Many importers and big companies import thousands of packages a day into the United States. They save a lot of money by not paying any customs duties, and in some cases, even the receivers don’t pay the due duties. When sourcing from China or any other country that doesn’t have a free-trade agreement with the US, it’s possible to cut the import costs by 10% or more. The question is, can you avoid US customs duties?
Can you avoid US customs duties?
Although avoiding customs duties is unethical and illegal, you can still take some measures to minimize duties and increase profits in your business.
Some US brands that ship, for example, from China to the US or within the US, pay no customs duties (import tariffs). Other brand owners and operators in the United States may want to do the same to increase profits. So, what’s the formula for avoiding US customs duties?
Import cheaper to the US – step-by-step guide (transshipment method)
Place your order
There are many ways to cut production costs – you can change your supplier, cut out the middleman from the loop, change the material used in manufacturing, or employ different manufacturing methods. Still, there’s only so much you can do without sacrificing the quality of your goods.
Ship your order
Book a container or find a freight forwarding company to do it for you on ShipHub for free. You can choose a cheaper transportation method, like train or sea freight, over air freight.
The main point is not to send the products straight to the US but to Canada or Mexico using a third-party logistics company. In other words, you must import directly from China to e-commerce fulfillment centers in those countries.
You don’t have to worry if you import a lot of packages. The third-party logistics company will upload a form to the US Customs and Border Protection and break down what’s in each package in the truck. The caveat is that each package must be under USD 800 per person per shipment (with some exemptions). It’s because import duty isn’t charged if the value of the goods is up to $800 (a.k.a. de minimis value or the minimum threshold).
Importing to the US via Mexico and duties
If you import to Mexico only for export (you don’t sell those products in Mexico), you don’t pay customs or duties. Make sure each shipment is below USD 800 and eligible for the duty exemption.
When we look at the data, we can see that imports from China to Mexico grew exponentially, and import duty avoidance was one of the reasons.
Importing to the US via Canada and duties
You can import products into the US via Canada that aren’t intended for the Canadian market without paying duties. As long as your shipment value from Canada to the US is below USD 800 (and is not an exemption), the shipment is duty-free.
Bear in mind that every quarter, you need to report which goods were shipped into the US or any export market and which were shipped within Canada to pay duties on the latter.
The shipment is delivered to the US
The third-party logistics company brings the items to the US and hands over the goods to the party that delivers them to the end customer.
Even though the indicated origin places are San Diego or Seattle, the package originated outside the US and was then trucked into the US without any customs and duties.
How do big companies reduce the cost of sourcing to the US?
Big companies like Shein, AliExpress, and Temu choose even shorter routes to reach their consumers. By using a third-party logistics company in China, they skip the Mexico/Canada stage. Many vendors offer free shipping, so it’s more affordable to order products from them. Compared to the US price set by importers or distributors, ordering directly from Chinese manufacturers via such platforms is more appealing.
Platforms like Temu and Wish offer products below the US de minimis threshold, so their customers don’t pay any customs duties. If the shipment is above USD 800, some sellers undervalue it by misdeclaring, but since thousands of packages come into the US daily, it’s difficult for customs authorities to detect every misdeclared shipment.
Is import duty avoidance worth it? How to reduce import duties in the US
Shipping from China to the US via Mexico or Canada to reduce import costs is tempting, but it has risks. You may face harsh penalties if you misdeclare or undervalue goods to avoid duties. Moreover, the transshipment method may not be possible in the future if countermeasures are implemented.
There are better ways to increase your revenue as a professional importer than being imprudent by avoiding customs duties. If you want to minimize import costs legally, consider consulting with legal experts specializing in international trade or customs brokers. As an importer, it’s essential to comply with customs regulations and accurately declare your imports.