Section 321 of the Tariff Act of 1930 created the US de minimis exemption, the rule that let any single shipment valued at $800 USD or less enter the United States duty-free and tax-free with informal entry paperwork. For more than a decade, Section 321 was the policy backbone of cross-border ecommerce from Canada, Mexico, and especially China-direct platforms like Shein and Temu. Brands shipping individual orders under $800 paid zero duty and cleared customs in minutes rather than days.
How it works in practice
Pre-suspension, Section 321 enabled the “fulfill from Canada or Mexico” model. A US customer would order on Shopify, the order would route to a Canadian or Mexican 3PL, and the parcel would cross the border into the US as a Section 321 entry, duty-free. The buyer paid no duty, the brand absorbed no tariff cost, and the parcel was usually delivered within 3-5 days via USPS or UPS Ground. Volumes peaked at over 4 million Section 321 shipments per day arriving in the US.
On August 29, 2025, the US government suspended de minimis treatment for commercial ecommerce shipments. The same parcel that previously crossed duty-free now requires formal entry, HS classification, and payment of the applicable tariff rate plus any Section 122 surcharge for non-USMCA goods. This effectively ended the Canada-and-Mexico fulfillment arbitrage that had built up over the prior decade.
Why it matters
The suspension of Section 321 forced thousands of brands to either pay duty on every cross-border order, restructure inventory to land in US warehouses pre-duty, or absorb the cost as a margin hit. The brands hit hardest were direct-from-China sellers and Canadian DTC brands that had built their US growth on duty-free crossings. The brands least affected were those already operating US inventory or already paying duty at the bulk import level.
Common misconceptions
- Section 321 is technically still on the books, it’s the operational treatment that was suspended.
- The $800 threshold is not back, even for low-value parcels. Every commercial shipment now requires formal classification.
- Personal gifts and personal-use imports follow different rules and are not the same as commercial Section 321.