Your Go-To-Guide to Understanding What’s Happening, How it Affects eCommerce Shipping, and What You Can Do To Impact Your Bottom Line

The Trade War Between the US & China

Your Go-To-Guide to Understanding What’s Happening, How it Affects eCommerce Shipping, and What You Can Do To Impact Your Bottom Line

Whether you’re well-versed on the topic or not, it’s likely you’ve at least heard the rumblings about the current trade war at play between two of the world’s largest economies, the United States and China.

While the trade war can be broken down and explained in a myriad of different, intricate ways, essentially, the short version is this: in 2017, the United States launched an investigation into Chinese trade policies, which resulted in an imposition of tariffs on Chinese products (worth billions of dollars). Of course, China retaliated, which, over the course of the last few years, has led to an increasing, tit-for-tat rise of tariffs from both sides.

The result? An opening round of tariffs that started at about $34 billion that has increased to over $200 billion.

Of course, the full explanation is much more complex than that. The past few years have been fraught with consistent updates on tariffs, duties, talks of trade deals, warmed relations, fizzled negotiations, and the like, but one thing remains true today—tariffs and duties are at an all-time high.

Which, ultimately, leads to the burning question — how does that trade war affect you? Surely, there are several indirect ways, but it’s likely the direct way the trade war is hitting where it hurts is through two main avenues—tariffs and duties.

How the US-China Trade War Affects You & Your eCommerce  Shipping

A direct result of the China & United States trade war is a dramatic rise in duties and tariffs—numbers that are only set to increase as the trade war wages on.

This of course, making shipping goods from your e-commerce stores and shops more expensive than ever. The altered landscape of US-China trade relations undoubtedly affect the economy, and further, dramatically affect those whose livelihood and businesses are dependent on the shipping, importing, and exporting of goods. (Hint: eCommerce companies just like you).

The US-China trade war affects eCommerce companies in more complicated ways than the most obvious increase in shipping costs, though most directly, the cost to import or export your goods is going to be far more expensive than it has been in the past. The issue here goes far beyond the normal influx of tariffs and duties—with such a dramatic increase (and threats to continue rising), your bottom line as a business is wholly altered.  
The result? As a smaller eCommerce business who can’t keep up with the tariffs that are gobbling up your margins, you’ll be forced to bump up your prices. This, of course, leaves you, the small-to-mid-size eCommerce company left struggling to keep up with eCommerce giants like Amazon, eBay, and more.

This, ultimately, leads to the questions burning in your—and every other eCommerce entrepreneurs’—mind: how can we compete with these tariffs? how can we ship products without dramatically affecting our bottom line? How can we fulfill orders without risking our livelihood?

Our answer? Section 321.

How the US-China Trade War Affects You & Your eCommerce  Shipping

If you’re not familiar with Section 321, that’s OK. That’s exactly what we’re here to explain. Whether you’ve heard of this rule or not, expanding your knowledge on how it works, what it means, and how it can help you save money on tariffs and duties are sure to help you influence your bottom line.

At Baja Fulfillment, our job as a third-party logistics service is to provide you with the means to easily and affordably ship your products—but it’s also our moral obligation to help you best understand how to navigate the uncertain, choppy waters of tariff and duty increases.

What is Section 321?

This is where we get to the good stuff—the explanation you came here for. Section 321 is a U.S. shipment category that’s designated to specific goods being shipped to the U.S. through Customs and Border Protection. This type of entry allows for the release at the border for shipments valued at $800 USD or less.

This type of policy is based on something known as the De Minimis value threshold. Traditionally that threshold was set to $200, but in 2016, was raised to the current rate of $800. This aligns with the amount that a U.S Citizen can bring back duty-free on a passenger plane.

Of course, there are more restrictions than just a dollar-amount threshold. For example, alcoholic beverages, perfume containing alcohol, cigars, cigarettes, and more are prohibited from this classification. That being said, as an eCommerce business, there are plenty of products that do qualify under Section 321.

How Section 321 Applies to You & Your eCommerce   Shipping

If you’re reading this as an eCommerce entrepreneur, owner, or eCommerce shipping manager, the wheels are probably already turning in your head. Under this rule, you can save a significant percentage of money. Why? Because you’re not paying the exact tariffs and duties that. So, how exactly does it work when you work with us using Section 321?

Simply. Section 321 allows us to receive inventory from China before it goes through US customs. When we do receive that inventory, we truck it to our facility in Baja, Mexico, where we process it in our system, label it, pack it, and then personally drive it from Mexico to the United States in designated vehicles (with manifests) to legally bring your goods into the United States. Then, we drive your products to our facility in San Diego and finish the shipping process for you. Convenient? Yes. More cost-effective? Yes. Legal? Absolutely. Above all, we want to make this one fact clear—compliantly leverage Section 321 is legal. As tariffs and duties continue to skyrocket, this legal method will help you avoid the exponential costs of shipping your products.

Are you still feeling a little lost on Section 321 and how it can help you with your eCommerce shipping? That’s okay—we’ve got more information waiting for you. If you’d like to learn more about Section 321, speak to an expert at Baja Fulfillment, or would like a free consultation, follow our link here to get connected! If you’re interested in keeping up with trade war, tariff, and eCommerce shipping news, check out our blog here—keep an eye out for regular updates to help expand your knowledge on eCommerce shipping and how you can save!

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