REAL ESTATE NEWS

As the White House abruptly suspended the de minimis duty-free import program on August 29—well ahead of the July 2027 deadline set in the recent budget bill—U.S. importers have been forced to scramble for alternatives, sending shockwaves through international supply chains. The de minimis program had long allowed consumers to receive small shipments from abroad without paying tariffs, with the threshold rising from $200 to $800 in 2015. According to Hogan Lovells, the average value of such packages reached $54 in 2023. For years, importers relied on a patchwork of legal maneuvers to minimize tariff exposure, such that about half of all goods entering the country arrived duty-free.

Now, with the loophole closed, importers are racing to secure foreign trade zone (FTZ) warehouse space, seeking ways to continue legally deferring tariffs for as long as possible. In FTZs, tariffs are postponed until goods are shipped to customers—a strategy that’s surged in popularity following the program’s suspension, according to The Wall Street Journal. Bonded warehouses, another critical tool, allow companies to store goods for up to five years without immediately paying duties, serving as a temporary financial buffer and ensuring products remain accessible to U.S. buyers.

Divey Gulati, co-founder and chief operating officer of ShipBob, told the Journal that FTZ and bonded warehouses differ in their flexibility: FTZs can store goods indefinitely, while bonded warehouses impose a five-year limit on duty deferrals. The value for importers lies in delaying tariff payments until products leave the warehouse, helping manage up-front costs. Gulati noted explosive growth in ShipBob’s FTZ-designated warehouse footprint, driven by sustained demand—especially in sectors like apparel and beauty, which had previously relied on the now-defunct de minimis exception.

With the suspension removing the option for sellers to drop ship from countries such as China or Hong Kong directly to U.S. consumers, tariff expenses are incurred immediately and sticker shock may be unavoidable. As loopholes close, importers must quickly adapt, shifting business models and logistics to navigate a deeply altered trade landscape.

Source: GlobeSt/ALM