As U.S.-China trade tensions continue to heat up and global supply chains face severe challenges, U.S. importers are adopting a cross-border strategy: storing their goods in hedged warehouses in Canada. The move could suspend, or possibly even completely avoid, the high tariffs imposed on Chinese imports.
According to Canadian third-party logistics provider 18 Wheels Warehousing and Trucking, enquiries about hedged warehouses have quadrupled in recent weeks, indicating that more and more US businesses are looking for alternative storage solutions to meet changing trade policies.
“We observed a significant increase in U.S. and Canadian demand for warehousing, which is directly related to U.S. tariffs on Chinese goods,” Brian Riley, senior vice president of relations services at international logistics company GEODIS, told the Journal of Commerce. “Companies are actively evaluating the tariff warehousing solutions in the two countries to reduce the impact of tariffs.”
A security warehouse (also known as a customs warehouse) allows importers to store goods without immediate payment of duties. Unlike the Free Trade Zone (FTZ), the latter pays customs duties when goods enter the market, and the insurance warehouse only pays when goods are picked up to enter the market.
“There is no alternative to the free trade zone tax requirement due to entry,” Riley explains. “And the flexibility of hedging warehouses can delay tariff spending, giving businesses more room to operate.”
Michael Kotendzhi, CEO of 18 Wheels, said the reasons for the increased demand for tax warehousing in Canada include a shortage of tax-free warehouse space in the United States, some shippers looking to resell to non-U.S. buyers to avoid tariffs, and the stronger buying power of the U.S. dollar in Canada.
“The purchasing power of the dollar in Canada is quite substantial,” Kotendzhi added, which also makes Canada a more cost-effective storage option.
Freight agents also help customers implement this strategy. Although goods that have been shipped to the United States cannot be changed directly to a Canadian port, once unloaded in the United States, they can be moved to a Canadian tax warehouse by “inbond” to suspend customs expenses.
“Cargo cannot be changed midway,” said a freight representative. “However, customs duties can be shipped to Canada after unloading in the United States, and you can defer payment of the duty.”
The industry has agreed that this is a temporary strategic arrangement, but with potential long-term benefits. Many importers want to bide their time by hedging warehouses to wait for the reversion of the tariff policy in the US. According to the Wall Street Journal, the White House is considering a major reduction in tariffs on some Chinese goods to reduce tensions over the trade war.
“Everyone expects the situation to be resolved one day,” said Landon Bibeau, Executive Director of OECGroup Canada. “With tariffs of up to 145% now, there is no need to wait for opportunities to reduce costs or sell directly to other Canadian customers.”
With tax warehouse space increasingly tense and trade policy uncertainty continuing, logistics experts advise businesses to stay flexible, stay informed and plan proactively.
“The key to choosing to use Canadian tax warehousing is an integrated consideration of tariff risk, logistics efficiency and overall costs for businesses,” Riley said. “This is a very strategic and cost-effective meta-program for businesses serving the U.S. border region.”
In a time of global trade restructuring and rapid supply chain change, warehousing is not only a privilege, but also an important part of building supply chain resilience.
Data Source:https://www.joc.com/article/us-importers-turn-to-canadian-bonded-storage-to-delay-payment-of-tariffs-5990113
