In our recent webinar, expert Tim Manning discussed the implications of the U.S. government’s recent trade policy updates, specifically the Section 301 and 321 announcements, with Ilias Simpson, President of Cart.com. To kick things off, Simpson highlighted the apprehension among brands and retailers as they assess the impact of these changes on their supply chains and ecommerce operations. Many are considering shifting production to the U.S. or exploring alternative international options to manage tariffs.
Tim Manning provided a deeper overview of the Biden administration's goals, which focus on supporting American manufacturing and addressing public safety issues associated with high volumes of de minimis cargo. This crackdown on Section 321 exemptions aims to close loopholes, allowing for better oversight and enhanced safety through customs enforcement.
Understanding the impact on Customs and Border Protection (CBP)
During the webinar, Sam Bowman asked Tim Manning to elaborate on the broader implications of the recent trade policy changes, beyond financial effects, specifically concerning Customs and Border Protection (CBP) operations. Manning highlighted that CBP processes around 4 million de minimis packages daily, yet it lacks the capacity to thoroughly inspect the increasing volume of shipments, which often includes illicit items. To address this, the White House announced measures aimed at closing loopholes that previously allowed items on the Section 301 and 201 lists to enter the U.S. under de minimis exemptions if they were valued below $800. Now, such items will require full declarations, including the 10-digit HTS code and sender details, enabling CBP to better screen shipments and enhance public safety. Additionally, the Consumer Product Safety Commission (CPSC) will receive detailed information on imports to ensure safety compliance.
Timeline for implementing the proposed rule changes
When asked about the timeline for implementing the new trade rule changes, Tim Manning responded, "That's the 800 billion dollar question." He explained that while no one can give a definitive answer, there is a process in place. The administration has already announced its intention to file a notice of proposed rulemaking, which would be published in the Federal Register. Following that, there will be a public comment period, typically lasting 30 to 60 days, after which Customs and Border Protection (CBP) and the Treasury Department will review and adjudicate the comments. This review can take weeks or even months, potentially leading to additional comment periods if needed. Once the final rule is issued, there will likely be a 60-day window before implementation. Manning expressed confidence that Jeff Zients, the President's Chief of Staff, will push for the proposed rulemaking announcement before the end of the administration, likely around late November or early December.
Potential impacts of the election on trade rules
When asked how the upcoming election might influence trade rule changes, Manning discussed possible outcomes. He suggested that some level of change is expected regardless of the administration, though the specifics could differ based on each administration’s focus, particularly with respect to China. Manning elaborated, noting that a Trump administration may push for global tariffs and stricter policies on imports from China, with an intention to revisit the USMCA in 2026. Trump’s proposed tariffs could significantly impact trade, including the flow of goods across the U.S.-Mexico border.
On the other hand, a Harris administration might bring new priorities. He indicated that a Harris presidency would likely involve new senior decision-makers, possibly leading to shifts in trade policy and focus. Regardless of the election outcome, any proposed rule will follow the regulatory review process, ultimately landing on the President's desk for final approval by spring.
The implications of the rule changes for the supply chain and brands
Ilias Simpson outlined two main implications of the rule changes on supply chains and brands. First, he noted the financial impact, where potential policy changes could influence costs, forcing brands to decide whether to adjust prices or absorb the impact on margins. Simpson pointed out that increased costs for companies like Shein and Temu could create opportunities for other brands to regain market share, particularly in the apparel sector.
The second major implication involves potential disruptions. Regulatory changes aimed at improving health and safety could slow down processes, adding complexity to inventory planning and supply chain management, especially for ecommerce brands that rely on speed. Many brands are considering moving more operations stateside to avoid these disruptions and maintain supply chain stability.
Should brands plan for increased demand in U.S. distribution centers?
Ilias Simpson talked about the likelihood of a surge in demand for U.S. distribution center space as brands consider shifting operations stateside due to increased shipping costs and potential tariffs. This could create a "seller’s market" for warehouse space, and brands that wait too long may face challenges securing the needed facilities.
Simpson advised brands to analyze cost and supply chain implications now, rather than waiting for final regulations, as delays in planning could lead to customer service disruptions. Brands are focused on peak season, which is in full swing, and also budgeting for 2025. However, strategizing around rule changes and planning for the "worst-case scenario" deserves attention now, and could ensure they’re prepared. Tim Manning added that an aggressive regulatory timeline could see changes implemented as early as late January, highlighting the need for brands to act swiftly.
Simpson says, “The last thing you want is to be in a situation where you sat still.”
To hear the full conversation and learn more actionable strategies, watch the webinar on-demand. If you're ready to take action and are interested in learning more about Cart.com's fulfillment network, available space or have more questions about the 321 de minimis rule changes, contact our expert team today.
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