Corrects story to say LVK Logistics is based in New York and is bonding a Utah warehouse in paragraph 5

By Richa Naidu and Arriana McLymore

LONDON/NEW YORK, May 21 (Reuters) - Companies importing goods into the United States from China are rushing to convert warehouses into facilities that are exempt from President Donald Trump's tariffs until they are ready to sell the merchandise.

The U.S. 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% 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 U.S. warehouses for goods ranging from clothing to auto parts is a bet for some that raised U.S. 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 industry sources told Reuters, prompting companies to apply to U.S. Customs and Border Protection to expand bonded space.

New York-based fulfillment firm LVK Logistics, for instance, is in the process of making a Utah warehouse bonded "in response to the tariffs," CEO Maggie Barnett told Reuters, 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 - which pushed duties on Chinese goods to as much as 145% in April before lowering them - makes the flexibility afforded by bonded warehouses appealing to companies.

"A lot of companies importing from China - not just China-based, but U.S. 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.

The CBP said it has noticed an increased interest in the use of bonded warehouses for continued compliance with new regulations and executive orders.

The White House did not immediately respond to a request for comment.

'UNPRECEDENTED' WAREHOUSE RUSH

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.

Vladimir Durshpek, cofounder of Venice, Florida-based warehousing and storage company CargoNest, said he is weighing adding a third bonded warehouse to his assets until U.S. tariff negotiations are completed.

"What we don't want to do is rush into providing more capacity, and then things change," he said.

Fremont, California-based storage company DCL Logistics has not made definitive plans for bonded space because "it's unclear if the demand will stay this high," Chief Revenue Officer Brian Tu said.

"By the time a lot of warehouses would be able to achieve bonded status right now, these additional tariffs might be gone, and the demand for bonded space might not be there," said Jacob Roseburrough, director of marketing at WarehouseQuote.

(Reporting by Richa Naidu and Arriana Mclymore in London; additional reporting by Trevor Hunnicutt; Editing by Lisa Jucca and Rod Nickel)

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