US T86 Customs Clearance Halted for 90 Days: Fully Managed Sellers in Trouble?!
It has been reported that SEKO Logistics will be suspended from using the US T86 customs clearance for 90 days starting May 27. SEKO has received a notice from the U.S. Customs and Border Protection (U.S. CBP) to halt their participation in Type 86 entries. The suspension will last until at least August 24, 2024. During this period, SEKO cannot submit Type 86 entries on behalf of their clients.
This news has raised concerns among businesses using fully managed platforms such as Temu and Shein.
What’s T86?
On April 19th, the US House Committee on Ways and Means approved the “End China’s De Minimis Abuse Act,” which revises the rules for the entry of Chinese goods under the “de minimis” exemption. This includes raising the exemption thresholds and barriers and establishing new penalties for violations.
The move comes in response to a significant increase in “de minimis” exempted packages being sent to the US recently, primarily from Pinduoduo’s cross-border e-commerce platform Temu and the Chinese fast-fashion e-commerce Shein.
Mike Gallagher, chairman of the House Select Committee on the Chinese Communist Party, recently stated that this year alone, 485 million packages entered the US using the “de minimis” exemption, with one-third coming from Temu and Shein.
The “de minimi” exemption is a standard trade policy worldwide that exempts goods from taxes and formal customs declarations if they do not exceed a specified value or weight.
Different countries have different exemption thresholds. For example, Australia’s threshold is $1000, Canada’s is $20, and Europe’s average is about $190. In the US, the”de minimi” rule is derived from section 321 of the”1930 Tariff Act”, which allows goods with a retail value of less than $800 to enter the US tax-free and exempt from strict inspections by the US Customs and Border Protection (CBP).
Type 86 (T86) clearance, related to section 321, was introduced by the CBP in 2019 as an informal entry method for low-value, duty-free packages, specifically for goods valued at or below $800 (the US tax-free threshold).
How Does the T86 Clearance Mode Operate?
The shipper, buyer, or designated customs broker must electronically submit the following data to CBP’s new Automated Commercial Environment (ACE):
- Air waybill or bill of lading
- The consignee’s name and address
- Country of origin
- Customs clearance number
- Fair retail value of goods in the country of shipment
- Planned port of entry
- Quantity
- Shipper’s name, address, and country
- 10-digit HS code (generally, low-value imports do not require an HS code. This is the main difference between T86 clearance and other clearance modes)
- Consignee’s designated broker, purchaser, or owner’s Importer of Record (IOR) number (if the trader’s shipment is subject to partner government agency reporting requirements, they will be required to provide an IOR number)
The T86 clearance mode allows submission of these details within 15 days after the goods arrive. Generally, CBP will immediately release the goods if there are no issues upon receiving the data.
However, it has been reported that following the large influx of small packages from platforms like TEMU and SHEIN, numerous misclassifications, underreporting, and infringements have occurred, significantly reducing customs inspection efficiency.
Therefore, US Customs has moved forward the deadline for submitting import declaration data for T86 clearance goods, requiring importers to provide a complete and accurate data set, including full product descriptions and HS codes.
Summary
The recent changes in US customs policies, particularly the suspension of the T86 clearance, could significantly impact e-commerce sellers using platforms like Temu and Shein. Sellers should closely monitor updates from these platforms and adjust their logistics and compliance strategies accordingly.
And it’s crucial for sellers to ensure their shipment data is complete and accurate to avoid delays and penalties under the new stringent measures. Working with experienced customs brokers and logistics providers familiar with these regulations will also be beneficial in navigating this challenging period.