Francisco Garcia of Lynx Logistics said he’s been getting "little sleep lately" thanks to President Trump’s tariffs.
But unlike some business owners who may be tossing and turning because of economic fears, Garcia is losing sleep because business is booming, according to CBS News.
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U.S. Customs and Border Protection Bonded Warehouses, like the one Garcia owns, allow companies to bring goods into the United States and store them in a secured warehouse facility without paying tariffs up front upon import.
They are typically used to allow companies to temporarily move goods into one country before shipping them to another without paying tariffs during the process. But now companies are taking advantage of bonded warehouses to try to avoid the economic damage that Trump’s “Liberation Day” tariffs may cause.
Demand increases for bonded warehouses
Lynx Logistics is not the only bonded warehouse benefiting from the tariffs, as many businesses are looking for a way to blunt the financial impact of the President’s trade moves.
Danny Reaume, an industrial property broker who works with JLL — a commercial real estate company — says he’s witnessed an explosion in interest in bonded warehouses.
As Reaume explained to CBS News, his company used to get around one-to-two calls about bonded warehouses in a typical 30-day period, but last month’s Liberation Day announcement changed the game. JLL is now reportedly receiving more than 100 calls per month about bonded warehouses.
The Liberation Day announcement included a universal 10% tariff on all imported goods, as well as dozens of additional tariffs on named products and imports from specific countries.
Trump intended for the announcement to encourage companies to bring manufacturing back to America — although some of these tariffs have now been put on pause after economic chaos and a stock market decline occurred in the aftermath of the announcement.
Still, companies coping with the reality of a global trade war are eager to use bonded warehouse facilities to get goods into the country without having to pay tariffs on them immediately.
"Everybody across the supply chain is trying to get their inventory here, into the United States, into the West Coast Market, and shield them from these tariffs in the anticipation that in the next 30 to 90 days, this will get figured out," Reaume shared with CBS News.
Lynx Logistics, which recently got an approval from U.S. Customs to build more bonded warehouse space, is moving quickly to meet the growing customer demand.
"The demand is so high, we just keep expanding," Garcia said. "By this time next week, this [pointing to the bonded space behind him] will be filled to the rim, and we’re increasing this by 200% capacity."
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How do bonded warehouses help U.S. businesses?
It’s understandable why so many companies would want to take advantage of bonded warehouses. In fact, Shane Salazar — CEO of Lynx Logistics — had a very clear explanation for the increase in demand.
"This is allowing companies to stretch their cash in terms of not paying for the entire shipment at entry to U.S. Customs and pay as they touch it down to take a carton or a pallet," he explained, highlighting the major benefit of bonded warehouses.
When goods come into the country and go to bonded warehouses, the tariff doesn’t have to be paid immediately. The goods can be stored there until companies take them out, so businesses can take out just a small portion of their imported items at a time. If trade deals are made before the tariffs have to be charged, these businesses may be able to avoid paying the high fee entirely.
Bonded warehouses cost around 80% more than traditional warehouse space, but companies clearly find that a price worth paying given the added expense that tariffs can bring.
So, while many hope that the trade war will soon be resolved, Lynx Logistics and other bonded warehouses like it will continue to get some economic benefit out of the current chaos roiling America’s supply chain.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
