Nearshoring has long offered companies a strategic advantage by allowing them to move production or fulfillment closer to the United States, often to countries like Mexico or Canada. This approach not only reduces transit times and transportation costs but also helps businesses optimize their supply chain and respond quickly to market demands. For years, many businesses combined nearshoring with Section 321 of the Tariff Act of 1930 to maximize cost savings and streamline cross-border operations.
What Is Section 321?
Section 321 is a U.S. Customs provision that allows for duty-free importation of shipments valued at $800 or less per recipient per day. This exemption has been especially valuable for ecommerce brands and fulfillment operations, enabling them to ship low-value goods into the U.S. without incurring customs duties or taxes.
By leveraging Section 321, companies could split inventory into smaller parcels and move them across the border, significantly reducing import costs and simplifying customs clearance.
How Nearshoring Leveraged Section 321
For many businesses, the combination of nearshoring and Section 321 created a powerful cost-saving model. A typical strategy involved sourcing products from Asia, moving bulk inventory to a warehouse or 3PL in Mexico, and then fulfilling U.S. customer orders by shipping individual packages under the $800 threshold. This allowed companies to benefit from Mexico’s lower labor costs, geographic proximity, and favorable time zones, while also taking advantage of Section 321’s duty-free import allowance.
This approach became particularly popular as U.S. companies sought to avoid tariffs on goods imported directly from China. By routing goods through Mexico and utilizing nearshoring, businesses could maintain a cost-effective supply chain and deliver products quickly to U.S. customers.
Recent Changes and Challenges
The landscape around Section 321 and nearshoring has shifted significantly in 2025 due to new U.S. trade policies and enforcement actions. The U.S. government has moved to close what it viewed as a “de minimis loophole,” which allowed businesses to import large volumes of low-value goods duty-free by splitting shipments.
- Suspension and Tariff Increases: Recent executive actions have suspended the de minimis exemption for goods coming from Mexico and Canada, meaning that shipments under $800 now face tariffs-up to 25% for some goods. This change was partly aimed at curbing the practice of routing Chinese goods through Mexico to avoid tariffs. Mexico, for its part, has also increased duties on certain finished goods and tightened restrictions on its IMMEX program, further complicating cross-border nearshoring strategies.
- Documentation and Compliance: New rules require more detailed shipment descriptions and accurate product classification. Generic descriptions are no longer accepted, and incorrect or incomplete documentation can result in delays or penalties. Companies must also comply with stricter entry types and customs procedures, making the process more complex for nearshoring operations.
- Eligibility Limitations: Not all products qualify for Section 321. Restricted items include firearms, alcohol, tobacco, and goods subject to quotas or anti-dumping duties. Only one shipment per recipient per day is allowed, and attempts to split larger orders into multiple smaller shipments to bypass the rules are prohibited.
Impact on Nearshoring Strategies
These policy shifts have forced businesses to reevaluate their nearshoring models. Companies that previously relied on Mexico as a nearshoring hub for duty-free entry under Section 321 are now facing higher tariffs and more complex compliance requirements. Many are considering reshoring inventory back to U.S. warehouses, or exploring alternative sourcing options in other regions to maintain cost-effective fulfillment.
For ecommerce and retail brands, the end of the Section 321 loophole means higher landed costs and potential delays at customs. This impacts pricing strategies, margins, and the overall competitiveness of nearshoring as a supply chain solution.
Key Takeaways
- Nearshoring and Section 321 once worked hand-in-hand to deliver significant cost savings and supply chain efficiencies for U.S. importers.
- Recent regulatory changes have suspended the duty-free benefits for goods routed through nearshore locations like Mexico and Canada, introducing new tariffs and compliance hurdles.
- Companies must now focus on meticulous documentation, accurate product classification, and alternative fulfillment strategies to adapt to the evolving trade environment.
As the regulatory landscape continues to evolve, businesses leveraging nearshoring must stay agile, monitor policy updates, and be prepared to adjust their sourcing and fulfillment strategies to maintain efficiency and compliance.
