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  • Writer's pictureCezary L. Lerski

U.S. Import Strategies: How importers of goods into the U.S. market minimize tariffs and maximize profits

Import charges, including duties and tariffs, are crucial to the profit margins of importers across all global markets. Coupled with shipping costs, which fluctuate greatly based on the goods’ country of origin and their specific attributes, these charges substantially influence the total import costs and the profitability of importers. Consequently, while import fees represent just one component of the overall cost structure, they can lead to a considerable decrease in the profit margins for those importing goods into the U.S.

How can this problem be solved? Importers who offer products to U.S. customers that incur high tariffs and duties can benefit from the provisions outlined in Section 321 of the Tariff Act of 1930. This legislation offers a practical approach to circumventing steep U.S. import duties and tariffs, thereby reducing import fees and enhancing profitability.

Section 321, part of the Trade Facilitation and Customs Enforcement Act of 1930 (TFTEA), pertains to the de minimis procedure. Due to amendments made in February 2016, it now permits the importation of goods into the United States valued at no more than $800 without the requirement to pay customs duties and taxes.

Many importers leverage this exemption to boost the profitability of their business operations.

A common strategy involves a scenario where a single recipient in the U.S. can receive up to 365 shipments annually, with each shipment valued at up to $800, all without incurring customs duties. The rule stipulating that a “shipment not exceeding $800 for one person on a single day” can be imported duty-free allows an individual in the U.S. to legally accept 365 shipments per year—a cumulative value of $292,000, exempt from import fees. For two different recipients, this total value doubles, and for ten recipients, it increases tenfold, and so on.

By collaborating with logistics partners in the U.S. and utilizing the warehousing and order fulfillment services available, importers can deliver their products to U.S. customers. This approach ensures the legal importation of goods into the American market without incurring additional fees.

Importers facing high shipping costs, as well as those with substantial needs and sales volumes, employ Section 321 for importing their products into the United States. Although the method differs, it remains highly advantageous.

The method employed involves initially importing goods into Mexico or Canada, followed by fulfilling orders directly to U.S. consumers from warehouses in these neighboring countries. Since the final shipments to customers are not imported in bulk into the U.S., and each individual shipment to a U.S. consumer remains below the de minimis value of $800, they qualify for tariff exemptions. Utilizing more cost-effective warehouses in Canada and Mexico allows many companies to significantly lower their logistics costs. This strategy not only circumvents expensive U.S. import duties but also expedites the delivery to the end consumer.

The utilization of Section 321 enables importers to strategically plan their imports, a critical aspect in e-commerce. This provision allows for the avoidance of tariffs on low-value items, which is significant when dealing with large volumes of imports. As a result, importers are able to offer their products at competitive prices while adhering to U.S. customs and tax regulations.

Section 321 is not confined to businesses of a specific type or size. It is accessible to a diverse array of companies, irrespective of the frequency or cumulative value of their imports. This flexibility allows businesses to adeptly navigate fluctuating market conditions, which is particularly beneficial in the e-commerce industry, known for its rapid expansion and occasional surges.

For all importers, particularly foreign entrepreneurs engaged in importing and selling within the U.S., the cornerstone of success lies in partnering with a reliable logistics partner in the U.S. This partner should possess extensive experience in the North American market, encompassing the U.S., Canada, and Mexico.

It is noteworthy that the U.S. Customs and Border Protection (CBP) is contemplating revisions to the Section 321 regulations. These potential changes could introduce tighter controls over customs data, with the primary objective of thwarting the importation of illegal and hazardous goods. The proposed measures are intended to foster improved import practices and heightened accountability within e-commerce. Such amendments may profoundly influence the U.S. e-commerce landscape, especially affecting sellers from abroad who depend on the de minimis import model for their logistics and supply chain strategies.

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