lading or Air Waybill
- Certificates of Origin, when applicable
- Special certifications for regulated products
How EP Logistics Can Help
Making sense of the post-Section 321 landscape requires expertise and strategic partnerships. At EP Logistics, we offer comprehensive solutions to help e-commerce businesses adapt to these regulatory changes.
Customs Brokerage Services
EP Logistics’ dual-licensed customs brokerage team specializes in US-Mexico cross-border trade, providing:
- Expert HTS classification
- Documentation preparation and verification
- Duty and tax calculation
- Regulatory compliance guidance
- Customs clearance representation
Strategic Warehousing Solutions
With our EP Logistics’ strategic locations on both sides of the US-Mexico border, we provide ideal solutions for businesses adapting to Section 321 changes:
- US-based fulfillment centers for domestic distribution
- Mexican warehousing for cost-effective manufacturing and assembly
- Cross-border transportation services
- Inventory management systems integration
- Order fulfillment and returns processing
The suspension of Section 321 marks a basic change in the economics of international e-commerce. ALS International estimates that these exemptions will cost the U.S. Treasury $3.2 billion yearly; thus, the government’s clear driving force for these reforms is evident.
E-commerce businesses must act now to adapt their fulfillment strategies. Whether through domestic warehousing, FTZ utilization, or distributed inventory approaches, the key is to develop a plan before the August 29, 2025 global suspension deadline.
Businesses can effectively negotiate these changes and keep competitive operations in the post-Section 321 environment by working with seasoned logistics companies such as EP Logistics. The companies that adapt most effectively will find new competitive advantages even as this long-standing benefit disappears.
