The trade war between the US and China peaked in 2016, when the Trump administration introduced a number of tariffs and duties that made it exponentially more expensive to import products from China.
While these were introduced to increase reliance on local products, all they ended up doing was increasing business running costs — costs that were passed directly onto American consumers to the value of an estimated 4.75 billion dollars a month.
This caused the closure of numerous ecommerce businesses across the nation — leading to widespread economic loss in America. It was this that led to the development of a unique workaround to the problem called Section 321.
The Section 321 Solution
Strangely coinciding with the importation costs introduced in 2016, the De Minimis value for imported goods was quickly increased from 200 to 800 US dollars.
This “De Minimis” threshold ultimately describes the dollar value a shipment can be imported into the US without incurring importation costs (i.e. the aforementioned tariffs and duties).
In short, this means that any goods imported into the US under the value of 800 USD did so for free.
Then, in late 2016, the De Minimis value was published within a list of Section 321 exemptions by US customs. And it was this step that allowed American ecommerce businesses to find a solution to their import woes.
Section 321 describes a category of shipment that sits below the de minimis value of 800 USD. As such, if an ecommerce business can get their products classified as a Section 321, they can completely eliminate import duties.
Since late 2016 this method of overseas importation has become increasingly common in the USA. It has led to the development of a unique direct-to-consumer sales model that relies on third party fulfillment to ensure Section 321 classification — and the US economy has benefited immensely.
In fact, ecommerce retail sales in the USA increased from 598 billion dollars in 2019, all the way to 792 billion dollars in 2020 — clearly showing the impact of Section 321 in this span of time.
Section 321 Continues to Climb
While Section 321 opened the door for the continuation of ecommerce in America, many hoped that it would not last forever.
With the change in US administration that occurred in 2020, many believed that the import duties and tariffs would be removed completely — ultimately paving the way for a return to “normal” ecommerce in the US.
But, despite common belief, these duties and tariffs were upheld by the Biden administration, making Section 321 more essential than ever.
As a clear demonstration of how important this clause is to businesses across America, US Customs are believed to be receiving more than 54 million small packages under the Section 321 classification per month — a number that is up from the 36 million they were receiving in just four years previous.
This will coincide with a projected increase in ecommerce spending by US consumers all the way up to almost 1 trillion dollars over the next twelve months — a seemingly astounding number that is only set to increase over the coming years.
The Practical Impact of Section 321
It should come as no surprise that Section 321 is an efficient means of doing business — by removing the cost of importation, it has increased the profit margin of many businesses across the nation.
Some clothing items from China have combined import taxes that total 39%. This means that ecommerce stores using the Section 321 model can sell their products for 39% less than brick-and-mortar retail stores — which is a shocking statistic.
With this in mind, there should be no questions as to why ecommerce has become the primary means of purchasing by American consumers. It also highlights the importance of Section 321 to these businesses, providing clear insight into why it has become so apparent.
In short, Section 321 is here to stay — so get on board, or get left behind.
