Companies importing goods into the United States from China are rushing to convert warehouses into facilities that are exempt from US President Donald Trump's tariffs until they are ready to sell the merchandise.

The United States has more than 1,700 bonded warehouses, facilities where imported goods can be held without immediate payment of customs duties such as tariffs, currently 30 percent for shipments from China.

Such fees are only paid when the goods leave the bonded warehouse, allowing businesses to manage funds more effectively at a time of extreme trade policy volatility.

The rush to bond US warehouses for goods ranging from clothing to auto parts is a bet for some that raised US tariffs will be only a short-term policy by the Trump administration.

Due to Trump's tariff war, many of these bonded warehouses are now at full capacity, and prices for space in them have skyrocketed, four sources said, prompting companies to apply to US Customs and Border Protection (CBP) to expand bonded space.

Utah-based fulfillment firm LVK Logistics, for instance, is in the process of making one of its warehouses bonded "in response to the tariffs," CEO Maggie Barnett said, adding she expects the process to take three to four months.

"You can bond more or less anywhere," said Chris Rogers, who manages the supply chain research team at consultancy S&P Global Market Intelligence.

"It involves money and it takes time, but if you are a big company and expect tariffs are going to remain elevated for an extended period, you can convert [existing] spaces into bonded warehousing."

Other companies and logistics firms are seeing their applications with the CBP backlogged in some cases by over six months, said Chris Huwaldt, vice president of solutions at WarehouseQuote, a logistics research firm. Last year, the process would have taken a couple of months, he added.

Huwaldt said getting storage space certified as bonded "could cost thousands of dollars or it could cost six figures," depending on the state the warehouse is based in, the financial status of the company and the additional security measures required by the CBP for a specific location.

Trump's on-again, off-again tariff policy makes the flexibility afforded by bonded warehouses appealing to companies.

"A lot of companies importing from China – not just China-based, but US importers as well – are taking advantage of bonded warehouses to assist with cash flow," said Cindy Allen, shipping consultant at Trade Force Multiplier and a former FedEx Logistics executive.

"It doesn't necessarily save them money as the tariffs have to be paid when the goods are withdrawn from the warehouse. But it allows companies to pay duties in smaller increments as they are sold," she said.

In early 2024, bonded storage space was rented at approximately twice the cost of standard storage rates, but since the start of 2025, it has risen to four times the price to rent non-bonded space, according to WarehouseQuote data.

"This rush to bonded warehouses to ease cash flow is unprecedented," Allen said.

During the first Trump administration, many companies simply accepted the levies on China. But this meant firms paid more over a prolonged period of time while also being forced to invest in alternative sources to China. Importers "don’t want to repeat the past mistakes," Allen said.

Setting up new bonded warehouses could be risky, because the United States may go back to higher tariffs once its 90-day reprieve ends. (Reuters)