As tariffs tighten their grip on global trade, international sellers need more than just great products; they need a strategy to navigate the US market’s hidden costs. Tariffs totaled $3.1 trillion in 2023 and are expected to continue to shape trade practices for years to come. These taxes, intended to protect domestic industries, often raise the cost of foreign goods, making it harder for them to compete in the US market. However, international sellers can still succeed by partnering with US-based fulfillment centers that offer solutions to minimize the effects of tariffs.

How Tariffs Affect International Sellers

Tariffs raise the cost of foreign products, making them less attractive to price-sensitive US consumers. This can force sellers to reduce their profit margins to stay competitive. Additionally, navigating US customs regulations can be challenging, with potential fines or delays for non-compliance. Not all products or countries are subject to the same tariffs so sellers can consult the Harmonized Tariff Schedule (HTS) to determine the rates and explore possible exemptions. Businesses exporting from one of the 20 countries with a US free trade agreement may even qualify for tariff-free access.

Optimizing Success with Smart Fulfillment Partnerships

For most international sellers though, tariffs pose a significant threat to success. Partnering with a US-based fulfillment center mitigates potentially damaging impacts from tariffs for international e-commerce companies. Here are three ways these companies, like Sweetwater Logistics, can help:

1. Lower Import and Shipping Costs

Instead of shipping individual orders internationally, a US fulfillment center allows businesses to send bulk shipments to the US, which can help reduce per-unit shipping costs. Importing goods in larger quantities may also allow for more favorable tariff classifications or lower duties.

Once shipments have arrived in the US, the fulfillment center stores the products in their facility until they are ready to be shipped to the consumer.

US fulfillment centers then work with domestic carriers such as USPS, FedEx, and UPS which can offer better shipping rates than international carriers. The lower rates offered for last-mile delivery reduces the cost of delivering goods to US consumers. This addresses increasing concerns for sellers worldwide as they have seen the share of last-mile delivery, out of total shipping costs, go from 41 percent to 53 percent between 2018 and 2023.

Three of four executives reported using this strategy of price shopping last-mile options to save costs. Sweetwater Logistics runs each shipment through a process to determine the lowest available cost for last-mile delivery and passes the savings on to the client. This competitive edge is provided on every single shipment that leaves their facility offering tremendous savings for sellers over other providers.

2. Faster Shipping and Improved Customer Satisfaction

The US economy may experience fluctuations but demand from consumers for fast shipping remains constant. Sellers must offer flexible and exceptional delivery options to stay competitive. When inventory is stored in the US, international businesses can offer much faster shipping to US customers. Fast shipping improves customer satisfaction and can lead to higher sales, which makes up for some of the costs incurred by tariffs.

Having a US fulfillment center gives an international business a local presence. It allows them to offer US standard shipping times and returns policies. This improves the customer experience making it more competitive with domestic US sellers. This factor is key when the playing field is made uneven by tariffs on international goods and services.

3. Customs Compliance Expertise

International businesses may experience challenges and increased costs due to complications in compliance with customs. Incorrect classification or incomplete paperwork can result in delays, fines or additional expenses. In 2022 the US collected $19.3 million in trade-related penalties and liquidated damages. Some fulfillment centers, including Sweetwater Logistics, offer customs expertise to help businesses ensure their products are classified correctly to minimize duties and avoid unnecessary fines.

Overcoming Tariff Barriers

By leveraging the expertise of a US-based fulfillment center like Sweetwater Logistics, businesses can effectively reduce shipping costs, ensure faster delivery times to maintain customer satisfaction and steer clear of costly customs fines. These advantages make it easier to compete with domestic sellers despite the challenges presented by tariffs. In an environment where tariffs are unlikely to disappear, staying ahead with the right logistics partnership is key to thriving in the US market. Smart strategies today will ensure success for international sellers tomorrow.

Contact Sweetwater Logistics to discuss your business’s potential for sales in the US market.