Section 321 China Suspension: What Replaces De Minimis for Importers
The Section 321 de minimis exemption for China was suspended in May 2025. For mid-market importers using consolidated freight or repackaging, here are the real alternatives: Type 86, FTZ admissions, bonded warehouse, and informal entry.
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Open calculatorSection 321 China Suspension: What Replaces De Minimis for Importers
The May 2 2025 executive order suspended the Section 321 de minimis exemption for goods of Chinese and Hong Kong origin. The change ended a workflow that millions of low-value Chinese shipments had used since the de minimis threshold was raised to $800 in 2016. For consolidated freight forwarders, repackaging operations, and any importer who had structured around de minimis, the operational picture in 2026 is materially different.
This guide explains what the suspension actually covers, which alternative entry processes work for Chinese-origin goods, the duty math after the suspension, and where the real cost savings now sit.
What was suspended
Section 321 of the Tariff Act of 1930, codified at 19 USC 1321, exempted from duty and most formal entry requirements any imported article fairly retailed in the country of shipment for $800 or less. The exemption applied per recipient per day. The volume effect was enormous: by 2024 over a billion shipments per year entered under Section 321, most originating in China.
The May 2025 order suspended the privilege specifically for goods of Chinese and Hong Kong origin. The substance:
- Goods of Chinese or Hong Kong origin no longer qualify for de minimis at any value.
- They require a formal entry (or Type 86 informal entry) with full duty payment.
- Section 301 List 1, 2, 3, 4A all apply at the entry as if it were a commercial shipment.
- Section 122 (post-February 2026 reciprocal) applies.
- Section 232 derivative rules apply if applicable.
Non-Chinese, non-Hong-Kong origins continue to qualify for de minimis at the original $800 threshold.
Type 86 informal entry
Type 86 is the streamlined entry process for low-value shipments. It survives for Chinese-origin product but with no duty exemption. The advantage of Type 86 is process speed, not duty relief.
Type 86 eligibility:
- Per shipment value not exceeding the formal entry threshold (currently $2,500 for most goods).
- Filed in ACE by an ACE-portal-enabled filer (carrier, broker, or self-filer).
- Required data: HTS code, country of origin, manifest reference, value.
- No bond required for the entry itself in most cases.
- Duty paid at filing.
Type 86 saves time but not money. A 50-piece Chinese-origin shipment at $100 per piece would have entered free under Section 321 in 2024. Today the same shipment pays 7.5 percent List 4A plus 10 percent Section 122 (assuming the product is on 4A and Section 122 applies) on $5,000, equal to $1,125 in duty before MPF.
FTZ admissions
Foreign Trade Zones offer duty deferral and certain duty reductions. For Chinese-origin product, an FTZ admission:
- Defers duty until formal entry into the US Customs Territory.
- Allows manipulation, kitting, repackaging, light assembly inside the zone without triggering duty.
- Allows inverted-tariff election where the assembled finished good has a lower duty rate than the components.
- Does NOT change country of origin for Section 232, 301, or 122 purposes.
Useful for cash flow and for assembly operations where the finished good qualifies for a lower line. Not useful for avoiding the China duty layers themselves.
Bonded warehouse
A bonded warehouse holds imported merchandise without payment of duty for up to 5 years. The owner can pay duty when the merchandise leaves the warehouse for the US Customs Territory, or re-export without paying. Useful when:
- The importer is uncertain whether the product will sell domestically or be re-exported.
- The product is held for grading, sorting, or quality inspection.
- The importer wants to defer duty during a working capital squeeze.
For Chinese-origin product, the bonded warehouse defers but does not eliminate the duty. Re-export from the bonded warehouse to a non-US destination avoids the US duty entirely.
The "first sale" rule
For Chinese-origin product routed through a Hong Kong or Singapore trading company before US import, the first sale rule under 19 CFR 152.103(a)(1) allows the US importer to use the manufacturer-to-trading-company sale price as the dutiable value, instead of the trading-company-to-US sale price.
The reduction in dutiable value flows through to all duty layers (MFN, 301, 232, 122, ADCVD). On a typical 30 percent first-sale price reduction, the total duty reduction can be 8 to 15 percent of the full sale value.
CBP has tightened first-sale audit posture in 2025 to 2026. Documentation requirements:
- Independent factory invoice to the trading company.
- Proof of payment.
- Bona fide arms-length transaction (no related-party adjustment).
- Goods clearly destined for export at the time of the first sale.
A first sale claim without all four pillars will fail on audit. The duty savings are real but the documentation cost is non-trivial.
Worked example: a former de minimis lane
A US e-commerce reseller imported 100 shipments per day of $100 average value, Chinese origin, HTS 8517.62 (smart-home electronics), under Section 321 in 2024. Annual duty paid: $0.
Same shipment volume in 2026:
| Per shipment | Rate | Base | Amount (USD) |
|---|---|---|---|
| Section 301 List 4A | 7.5 percent | 100 | 7.50 |
| Section 122 | 10 percent | 100 | 15 |
| MPF (minimum) | minimum 2.62 | per entry | 2.62 |
| Per-shipment duty | 32.12 |
Annual duty on 100 shipments per day x 365 days: $1,172,380. The reseller either:
- Absorbs the cost and watches gross margin collapse.
- Passes through to the customer (price up 32 percent).
- Switches sourcing to Vietnam, India, or Mexico where Section 321 still applies under $800.
The third option drives the supplier-substitution wave visible across mid-2025 to mid-2026 in apparel, electronics, and homewares.
Run your China-suspended entry now
The LandedFees calculator applies the post-May 2025 Section 321 suspension automatically when origin is China or Hong Kong, stacks the correct 301, 122, and 232 layers, and flags Type 86 versus formal entry eligibility. Compare to a non-China origin in the same product to see the substitution math.
Calculate a China-origin entry
Section 122 status as of June 20 2026
The May 7 2026 Court of International Trade ruling in Oregon v. United States (consolidated with Burlap and Barrel v. United States) struck down the Section 122 proclamation. The Federal Circuit issued an administrative stay on May 12 2026, so CBP is still collecting the duty pending appeal. Importers paying now should preserve protest rights and refund claims in case the government loses on the merits. The underlying Section 122 authority sunsets July 24 2026 under the statutory 150-day ceiling, regardless of the appeal outcome, unless Congress extends or a fresh proclamation restarts the clock.
Citations
- Executive Order on Section 321 China suspension, May 2 2025: Federal Register
- 19 USC 1321 (original de minimis statute): https://www.law.cornell.edu/uscode/text/19/1321
- CBP CSMS on Section 321 China implementation: https://content.govdelivery.com/accounts/USDHSCBP
- Type 86 program guidance: https://www.cbp.gov/trade/programs-administration/entry-summary/type-86-test
- 19 CFR 152.103(a)(1) first sale rule: https://www.ecfr.gov/current/title-19/chapter-I/part-152
Frequently asked questions
Is Section 321 completely gone for China?
Yes for goods of Chinese origin. The May 2 2025 executive order suspended the de minimis privilege for goods from China and Hong Kong. Section 321 still applies to most other origins under the original $800 threshold.
Does Type 86 still work for China?
Partly. Type 86 itself remains available but Chinese-origin goods entering under Type 86 are subject to all applicable duties, including Section 301 and Section 122. The Type 86 streamlined process still applies but there is no duty relief.
What about FTZ admissions?
FTZs still allow duty deferral, inverted-tariff election, and the manipulation of goods before formal entry. For Chinese-origin product, this can defer duty until formal entry but does not eliminate the duty owed. Useful for cash flow, not for duty avoidance.
Can I claim a USMCA exemption on Chinese goods routed through Mexico?
No. USMCA origin requires substantial transformation in a USMCA country. Repackaging or labeling in Mexico is not substantial transformation. The CBP first-sale rule and the rule of origin are now actively audited for routed Chinese product.
What is the de minimis rule for non-China origins?
Goods valued $800 or less per recipient per day are still eligible for informal entry under Section 321 if from a non-China non-Hong-Kong origin. The same rule applies to most other origins.
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