Maximizing revenue by keeping logistics costs down is key to running a successful business. But keeping costs down while shipping product overseas can be a huge challenge, thanks to customs, import duties, and taxes.
If you’re a brand looking to import goods into the United States, there are ways optimize your ecommerce supply chain and save on costs, as long as you keep up with the laws and regulations placed by the US Customs and Border Protection (CBP).
One of the most common CBP’s laws known by ecommerce business is Section 321, which allows low-value shipments to bypass taxes and duties, making it more affordable to ship products to the US (even from China).
In this guide, we’ll go over how Section 321 works, and how to use it to your advantage.
Note: This article is solely for informational purposes and does not constitute legal advice.
What is Section 321?
Section 321 is a CBP Shipment Type that allows for goods to clear through customs tax and duty-free. The section exempts low-value shipments from taxes and duties as long as the shipment complies with the de minimis threshold.
How does section 321 work?
Section 321 helps ecommerce businesses save on importing costs for shipping products with a retail value under $800 to the US. The de minimis threshold was recently amended, from $200 to $800, by the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). Therefore, goods below this de minimis value can be imported into the US and surpass duties and taxes with less paperwork. Not only does Section 321 help businesses reduce international shipping costs, but it also speeds up the cross-border shipping process.
3 things you should know about Section 321 for ecommerce
With Section 321, shipments receive clearance quicker and require less paperwork for processing. However, there are some rules and conditions that apply that you should be aware of.
1. US customs laws and regulations
There is a duty exemption for goods produced at less than $800 in fair retail value in the country of shipment, but there is also a list of goods that are restricted by the administrative ruling, which includes:
- Products that require customs inspection (such as harsh chemicals or cleaning supplies).
- Goods that fall under the Countervailing or Anti-Dumping Duty.
- Products that are regulated by certain government agencies, including FSIS, USDA, NHTSA, CPSA, or the FDA.
- Cigarettes, cigars, and alcoholic beverages.
You also must provide proof of items’ retail value, and every shipment must have consignee names and addresses.
2. Imports from China
The United States and China have been involved in an economic trade war. What’s known as “301 China” or “Section 301” are US-specific import duties places on goods. This section has cost importers billions of dollars in taxes and has increased tariffs on a wide range products such as food and beverages, household items, sporting goods, and personal care items. Fortunately, Section 321 overrides Section 301 as long as the items being shipped meet the de minimis value.
3. Limited to one shipment per day
By taking appropriate administrative and logistical measures, businesses can transport low-value shipments across the US border for minimal cost. However, it’s important that Section 321 holds a daily restriction that consists of only one shipment per person (i.e., the company) per day. To avoid serious penalties, make sure that your carrier or freight shipping partner does not make multiple Section 321 claims on the same day.
Section 321 can help benefit your ecommerce shop
If you’re looking to store inventory with a third-party logistics (3PL) company with US-based fulfillment centers, Section 321 allows you to save significantly on importing expenses, which ultimately reduces international fulfillment costs. Here are some of the other benefits of Section 321.
1. Overall lower costs
Section 321 provides ecommerce businesses with the opportunity to manufacture their products overseas and have them imported into the United States duty and tax-free. As mentioned earlier, if you manufacture low-value items in China, your shipment might qualify to be exempt from Section 301 tariffs.
2. Faster shipments
Although you will need proof of value, Section 321 reduces the amount of paperwork required to import products and receive clearance for them across the border, which significantly speeds up the shipping process and eliminates delays caused by shipments held up at customs.
3. Offers a competitive edge
Saving on international shipping costs can help you launch into the US more affordably and offer better shipping rates for US-based customers. For instance, if you bulk ship products to a 3PL’s fulfillment center in the US, you can start shipping products to US customer domestically, which reduces shipping costs and last-mile delivery times.
Saving on costs is just as important for your business as gaining revenue. Understanding international shipping and trade laws, such as Section 321, can help you cut back on landed costs, making cross-border shipping more affordable. However, it’s important to pay attention to these types of laws and requirements, as changes are made often, and any violation of these laws can result in significant penalties.
Cross-border shipping is complex, but you don’t have to navigate it alone. ShipBob is an international fulfillment provider that partners with brands across the globe. We offer an international fulfillment network, discounted shipping rates, and best-in-class ecommerce fulfillment and shipping services.
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Section 321 FAQs
Section 321 is something that every global ecommerce business should be aware of. Here are some answers to some of the most common questions about Section 321.
What is a section 321 Shipment Type?
A Section 321 Shipment Type is a low-value shipment to the United States that includes items worth less than $800. The section allows the shipment to bypass tariff and duties if it meets the de minimis value.
How does Section 321 affect shipments to/from China?
The US-China trade war has significantly raised tariffs for both countries. Section 321 provides businesses with the opportunity to import products from China to the United States without having to pay a large sum in taxes and duties outlined (i.e., these shipments are exempt from Section 301).
How does Section 321 work?
Section 321 helps ecommerce businesses save on importing costs for shipping low-value products to the US. Therefore, goods below this de minimis value can be imported into the US and surpass duties and taxes with less paperwork. Not only does Section 321 help businesses reduce international shipping costs, but it also speeds up the cross-border shipping process.