Without de minimis treatment for imports from key U.S. trading partners, companies are now figuring out the best path forward for their supply chains.
During a webinar last week, cross-border logistics experts said there are several paths businesses can take depending on their particular needs. However, a deluge of trade policy changes and uncertainty about future regulations are making those decisions harder.
"It's just fatigue around the conversation, because they just want to know what the rules are going to be," Maggie Barnett, CEO of LVK Logistics, said.
The de minimis exemption is often leveraged by cross-border e-commerce shippers to ship sub-$800 products into the U.S. without having to pay additional duties, limiting shipping costs in the process.
The Trump administration plans to ax the exemption for products from China permanently once "adequate systems are in place” to quickly process and collect related tariff revenue. De minimis eligibility is also slated to be cut for goods from Canada and Mexico under executive orders slated to take effect next week.
Using a U.S.-based 3PL is a strong option at the current juncture, according to Barnett, since she expects the de minimis exemption will receive further scrutiny even when it no longer applies to shipments from China. If a company aggressively shifts their sourcing to Bangladesh, Vietnam or another country, that could just leave them vulnerable to future U.S. trade actions, Barnett said.
"Why would they just close this for China?" Barnett said, referring to de minimis treatment. "If the mandate is to reduce fentanyl, increase revenues into the U.S. and increase U.S. jobs, why just stop at China?"
Companies need to find a long-term fulfillment solution with less exposure to rapidly changing trade policies, as frequent supply chain shifts can be expensive for brands, Barnett added. Companies with 20,000 to 25,000 SKUs could incur expenses up to $100,000 just to move their inventory to a new 3PL, she said.
"That's where the idea of coming back to a U.S. 3PL is basically the best option at this point," Barnett said.
Aaron Rubin, CEO of warehouse management system provider ShipHero, recommended smaller brands lean on U.S.-centric operations and domestic 3PLs, while advising larger brands to partner with a capable customs broker and lawyer to minimize tariff costs.
Higher brokerage fees are also a concern as importers navigate new trade rules. In response, Rubin said some companies are trying to clear as many products as possible in one customs entry, grouping them by both the client they're serving and the applicable Harmonized System (HS) code.
"If you can do a formal entry and every line is going to be separate, you're going to run into a lot of brokerage fees," Rubin said. "And most people are using this to save, like, a couple dollars per package."
Companies should weigh labor costs as well in determining their de minimis response. Mexico is a key location for fulfillment into the U.S., and eliminating the exemption won't entirely erase that, according to Rubin. That's because brands can still leverage Mexico's lower labor costs for more hands-on processes. This includes fulfilling shipments that are kitted — combining multiple items into a single package — or have more complex manufacturing needs.
Experts also floated the use of Type 11 entry as an alternative for de minimis-reliant importers, although that requires more information during the customs process.
Type 11 entry is a simplified procedure where goods can be cleared through customs without a bond as long as the shipment's value doesn't exceed $2,500, or $250 for China-based goods covered by Section 301 tariffs, Portless CEO Izzy Rosenzweig said in a LinkedIn post. Portless has been testing Entry Type 11 "with great results," according to Rosenzweig.
Importers may adjust more quickly to Type 11 entries in the future after using the process during the initial ban on de minimis shipping from China earlier this month, said Scott Sangster, general manager of global logistics service providers at Descartes Systems Group, in an interview with Supply Chain Dive. Companies are "getting better at comparing the information that they're going to need to continue to comply with different types of filings," he added.
"The Type 11 informal entry was the most natural entry for people to move to," Sangster said.
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