What Just Happened to Section 321? What U.S. eCommerce Brands Need to Know as of April 2025

The de minimis loophole just closed for Chinese and Hong Kong goods— Here’s what comes next for eCommerce brands.

Last updated April 11, 2025

If you're in the eCommerce world — especially if you source products overseas — you've likely heard of Section 321. It’s been a go-to workaround for cutting costs on international shipments by taking advantage of the U.S. de minimis exemption (aka, duty-free entry for low-value packages).

But in true 2025 fashion, the rules just changed. And not in a small way.

In a sweeping new executive order, the U.S. government has officially restructured how Section 321 works, especially when it comes to shipments from China and Hong Kong. And if you’re a U.S.-based brand (or shipping to U.S. customers from abroad), you need to understand what this means — fast.

In this article we’re breaking down what Section 321 is, how it’s been used until now, what’s changing, who it affects, and what you can do to keep your fulfillment strategy ahead of the curve.

What is Section 321?

Section 321 of the U.S. Tariff Act allows one shipment per day, per recipient to enter the U.S. duty-free, as long as the total value is $800 or less. This rule was originally designed for everyday consumers ordering small items from overseas — think gifts, t-shirts, or electronics from abroad.

Over the years, though, eCommerce brands and marketplaces have found clever ways to legally leverage this exemption at scale. By breaking down orders or routing through third-party logistics partners, brands could keep individual shipments under the $800 threshold and avoid paying customs duties altogether.

How do eCommerce brands utilize Section 321?

Section 321 has been a key piece of the puzzle for brands that:

Manufacture overseas (especially in China)
Ship DTC from abroad to U.S. customers
Want to minimize landed costs and avoid tariffs on products like apparel, electronics, supplements, or accessories

Typically:

1. A U.S. customer places an order online.
2. It’s shipped directly from a warehouse in China (or another low-cost market).
3. If it’s under $800, it enters duty-free.

Some logistics providers even built operations around breaking down bulk shipments to qualify. Brands saved big on tariffs. Customs enforcement? Not so much.

What’s changed to the de minimis exception (and why now)?

As of May 2, 2025, the U.S. will officially ended duty-free treatment for certain low-value shipments from China and Hong Kong.

Here’s what triggered the shift:

The opioid crisis: Officials say many synthetic drugs and illicit substances are slipping into the U.S. through small international packages — often from China.
Evasion of tariffs: The rise of direct-to-consumer cross-border shipping has made it easy for international sellers to skirt duties.
Trade imbalance concerns: The government has been sounding the alarm on U.S. trade deficits and unfair pricing advantages, particularly with countries like China.

So, in short : security + economics = crackdown.

Note: As of April 10, 2025, certain Chinese products face a massive 125% tariff, up from 84%. This reflects rising tensions and retaliatory moves between the U.S. and China — and could signal future changes to broader import categories.

Key dates that impact Section 321 changes:

April 9, 2025: Tariffs on a wide range of goods go into effect (10% baseline, higher for some countries)

May 2, 2025: Section 321 de minimis no longer applies to targeted goods from China and Hong Kong

May 2–May 31, 2025: Flat-rate postal duties from China/Hong Kong increase to $100 per package

June 1, 2025 onward: Flat-rate postal duties rise to $200 per package

Who is impacted by the recent Section 321 changes?

Short answer? A lot of brands.

Let’s break it down:

1. Brands importing from China or Hong Kong

If you rely on China-based manufacturers and ship directly to U.S. customers using de minimis to avoid tariffs, this rule directly affects your bottom line

2. 3PLs & cross-border carriers

Carriers transporting packages from China now have to collect and remit duties — either a 30% ad valorem or a flat fee per package. That’s more paperwork, more fees, and a slower process overall

3. U.S.-Based brands using drop shipping or cross-docking

Even if you’re a U.S. brand, if your inventory never touches U.S. soil before being delivered to customers, you’re in the crosshairs.

4. Marketplaces (Temu, Shein, AliExpress, etc.)

These platforms, which heavily rely on Section 321 for ultra-low shipping costs, are seeing the most pressure. Some are already planning to warehouse more goods in the U.S. to adapt.

What should eCommerce brands do to lessen the impact of de minimis changes?

Don’t panic. But do pivot.

Here’s how to stay nimble and protect your margins:

1. Reevaluate your sourcing and fulfillment strategy

If you’re still drop-shipping from China or depending on Section 321 to save money — it’s time to rethink.

📅 Consider stocking inventory domestically
🔬 Explore hybrid fulfillment (international bulk + U.S. final-mile)
💼 Talk to your 3PL (hey 👋) about FTZs or bonded warehouse options

2. Know your tariff codes and product classifications

If you shift to importing in bulk, you’ll now be paying duties on products you might not have been taxed on before.

🔗 Get with your customs broker to check your HTS codes
🔍 Make sure you understand what tariffs apply to your product category
💳 If applicable, look into tariff engineering to reclassify or reconfigure products legally

3. Watch your margins

You’ll want to build in new landed cost assumptions — including:

Duties (likely 10–30% depending on origin)
Compliance costs (formal entries, customs bonds)
Increased last-mile handling or warehousing needs

4. Be transparent with your customers

If this change forces a small price increase or shift in delivery speed, don’t leave your customers in the dark.

Update shipping timelines
Communicate any pricing changes clearly
Highlight any improvements (like faster domestic shipping!)

5. Partner with a fulfillment provider who gets it

(Yes, we’re going to plug ourselves here. Shameless, we know.)

Nice Commerce helps eCommerce brands scale smart — which means navigating stuff like Section 321 before it throws off your margins.

We’re already working with brands to:

Shift inventory into the U.S.
Implement SKU-level tariff tracking
Explore fulfillment network changes to keep costs low and delivery times fast

🤔 Still Have Questions?

Here are a few quick ones we’re hearing from our clients:

Q: Are all Chinese goods now excluded from Section 321?
Only specific goods outlined in Executive Order 14195 and its amendments. But for practical purposes, most low-value DTC shipments from China and Hong Kong are affected.

Q: Can I still use Section 321 for goods from other countries?
Yes — for now. But given the direction of policy, don’t be surprised if further limitations are coming.

Q: What if I’m using an FTZ or bonded warehouse?
Those can still offer duty deferral, but new rules require many goods to be entered as privileged foreign status, locking in the tariff rate upfront.

Final thoughts:

Section 321 has been a shipping shortcut for years — but in 2025, the shortcut has closed (at least for China).

This doesn’t mean doom and gloom for your margins, but it does mean it's time to think strategically about how your products get to customers and who you partner with to get them there.

Need help navigating what this means for your brand? Let’s talk.

Nice Commerce is here to make the complex stuff feel a little simpler — and help you adapt before your competitors do.

Need a fulfillment partner for your e-commerce business? Reach out to Nice Commerce!