For businesses in the United Kingdom looking to expand their market reach to the United States, the allure of a vast consumer base and boundless economic opportunities is undeniable. The USA has always been dubbed "the land of opportunity", so naturally it falls within many growth plans.
However, there's one factor which typically slows down progress across the pond for UK businesses: the reputation of US customs. Navigating the intricacies of the US customs system can be a costly and time-consuming process which may even put people off trying to break into this lucrative market.
At WTA we know the USA doesn't have to be as complex or scary as its reputation makes it, so within this blog, we'll explore some practical strategies for UK businesses to save money and stress when shipping to the USA.
Leverage Legislation
One of the most effective ways to reduce customs-related expenses is to understand the different legislation in place with the USA as a whole, or on a State-level, so that you can take advantage of any benefits available to you. There are some very targeted sector-specific agreements that have been reached in a number of areas. Investigate if any apply to your industry by reading the websites of trade magazines or industry associations.
Speaking more generally, there are Memorandum's of Understanding in place with several states, looking to liberalise trade. Agreements like the Atlantic Declaration contains sector specific legislation liberalisation and other recent changes to foster UK-US trade help make the market conditions more favourable for UK businesses.
Properly Classify Your Goods
Customs duties are often calculated based on the classification of your goods. Correctly classifying your products can lead to significant cost savings. Make sure to invest time in understanding the Harmonized System (HS) Codes and don't hesitate to consult with customs experts if needed to ensure accurate classification. This ensures that you only pay the duties you owe, and not a penny more.
Ensure you keep a paper-trail of your decision on a HS code. That way if challenged by customs officials, you are able to provide evidence of your decision and they will more likely take a favourable view if there is a mis-categorisation.
Utilise Duty Drawback Programs
Both the UK and the US offer duty drawback programs that can help you recover customs duties paid on imported materials that are later exported out of the country as finished products. By taking advantage of these programs, you can reduce the overall cost of your supply chain, making it more cost-effective to ship to the USA.
Have questions about Duty Drawback Programs? Ask our expert team
Find Expert Help
Ensuring that your documentation is accurate can save you both time and money, so naturally we recommend taking advantage of customs compliance specialists who understand the process best and can help you avoid delays and fines. By partnering with US customs experts, you can streamline your supply chain and minimize risk when sending good to the USA.
"The biggest piece of advice I can offer anyone about US customs is 'proactive compliance'. Make sure to get your information clear and any questions you have answered before you look to send your first shipment. Consulting people like us who understand the surprises that can come up with US customs beforehand can save you a lot of trouble and ensure a much smoother experience.
I'd also say, along with knowing your commodity, understand and choose your incoterms carefully before shipping as they play such a big role in the import process. Many importers into the US don't know that certain costs may be deducted from the value (depending on the incoterms) that the customs duty is calculated against and end up paying higher duties than they needed to."
Kimberly Roddy, Customs Compliance Manager
Looking for specialist US customs knowledge? Reach out to our team today.
Utilise Foreign Trade Zones (FTZs)
Foreign Trade Zones in the United States offer a way to delay or even avoid customs duties and taxes altogether. Goods stored in FTZs can be processed, assembled, or manufactured without incurring customs fees until they leave the zone for the U.S. market. This can result in significant savings, especially for businesses with complex supply chains.
Strategic Inventory Management
Efficient inventory management practices can help minimise customs-related expenses. Maintain a lean inventory to reduce storage costs and ensure that you're not holding excess stock that incurs customs duties unnecessarily. A well-optimised inventory management system can also help you better forecast demand, reducing the risk of overstocking. Look into digital tools, API links or even how AI can help with this process.
Shipping from the UK to the USA can be a lucrative venture and a great step in your expansion journey, but there's no denying it comes with its share of customs-related challenges. To save your business money (and you many customs-headaches) it's important to be thoroughly prepared before you ship. By implementing the strategies we've listed above though, UK businesses can reduce their customs-related costs and make navigating US customs much simpler - ultimately increasing your competitiveness in the US market.