The off-again on-again tariffs on foreign imports are upsetting consumers, businesses, and the stock market. People are seeking a tariff workaround, from ordering directly from foreign manufacturers to relabeling products, in hopes of avoiding the price hikes experts predict. One option could be to ship goods to Puerto Rico, right?
Wrong. While Puerto Rico’s territorial government has tried to assist China in tariff workarounds in the past, it doesn’t work. Puerto Rico is a territory of the United States, and as such is part of the U.S. Customs territory. Any goods coming to Puerto Rico from foreign countries — and that includes about two-thirds of the goods shipped into San Juan’s port — will be assessed the current tariffs at the time of arrival.
Shipping to Puerto Rico
Shipping to Puerto Rico can be complicated. First, it is not an overseas destination for U.S. shippers. It is a domestic destination. The Post Office doesn’t require customs declarations or overseas shipping fees. Goods from states do not have to go through customs upon arrival in Puerto Rico.
However, even though it is a domestic shipment, private shippers like UPS or FedEx may have different rules. For example, they may require U.S. shippers to put “Puerto Rico” on labels in both the State and the Country spaces, which would not be allowed by the U.S. post office. They may also have additional fees. Some suppliers simply refuse to send goods to Puerto Rico, claiming it is too expensive or complicated.
In spite of being a domestic destination, shipments from a state to Puerto Rico require an Electronic Export Information form if their value exceeds $2,500. The current administration is discussing changing that number, but that is the threshold as of this writing.
Also, nearly all shipments to Puerto Rico are subject to 11.5% excise taxes, regardless of their country of origin. This tax is paid directly to the territorial government.
Foreign shipments arriving in Puerto Rico are subject to the same laws and regulations, as well as the same tariffs, as foreign shipments to any other part of the United States. Shipping to Puerto Rico is therefore not a tariff workaround.
Special deals?
But could another country make a special agreement with Puerto Rico that would help them avoid U.S. tariffs? Puerto Rico’s government has occasionally tried to make special deals with other nations in the past, but the federal government interferes. It is not at all likely that an effort of this kind would be successful.
People may continue to try to find tariff workarounds, but shipping to Puerto Rico won’t be one of them.
