If you own an eCommerce business and import many goods from China, you’ve probably experienced the hefty price tag of import tax. Thankfully, there are always ways to optimize your supply chain and save money on shipping, taxes, import duties, and customs.
One of the most common ways you can save big on import duty is by taking advantage of Section 321 of the US Customs and Border Protection Laws.
Section 321 is a law that allows businesses to import goods without any customs duties or taxes as long as the items are valued at less than $800. This price was raised in 2016 from $200, making it easier and more affordable to buy supplies from overseas, including China.
Unfortunately, Section 321 isn’t without its restrictions. The biggest one is that you can only buy up to $800 worth of products without being taxed. For most companies, that means that shipments have to be broken up, and they have to pay more in the long run for multiple shipments.
Another restriction is that Section 321 can only be made on one shipment per day per person. If you have multiple shipments coming in, you have to make sure your carrier doesn’t make more than one Section 321 claim per day.
Finally, what you ship matters, items that include harsh chemicals, cleaning supplies, products regulated by government agencies, cigarettes, cigars, or alcohol are not covered under Section 321. Also, products that fall under the Countervailing or Anti-Dumping Duty can not be claimed with Section 321.
Importers don’t need to pay tariffs on shipments valued at less than $800. But what if it’s not cost-effective for you to import only $800 worth of goods at a time? Here’s the solution.
When you import goods from China, take advantage of a floating. Floating means that the product hasn’t arrived at its final destination yet. It allows you to store products in a warehouse duty-free in Mexico or Canada.
Once your goods are stored in your floating warehouse, you can fulfill customer orders directly from there, claiming Section 321.
The downside to using this loophole is that it requires a lot of work to manage a second warehouse or move your warehouse across the border. However, if you have someone you trust to manage the logistics either in Mexico or Canada, it will save you a lot of money and reduce the risk of any complications.
Once you have your merchandise in the warehouse, you will still need to claim Section 321 to ship it into the United States.
Commercial goods require an eManifest to enter the United States. You will use an eManififest to claim Section 321.
Use the eManifest to import goods by:
Using Section 321 along with the floating loophole means avoiding all import duties and taxes. If you have the ability to store goods in Canada or Mexico temporarily, it will save you a whole lot of money in the long run.
Ultimately, it will make purchasing merchandise from outside the country more affordable and will increase your profits. It will also give you a competitive edge as you’ll be able to offer lower prices to consumers and ship faster.
PHOTO: Robson Hatsukami Morgan, Unsplash
