May 19, 2021 Last updated May 19th, 2021 859 Reads share

Duty Elimination and Section 321: What you need to know

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If you own an e-commerce business, then you would be aware of just how much the cost of importation can eat into your profits.

I mean, I have been in this industry for a long time, and ever since the Trump administration introduced several duties that made it more expensive to import goods from overseas, it has become harder and harder to make money.

But do you want to know the worst bit?

I had to pass these importation costs on to my customers, which actually reduced business satisfaction.

And I know I am not alone.

These duties have made it harder for e-commerce businesses across the nation to import goods for sale. This has increased the price of these products, leading to a reduction in consumer confidence throughout the US.

In fact, experts have estimated that the increased cost being passed onto consumers is about 57 billion dollars per year.

Which is why finding a way to avoid these duties is integral.


De Minimis, Section 321, and Duty Elimination

In February 2016, the US opted to raise the de minimis value from 200 USD up to 800 USD — opening the door for small e-commerce companies to reduce the cost of importation in a very big way.

See, the De Minimis value threshold describes the maximum dollar value that a shipment can be imported into a country duty and tax free. This meant that people traveling back to America from overseas can bring products with them to the value of 800 USD without worrying about incurring any importation costs.

This new de minimis value was then published by the USA Customs and Border Protection in August 2016 as part of an issuance of Section 321 exemptions.

And this is where small businesses started to take advantage.

Section 321 describes a specific category of shipments that fall below the de minimis value of 800 USD, making them completely exempt from the duties and taxes associated with overseas importation.

This means that if you can get your overseas shipments classified as a Section 321, you can completely eliminate import duties.

Now, the caveat here is that in order to qualify for the exemption, a shipment must be imported by an individual US consumer on a single day, and the retail value of that shipment must be 800 dollars or less.


The Rise of Section 321

Over the last decade we have seen online shopping grow to unbelievable levels. And, when this was combined with increase in the de minimis value to $800, the number of shipments entering the USA under Section 321 classification increased exponentially.

In fact, Customs and Border Protection has suggested that as much as 2 million shipments can enter the US under Section 321 classification per day.

That is a lot of money saved on importation duties…

It is important to note that to manage this huge increase in Section 321 shipments, Customs and Border Protection need to receive all Section 321 shipment details prior to their arrival at the border so that it can maintain acceptable processing speeds.

To facilitate this process, a specific Section 321 Data Pilot Program was initiated to allow shippers to submit the required documentation electronically prior to the shipment’s arrival at the border.

This has vastly increased the speed at which goods make it across the border, while still sticking to strict border regulations and laws.

And you can use it to your advantage.


Duty Elimination and Fulfillment Companies

A Canadian fulfillment company is, in essence, a company that receives and ships orders on your behalf.

See, if you are making large orders of overseas products to sell via your e-commerce platform, then there is very little chance that they are going to be less than 800 american dollars — meaning you have to pay associated import tariffs.

However, if you enlist a canadian based fulfillment company for some help, this can be avoided.

These large companies have warehouse facilities located in Canada that can store your stock for you. Then, when you receive an order through your website, they ship them out to your individual customers in the USA on your behalf.

Each individual order can then gain Section 321 classification, completely eliminating importation duties.

If you are in the world of online business, this is a no-brainer.


Final Thoughts

As a small business owner, eliminating any unnecessary costs is essential to keep my business afloat. It is also a great way to reduce the cost of my products, and improve customer satisfaction.

And the best way to reduce cost?

Through duty elimination.

So, what are you waiting for? Take the first step, explore Section 321, and save yourself heaps of money in the process.


Dmitry Kozlov

Dmitry Kozlov

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