Importing Duty-Free with Section 321
Most eCommerce businesses aim to lower their expenses or provide customers with unique offerings, which frequently involves importing products. Fortunately, you can accomplish these objectives while simultaneously saving significant costs on your USA eCommerce fulfillment through utilization of the Section 321 provision. Section 321 enables businesses to eliminate taxes and duties on certain imported goods. While the regulation is intricate, it can be quite simply applied to companies with lower-cost shipments such as most apparel, footwear, and accessories brands.

What is Section 321?
Section 321 is the statute that describes de minimis. De minimis is the retail value below which articles can be admitted into the country free of duty and of any tax imposed on or by reason of importation.  The U.S. Customs and Border Protection states that the fair retail value of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800. The de minimis threshold was previously $200 but increased with the passage of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA). What does this mean for your business? It means a savings strategy. Because inventory can enter the USA, if the items value is under $800, you can send orders from either of our bi-costal facilities in Canada duty-free.

How Does It Work?
Canada offers a business-friendly duty drawback program, as well as a duty deferral program. So, you can ship your inventory into Canada and ship orders from one of NRI’s Canadian facilities into the USA, duty-free, and leverage either duty deferral or drawback to negate Canadian duties. By combining these ideas and utilizing NRI’s Canadian facilities, this creates a duty-free program for USA destined ecommerce shipments. It does not require an FTZ (Foreign-Trade Zones) or bonded facility to operate and it provides potentially significant improvements to your margins. NRI is managing this from our facilities on both west and east coasts – Vancouver, Kamloops, Montreal, and Toronto. 

Is Section 321 Right for You?
Depending on the company, Section 321 can provide an avenue toward business expansion and save money within the importing process. To see if Section 321 is right for your brand, perform a quick analysis of the opportunity value, there are a few simple calculations to perform to help as a guideline. For a deeper analysis, contact us.

  • Understand your current duty cost. Look at your total US duty paid on all imports, or at minimum assess one or two key products in your line. The total US duty paid becomes your opportunity for savings. 
  • Assess your average freight cost for shipping your average-sized ecommerce order domestically from within the USA. This will need to be compared with the cost of shipping from Canada. Consider your current packaging and if it is the most efficient (i.e., smallest) type of packaging solution possible.  
  • Determine average shipping cost from Canada for a same size parcel as above. This result may be in Canadian currency, so be sure to convert to USD for proper comparison. The closer to zero difference between Canada and USA shipping costs, the greater your total saving opportunity.

Importing Duty-Free? NRI Can Help
Importing goods can be tricky. It’s important to have reliable partners who are fluent in all things freight.  Leave it to NRI, your experienced partner in end-to-end logistics and fulfillment to help you make significant savings. Learn more about how we can help you today.