There’s no denying that shipping costs are a huge expense for ecommerce businesses. And when you start shipping outside of your home country, duties can cause those costs to skyrocket. So, how do you keep those costs down? You might want to look into Section 321.
Section 321 is a regulation put in place by the US Customs and Border Protection (CBP), among other rules and restrictions on shipping. However, Section 321 is a particularly important law because it allows low value shipments to avoid taxes and duties. Imagine the difference that can make to your shipping costs out of country!
This article will go over all things Section 321, arming you with the knowledge you need to make the most of it.
What is Section 321?
Section 321 is a law that was put in place by the US Custom and Borders Protection. This law changed the de minimis value, the value where anything below, does not pay duties, for businesses. Simply put, Section 321 allows shipments valued under a certain dollar amount to enter the U.S. duty-free.
Recently, this dollar value where you don’t have to pay tax on importing to the U.S. was raised from $200 to $800 dollars. This can make a huge difference for businesses that are looking to ship into the United States.
Say you sell high-quality apparel, where your best-selling jacket goes for $375. Before, you would either be paying pretty hefty duties or taxes out of pocket to ship it into the United States or putting those extra fees onto your customers. This means a huge expense for you or an unhappy customer when they get hit with a big bill for duties.
This new law provides a lot of room for ecommerce businesses to grow into new markets, since products priced between $201-$799 can now be shipped into the US with no duties or taxes. A new market plus shipping savings is an incredible combo.
How Does a Business Claim Section 321?
Utilizing Section 321 for your shipping doesn’t require much extra legwork on your end. Your shipments should enter into the United States duty-free if the attached invoices list the value of your product at under $800. It’s that easy!
Pro tip: Make sure the product value is clear on attached invoices. The clearer it is, the easier it is for the product to clear customs quickly. If you work with a third party logistics company, like Bolt, the documents, manifestation, and clearance is all handled for you. This means no additional backend work for you!
What Are the Benefits of Section 321?
It’s clear that there are some major benefits of the amendment to Section 321, especially for ecommerce merchants located outside of the United States with products valued from within the new de minimis value.
But let’s break down what some of these benefits actually are.
1. Affordable Entry Into New Markets
If your business is located in Canada, you’re selling to around 37 million people. When you enter the US market, you’re reaching an audience ten times that size! But affordability of shipping may have been a deterrent to expanding sooner.
With Section 321, you see some major savings on shipping costs. Given anything you import will be duty-free, it’s way more affordable to ship under this law.
Time to start shipping to a whole new group of potential customers!
2. Offer Savings to Customers
While this benefit only applies to you if you have already been shipping across borders, it’s still important to flag. Given how high the cost of duties can be, your customers may have been seeing higher shipping rates at checkout. With Section 321 in place, and you are able to save on duty, you can pass those savings onto customers.
And more affordable shipping makes potential buyers even more likely to hit that “add to cart” button.
3. Ship Faster
Delivery times are a huge factor for consumers when placing an order, especially when the country of origin for the product is different from their home address. And while there is a level of patience that comes with consumers, it’s not always enough patience to order.
Luckily, Section 321 makes it easier for packages! Since there's less customs paperwork required if your shipment is under $800, it’ll get to customers faster. Who doesn’t love a quick delivery?
What Are the Restrictions?
Unfortunately, Section 321 isn’t a rule that blindly covers everything – just like everything else in life, there are some exceptions.
Here are the restrictions you want to make sure you’re aware of.
1. Non-Compliant Goods
This shouldn’t come as a surprise to most seasoned ecommerce merchants who ship internationally. Every country has different rules on what goods are (and are not!) allowed to be shipped within their borders.
Some of the non-compliant goods under Section 321 include:
- Goods that need inspection as a condition of release, even if they are under the $800 value
- Merchandise subject to Anti-Dumping Duty (ADD) or Countervailing Duty (CVD)
- Non-medical devices that emit radiation
- Goods that are specifically regulated by the Food and Drug Administration (FDA), Food Safety Inspection Service (FSIS), Consumer Product Safety Commission (CPSA0, United States Department of Agriculture (USDA), and National Highway Transport and Safety Administration (NHTSA)
- Cigarettes, cigars, e-cigarettes, or alcoholic beverages
2. Restrictions on Imports from China
After this article, you’ll know Section 321 like the back of your hand, but do you know about Section 301?
Section 301, also known as 301 China, is an increased tariff put on goods imported from China into the U.S. For the time being, Section 321 actually overrides Section 301, but it’s an important restriction to be aware of if you regularly import goods from China, as things can change.
3. 321 Claims Can Only Happen Once a Day
This is an important one to flag to your couriers, as you can only make one tax-exempt import per day. If you make more than one daily claim, you may face serious penalties – $5,000 in serious penalties in some cases. Make sure your logistics partner isn’t claiming Section 321 numerous times per day.
Final Notes on Section 321
They say that a dollar saved is a dollar earned, and saving on shipping costs is a great way to save! That’s why Section 321 and the de minimis amount being bumped can be a gamechanger for ecommerce businesses.
Either you can enter a new market at a much more affordable shipping cost, or you can save on the shipping you’re already doing. Both options are a win.