As part of the tax and spending provisions included in the “Megabill” signed by Trump into law on July 4, 2025 are provisions that eliminate the de minimis exemption under Section 321 of the Tariff Act of 1930. The de minimis exemption currently allows shipments not exceeding $800 to enter the U.S. duty-free, excluding shipments coming from China and Hong Kong. The tax and spending law officially eliminates the de minimis entry privilege for commercial shipments from all countries, with an effective date of July 1, 2027. In addition to its repeal of de minimis, the law imposes a new civil penalty for misuse of the de minimis entry process.  Violators of Section 321 of the Tariff Act of 1930 will be fined a civil penalty up to $5,000 for the first violation and up to $10,000 for each subsequent violation.  The effective date for the new penalty provision is August  3, 2025 (30 days after the law’s enactment).

On July 3, 2025, the U.S. House of Representatives voted 218-214 to pass President Trump’s domestic tax and spending bill, which passed in the Senate earlier last week in a narrow 51-50 vote. The House approved an initial version of the Megabill in May. An earlier version of the Megabill drafted in the Senate did not eliminate de minimis, but the version that ultimately passed in the House and Senate did.

Litigation challenging Trump’s previous elimination of the de minimis exemption for shipments coming from China is currently pending before the Court of International Trade (CIT). In Axle of Dearborn, Inc. v. Department of Commerce, auto parts importer Detroit Axle is arguing that Trump’s removal of the de minimis exemption for Chinese shipments was in violation of the Administrative Procedure Act (APA) and any changes to de minimis should have undergone a formal rule-making process. The CIT has scheduled oral arguments for the case to take place on July 10, 2025, where the CIT will consider Detroit Axle’s motion for a preliminary injunction against the enforcement of the de minimis removal. If de minimis treatment for Chinese shipments is reinstated as an outcome of this CIT case, the reinstatement would be temporary, given the enactment of the tax and spending law and the end to de minimis treatment for all countries in July 2027.

Crowell & Moring LLP continues to monitor this and other developments in the customs space and their impact on business and industry going forward.

Tags: de minimis
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John Brew is the former chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office.

John has extensive experience in import and export trade regulation, collaborating with corporations, trade associations, foreign governments, and nongovernmental organizations on…

John Brew is the former chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office.

John has extensive experience in import and export trade regulation, collaborating with corporations, trade associations, foreign governments, and nongovernmental organizations on customs administration, enforcement, compliance litigation, legislation, and policy matters. He represents clients in proceedings at the administrative and judicial levels as well as before Congress and the international bureaucracies that handle customs and trade matters. John advises clients on all substantive import regulatory issues handled by U.S. Customs and Border Protection and Immigration and Customs Enforcement, such as classification, valuation, origin, marking, tariff preference programs, other agency regulations, admissibility, customs brokerage, Section 321, drawback, foreign trade zones, duty recovery programs, import restrictions, quotas, audits, prior disclosures, penalties, investigations, Customs Trade Partnership Against Terrorism and trade compliance programs, importations under bond, the Jones Act, and vessel repairs.

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Dan Wolff represents clients facing enterprise-level risks arising out of government enforcement actions and complex commercial disputes. He is a problem solver who understands how to use litigation, whether as plaintiff or defendant, to achieve exceptional business solutions and outcomes. Dan leads the…

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Ivy Xun is an international trade analyst in Crowell & Moring’s Washington, D.C. office. She provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative and U.S. Customs and Border Protection. She…

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