A large majority of Amazon sellers and e-Commerce business owners opt to get their goods from China to sell in the US; but did you know that Mexico is an up and coming manufacturing and sourcing market that offers benefits equal to or better than importing your goods from China? Since 2019, Mexico has been considered one of the leading trade partners for the United States; trade rules and regulations reflect the rise in popularity. The USMCA (the United States, Mexico, and Canada Agreement) has been working to remove most barriers to trading between the United States and Mexico, making it an attractive option for e-Commerce sellers who are based in the United States.
Is sourcing from Mexico right for you? Here are a few of the most commonly asked questions about importing goods from Mexico into the US.
Do you pay import taxes when you import products from Mexico?
While China has plenty of advantages to recommend it to sellers, it can also prove costly to import products into the United States from China. This is one advantage that Mexico has above other countries: sellers importing products from Mexico into the United States will rarely have to pay import taxes while some products are still taxed, it’s at a much lower rate than if the product was imported from elsewhere.
What are the advantages of importing your products from Mexico?
Besides the low import tax rate, there’s other reasons why Amazon and e-Commerce sellers should consider importing their products from Mexico:
Faster turnaround time
As Mexico is located much closer to the United States, there is less turnaround time involved. We saw the damage of vessel delays and port congestion in 2020 and have since learned having a plan B and diversifying your supply chain is a pro-move. Having a close to home sourcing partner will set you up to win when the unpredictability of overseas suppliers strikes. This is especially useful when you’re experiencing seasonal rushes and need to be able to restock quickly. We all know how crucial staying in stock is in high selling periods.
Cheaper transportation costs
Your product will need to travel shorter distances to arrive at your distribution center or warehouse. Though freight costs have recently gone down, trucking over the US-Mexico border is significantly lower in costs for FTL and LTL.
Good trade relationship
Mexico and the United States have a stable trading relationship, with very little chance of sudden upheavals or tariff changes due to the current sociopolitical climate. Therefore, importing products from Mexico is relatively safe and reliable.
What are the disadvantages of importing your goods from Mexico?
Certain goods will require a special license or additional documentation that can take up more time to fill in than if products are imported from other countries. Additionally, if you want to import products from Mexico, sellers need to first be cleared by the CBP, the Customers and Border Protection. This applies to all businesses and is given depending on the goods you are trying to import into the United States.
What does the CBP look for when importing goods from Mexico?
The CBP takes a two-fold approach to clearing products for importation.
The first step is to make sure that all your paperwork is in order. A licensed customs broker can handle this part for you, but it’s vital that you have:
- Commercial invoice with clear information what items you’re importing and the costs you are paying your supplier
- Packing list that includes the shipment weight
- USMCA Certificate
This documentation is the precursor to the CBP’s examination of goods and ensures that your goods are actually allowed to enter the United States.
Finally, CBP might do further inspections in which they look at the value of the goods, proper labeling, prohibited items, and for the accuracy of invoices.
What are the steps to take to import products from Mexico?
Importing products from Mexico is a fairly similar process to importing goods from other countries, the key differences being that you need to submit paperwork and certificates to the CBP prior to any importation and you’ll need a customs broker on both sides of the border. This means you’ll need a Mexico-based customs broker and US customs broker, or someone that does both. Additionally, if you are importing goods that are on the restricted list, you may find that you need official paperwork from other government agencies, such as the CDC or the USDA.
Besides obtaining the required paperwork, the process for importing goods into Mexico can be summed up in three steps.
- Submit all paperwork to CBP, including any certificates of approval if necessary. Make sure all documents are accurate, as this can negatively affect the CBP approval process, and might result in steep fees.
- Once the goods reach the border, they will be appraised and evaluated by the CBP to make sure that the products shipped adhere to the documentation provided.
- The goods are then released and will be shipped to your warehouse or provided location.
Do I need a license to import products from Mexico?
No importer needs a license, according to the CBP regulations, however you might need a customs bond if you are importing goods above $2500 in value or if you are importing goods that need approval from other government agencies, such as the CDC or USDA as mentioned previously. If your shipment does not need the additional paperwork provided by partner agencies, but you are importing it for commercial use, it’s likely that you will still need a customs bond.
Customs bonds can be either purchased as single entry – meaning they will only cover one shipment, and a new one is needed every time you import products from Mexico- or continuous, which will last for twelve months and takes into account the overall duties, taxes, and fees for an entire year.
What transportation options are available for me?
There are four ways you can import products from Mexico, primarily truck, rail, and air. What you opt for depends on what you prefer: a minimum cost, a quick delivery, or good conditions. This will change what you pay for shipping, but otherwise each method has its own benefits.
If you’re shipping by truck, your delivery is fast and affordable, but you may run into delays if there’s bad weather, traffic, or road work. Rail is another option that is fast and affordable, owing to the United States railway infrastructure, and it is also only slightly slower than shipping via truck while carrying as much, if not more, than truck shipping. That said, railway shipping can be inconvenient as it will only deliver to rail freight depots, which can be out of the way.
Finally, there’s the most expensive option, which is air, but which will provide you the best turnaround time and recovery time when you import products from Mexico. It is also susceptible to more checks than other options. This is best for urgent inventory needs but not recommended as a staple method for importing. Is there anything else I need to know about importing products from Mexico?
The most crucial aspect of any importation process is that you focus on building a good relationship with your shipping company and your supplier, particularly if this is new territory for you. We’re happy to guide you through the process of shipping your products from Mexico into the United States, and if you have any other questions, we’re happy to answer those too.