Section 321 Suspended: What It Means for Ecommerce Businesses and Global Trade

On February 1, 2025, President Trump signed an executive action that included a clause to suspend the Section 321 customs de minimis entry process effective February 4, 2025, which previously allowed shipments under $800 to enter the US duty-free. This means all ecommerce and cross-border retail shipments—previously benefiting from this exemption—will now be subject to tariffs. These changes will have major ripple effects, the first of which is the impact on global ecommerce brands who will need to quickly change their international fulfillment strategies.

Included in the executive action are a 25% tariff on imports from Canada and Mexico, (which have been delayed as of February 3), and a 10% tariff on imports from China. He specifically called out a 10% tariff on Canadian energy exports. More negotiations are planned. 

The use of Section 321 has surged over the past decade as ecommerce brands sought to reduce costs and maximize profits on direct-to-consumer (DTC) sales. According to US Customs and Border Protection (CBP), de minimis shipments made up 92% of all cargo entering the US. However, the sudden suspension of Section 321 will have brands scrambling to find alternative fulfillment strategies to avoid disruptions and much higher costs. 

With this shift, many brands that previously relied on Section 321 will likely transition to US-based fulfillment providers to maintain efficiency and cost control. As companies reassess their logistics operations, finding the right domestic fulfillment partners will be essential to sustaining seamless DTC shipping and minimizing the impact of new tariffs. 

Understanding Section 321: Duty-Free Imports for Low-Value Shipments

Section 321 is a US Customs and Border Protection (CBP) designation that allows goods to be imported duty-free, provided they meet the de minimis value threshold. Currently set at $800 USD, this means most shipments valued at or below this amount can enter the US without incurring customs duties, import taxes, or tariffs. This provision is particularly beneficial for ecommerce businesses that ship low-value goods directly to consumers. Read the complete guide to section 321 for more information. 

CBP manages these shipments through different data pilot programs. Section 321 is released on the manifest data, whereas Entry Type 86 (T86) is a formal customs entry that extends Section 321 benefits to shipments requiring Partner Government Agency (PGA) oversight. T86 entries use the Automated Commercial Environment (ACE) system, providing better supply chain visibility while requiring additional data elements for compliance. While most commodities qualify under T86, understanding the distinction between Section 321 and T86 is crucial for optimizing cross-border logistics. 

What is the Immediate Impact of Brands Leveraging Section 321

With the suspension of Section 321 taking effect on February 4, 2025, brands that previously benefited from duty-free imports will now face significant tariffs and taxes on goods sold to US customers.

This sudden change presents an immediate financial challenge, forcing brands to either absorb the increased costs—reducing profit margins—or pass them onto consumers through price adjustments. For many DTC businesses, even small cost increases can disrupt pricing strategies, conversion rates, and overall competitiveness in an already tough market. 

Beyond the financial impact, the logistics and operational complexities of cross-border shipping will increase significantly. All imports, regardless of the value, will now require: 

• Formal customs entries for every shipment
• Additional processing and paperwork, increasing administrative overhead
• Full payment of newly imposed tariffs on all imports
• Significantly longer transit times, creating potential delays for customers
• A decision on who absorbs the costs—either the brand or the end customer

Previously, Section 321 allowed for a streamlined import process, enabling brands to move goods quickly and cost-effectively. Now, with these new barriers in place, brands operating at high volumes will face slower, more complex fulfillment workflows, making cross-border DTC shipping less viable. To adapt, many businesses will need to explore alternative fulfillment strategies, such as US-based warehousing, to maintain cost efficiency, delivery speed, and a seamless customer experience while avoiding customs bottlenecks and unexpected tariffs. 

How Brands can Adapt to the Section 321 Suspension

With the suspension of Section 321, brands that previously relied on duty-free direct-to-consumer (DTC) shipping from abroad must now rethink their fulfillment strategies to mitigate the impact of new tariffs and logistical challenges. One option is to shift fulfillment to the US, allowing brands to store inventory closer to customers. While this means paying tariffs upfront, it eliminates the risk of customs delays, ensures faster shipping times, and provides greater control over fulfillment operations. Though this approach requires some logistical adjustments, it offers long-term stability and operational efficiency in a post-321 landscape. 

Some brands may prefer to maintain their existing cross-border fulfillment operations and take a wait-and-see approach. This allows businesses to continue shipping from their current facilities without immediate disruption, with the hope that policies may change or exemptions could be introduced. However, this strategy comes with risks, including longer transit times, customs bottlenecks, and increased shipping costs. Regardless of which path a brand chooses, staying proactive and flexible in response to evolving trade regulations will be critical to maintaining a seamless DTC operation and minimizing potential disruptions. 

Continuing to Import DTC Goods into the US: Type 11 versus Type 86

When importing goods into the U.S., brands must consider the best customs clearance method to minimize costs and maximize efficiency. Two commonly used entry types are Entry Type 11 (Informal Entry) and Type 86 (Section 321).

• Entry Type 86 allows duty-free clearance for shipments valued under $800 per day per consignee, making it ideal for high-volume, low-value direct-to-consumer (DTC) shipments. However, with the suspension of Section 321 this will no longer be an option.
• Entry Type 11  allows importers to declare the manufactured cost (rather than the retail price) as the dutiable value. This provides an alternative option for importers to reduce tariff expenses; the manufactured cost is almost always lower than the retail value, offering importers a higher chance of goods entering under the de minimis threshold.

Before jumping to change the entry type of your goods, considerations should be made. Using Entry Type 86 allowed for faster customs clearance and required minimal documentation, Type 11 requires more detailed data documentation, such as a commercial invoice with a full value breakdown.

For brands choosing to use Entry Type 11, they may see reduced duty payments, which is especially valuable for businesses with products such as electronics, apparel, and beauty, where retail markups can be significant. Below is a comparison of these two entry types:

Bottom Line

The suspension of Section 321 marks a significant turning point for ecommerce brands that have long relied on duty-free cross-border fulfillment to serve US customers. As tariffs and customs requirements become more complex, businesses must act swiftly to reassess their supply chain strategies and adapt to the new reality.

Whether by transitioning to US-based fulfillment, exploring alternative international logistics solutions, or closely monitoring potential policy changes, brands that take a proactive approach will be best positioned to minimize disruptions and maintain customer satisfaction. 

While these changes introduce new challenges, they also present an opportunity for brands to optimize their fulfillment models for long-term resilience. The brands that invest in efficient logistics, strategic warehousing, and strong fulfillment partnerships will not only mitigate immediate risks but also set themselves up for sustainable growth in an evolving global trade environment. With the right strategies in place, businesses can continue to deliver a seamless DTC experience, despite the shifting regulatory landscape. 

If you’re looking for a 3PL partner to help you navigate the Section 321 suspension, DCL Logistics offers a range of fulfillment solutions to keep your operations running smoothly. Whether you need guidance on adapting to these changes or optimizing your fulfillment strategy, we’re here to help. Reach out to us to explore your options.