This week:
- CBP delays implementation of new de minimis exemption rule until early 2025
- Biden-Harris administration proposes multiple changes to de minimis regulations
- White House considers its options as potential ILA strike start date looms
- US retailers increase imports forecast amid concerns about ILA strike
- US East and Gulf Coast container spot rates drop as business moves west
CBP Delays Enforcement of New De Minimis Exemption Rule
The US Customs and Border Control (CBP) agency has postponed implementing a new de minimis exemption that would automatically reject shipments exceeding a threshold of $800 per day. The CBP, which announced the delay in a September 3 bulletin, had planned to start enforcing the rule this month but is now delaying implementation until February 2025.
Starting in January, the agency will issue warnings to filers once shipments reach the daily $800 limit. After a 30-day warning period, the CBP will activate an automated rejection function. In the bulletin, the agency said, “CBP is committed to ensuring that the automation does not negatively impact the efficient flow of goods through US ports of entry.”
The exemption rule was drafted over a year ago in response to concerns about a surge in de minimis shipments. Agency officials cited difficulty enforcing regulations against illegal substances, counterfeit goods, and products made with forced labor amid increased shipments. The CBP will continue to solicit feedback on the exemption up through the early 2025 implementation.
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Biden-Harris Admin Plans Limits, Other Changes to De Minimis Exemption
In an announcement last Friday, September 13, the Biden-Harris administration said it planned to limit the types of goods that can be shipped under the de minimis exemption and enhance information collection for de minimis shipments. Proposed rules would exclude shipments containing products covered by some tariffs from using the exemption.
The administration also urged Congress to pass legislation excluding textiles, apparel, and other “import-sensitive” products from de minimis eligibility. This multi-pronged approach to de minimis reform comes after Democrats in the House of Representatives drafted a letter urging President Biden to exercise his executive authority to update the de minimis exemption policy.
According to the administration’s announcement, Section 301 tariffs make up approximately 40% of US imports. The proposed changes would eliminate de minimis eligibility for these shipments and those that fall under Section 201 and 232 tariffs.
White House Considers Options as ILA Strike Deadline Nears
In an editorial published last week, Journal of Commerce (JoC) executive editor Mark Szakonyi broke down the likelihood of the White House intervening if International Longshoremen’s Association (ILA) workers at US East and Gulf Coast ports strike on October 1.
For months, the ILA has been in tense negotiations with the United States Maritime Alliance (USMX), which represents employers in the East and Gulf Coast ports. Sticking points include a dispute over port automation and ILA demands for hefty salary increases. The current contract between the ILA and the USMX expires September 30, making October 1 the potential first day of a strike.
Industry observers worry that such a strike would devastate the US supply chain and the global economy. Szakonyi said that the Biden-Harris administration may have to act to prevent economic disaster, noting past White House interventions in West Coast port labor negotiations in 2015 and 2023.
The Taft-Hartley Act enables Congress to force an immediate end to any labor strike for the good of the country’s economy. However, Szakonyi says such a move with the potential ILA strike would be the “nuclear option.” The White House must consider the possible political fallout with union members, a traditionally sizeable Democratic voting bloc.
US Retailers Increase Imports Forecast, Brace for Potential ILA Strike
According to data from the National Retail Federation (NRF) and Hackett Associates’ Global Port Tracker, US retailers have significantly increased their forecasts for September imports. The two sources now project September imports to reach 2.3 million TEUs, a 14% year-over-year increase.
The import surge is in response to concerns about the potential ILA strike. Even a short-lived strike could disrupt operations at all major North American ports. With talks between the ILA and the USMX seemingly at an impasse, pessimism about avoiding a strike is taking hold across the retail industry.
In a statement released last week, NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said, “Many retailers have brought cargo in early and shifted to alternate ports as a precaution, but it is vital that labor and management at East Coast and Gulf Coast ports actually sit down at the negotiating table and bargain in good faith for a new contract so we can avoid a disruption of any kind when their contract expires.”
Container Spot Rates Plunge as Peak Season Business Moves West
Amid the threat of the ILA strike and continued frontloading, Asia container spot rates to US East and Gulf Coast ports have plunged during peak season as business moves to West Coast ports. The rates fell $2,300 per FEU this past week, much faster than the peak season norm.
In addition, carriers have utilized special “bullet rates” this year to compete for cargo. An anonymous carrier executive told the JoC, “It’s the bullet rates that are driving behavior.” The East Coast spot rate dropped to $6,200 per FEU last week, down from $8,500 the week prior.
