Economics of a little known program and perfectly legal piece of legislation has surfaced that provides multiple benefits for U.S. companies fitting the following profile:

  • Importing finished products from China into the U.S.
  • Products have a retail sales value of $800 or less.
  • Prefer to reduce labor costs 75% for processing, packaging, and shipping products.
  • Wish to see their import tariffs reduced to less than 2%-5% instead of 10%-25%.
  • Prefer to ship such finished products directly to consumers using UPS, USPS or FED-X.
  • Prefer to lower warehousing costs for program implantation in Mexico

All of this is possible and has been possible for over thirty years but has not been implemented by U.S. companies until recently.

How the 321 Program Works

Say a U.S. company is importing containers of finished products from China or any other country and is paying normal duties of 2%-5%.   They are having the containers shipped to their processing facilities in the U.S. where the finished products are unpacked, tested, and repackaged for retail sale.  Assuming this company then labels and ships the retail packages directly to the consumer via USPS, Fed-X or UPS or some other similar shipping service.

Our example U.S. company is paying labor costs somewhere between $16.00 to $22.00, as a fully loaded hourly labor cost, including all taxes and benefits and is probably paying high warehousing costs as well.

The unique benefit of the 321 Program is that our example U.S. company could enjoy $4.00-$5.00 fully loaded labor cost per hour and lower warehousing costs in Mexico.  The 321 Program allows the company to import its products from China with only 2%-5% tariff (import duty) REGARDLESS OF THE CURRENT POSSIBILITY OF INCREASING U.S. TARIFFS ON CHINESE PRODUCTS.

How?  Say our example U.S. company imports its finished products from China into its warehouse in Tijuana or Juarez, Mexico.  There it repackages the products for retail at the lower costs of Mexico and sells each product for $800 or less.  Under the 321 Program, it can do so with a 2%-5% import duty and have no duty when shipped directly into the U.S. Our example company has utilized the benefits of the 321 Program and is not worried about increasing tariffs when importing its products into North America.

Read what others are saying about the 321 Program

The Tecma Group of Companies has developed expertise in assisting companies with setting up their 321 Program in Mexico.

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