U.S. importers rethink shipments as Trump cuts China tariffs

Just as U.S. importers were starting to adapt to President Donald Trump’s 145% tariffs on Chinese goods, a sudden change has upended their plans. With the rate cut to 30% and trade talks shelved for 90 days, businesses are rethinking how and when they bring in shipments. At the same time, a wave of incoming stock is putting new pressure on warehouses and transport networks.

Before this week’s announcement, the 145% tariff effectively blocked all but the most vital goods from crossing the Pacific. For cargo already on the water, many companies turned to bonded warehouses, which let them store items duty-free for up to five years. They only pay the tariff when they finally move the goods into the U.S. market.

“By holding the goods under bond, there’s the possibility that they might pay at a lower rate,” said Ben Dean, vice president at Flexe, a national warehousing network, in an interview last week. When the duty stood at 145%, waiting in a bonded facility, even with storage fees, often made financial sense.

Now that the levy has dropped to 30%, interest in bonded storage has “fallen precipitously,” Dean told Business Insider. Still, some importers view it as insurance against any future hikes.

Many businesses are turning to foreign-trade zones (FTZs).

Like bonded warehouses, FTZs allow a delay in paying tariffs. The crucial difference is timing. FTZs lock in the duty at the moment goods arrive, not when they leave the zone and officially enter U.S. commerce. That could shield importers if rates climb again after the three-month pause ends.

“Should we not make progress on a formal agreement and in 91 days rates shoot up again, that is a risk,” Dean said. “At least now there’s an upside risk, which we didn’t have before.”

On the transportation side, demand for rail and short-haul trucking is rising, while long-haul trucking rates have eased. “The need for speed has gone away,” Dean explained. “Slower, more cost-effective transport modes are now in high demand.”

In effect, importers who rushed goods in ahead of the earlier tariffs are now using the nation’s rail lines to hold merchandise until it’s time to sell. That buys extra time without piling up bills at storage facilities.

Meanwhile, container bookings between the U.S. and China have shot up nearly 300% this week, pointing to a fresh influx of goods. “The ports are working hard to make sure that surge can get off the ship,” Dean said. “Everyone wants to avoid another headline event like we saw at the Port of Long Beach during the COVID peak, when ships sat waiting at anchor for weeks.”

Despite available warehouse space across the country, west coast docks could face capacity tight spots in the weeks ahead. “We are in real-time changing the economics of inventory cost,” Dean said. “We’re running a live test of what happens to our supply chain domestically when that shift occurs.”

Trump’s reduced tariffs on China won’t save U.S. consumers from price hikes

The drop from 145% to 30% might sound like a relief, but U.S. shoppers may not see much difference, according to a CNN report. With the reduced duty lasting just three months, companies are racing to finish orders and ship goods from China while the rate is at its lowest. That urgency is driving up production and shipping premiums, eating into any tariff savings.

Factory owners in China are already hiking their own costs to meet the surge in orders. “They’re offering overtime pay for employees and other bonuses, which is unusual,” said Andrew Rader, managing director at Maine Pointe, a global supply-chain consulting firm. Meanwhile, prices for key raw materials—plastics, metals, and the like have climbed “upwards of 10% or more,” he added.

To compound matters, many factories have raised their minimum order sizes. Companies that once bought enough goods for three months must now place orders large enough to cover six months. That boosts inventory levels and the storage bills that come with them, before tariffs or any transport fees are added.

Taken together, Rader estimates U.S. firms are paying 15% to 25% more to manufacture in China, even before the 30% duty and rising shipping costs. Still, he notes the current rate is a “sizable saving” compared with the 145% duty they faced days ago.

“Any cost and risk added to the supply chain has to be expressed somehow,” said Andy Tsay, a business professor at Santa Clara University. He warned that higher expenses could lead to more frequent stock-outs or fewer and smaller sales and discounts.

Tsay also said some new products might never reach store shelves if companies decide the shifting costs and risks are too great. And even if tariffs revert to zero after the deal, he suggested sellers may keep prices higher if consumers prove willing to pay.

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