Selling your goods to customers in the United States can represent a huge growth opportunity for your business. After all, the U.S. economy remains the second largest of all countries, representing 16% of the global gross domestic product. In 2020, the U.S. imported a total of $253.9 billion in goods and services.
However, doing business with buyers in the United States can be challenging. The U.S. is a huge country with a complex web of tariffs, taxes and requirements that are specific to different states. The American way of communicating and doing business may also be very different from your country’s cultural traits.
Below are a few insights on how to successfully break into the U.S. market. First and foremost, you’ll need an agent or distributor in the U.S. who values your product and can help you navigate the country’s rules and business practices.
Have a Trusted Partner in the U.S.
The quickest, most effective way to start doing business in the United States is to have a reliable customer or business partner that knows how to import into the country. Your U.S.-based buyer or distributor should be able to provide you with instructions on the invoicing, packaging, marking and labeling your products require.
Make sure your U.S.-based partner has also made a careful check of the U.S. Customs and other government agencies’ requirements that must be met when your merchandise arrives. A reputable U.S. Customs broker can assist you and your trade partner with information and filing of the customs entry and any other reporting that is necessary to other government agencies.
To protect your company’s interests, you will need to perform due diligence checks on any potential U.S. customer or distributor and draft contracts defining the key terms of the business relationship. To help with these agreements, you should get legal guidance from a lawyer who is familiar with U.S. law, as well as the U.S. state laws where your goods will be sold. The American Bar Association has helpful information about U.S. law firms, as well as an online state-by-state directory.
Research the Market
Keep in mind that the United States is not a single national market. It is a federal system in which each state operates as a separate entity with its own set of procedures.
Once you identify the U.S. states where you plan to sell your product, you will need to determine the costs and other implications of doing business in those states. Is there a customer need for your product in the parts of the U.S. you plan to serve? How will your pricing compare with that of direct competitors? A careful market analysis is needed to ensure your goods will be well received by American customers.
The American way of doing business can also be unique from other cultures. Communications with U.S. businesses tend to be very direct, with negotiations focused on closing deals. In talking with your American partners, you will be expected to “get to the point” and articulate the bottom-line advantages of your product.
The Top Eight Exporters to the United States (in Goods)
- China: $435.4billion
- Mexico: $325.4 billion
- Canada: $270.4 billion
- Japan: $119.5 billion
- Germany: $115.1 billion
- Vietnam: $79.6 billion
- South Korea: $76 billion
- Switzerland: $74.8 billion
Source: U.S. Census Bureau on Foreign Trade
Pay Attention to the Details
To ensure faster clearance through U.S. customs, pay close attention to U.S. tariffs, laws and instructions. Prepare your customs invoices carefully, including all the information that would be needed in a well-prepared packing list. Include detailed descriptions in English of the goods or merchandise being shipped. Make sure you comply with any special provisions related to food, drugs, alcohol, cosmetics, radioactive materials, and other products.
Generally, the following documents will need to accompany the importation of any goods into the United States. As a seller, you will be responsible for providing the first three documents:
- Bill of lading (ocean, air, truck or freight)
- Commercial invoice
- Packing list
- Air waybill
- Binding ruling
- Cargo release/simplified entry
- Customs bond
- Customs import declaration
- Entry/immediate delivery
- Importer security filing
- Manifest for aircraft, motor carrier or vessel
Finally, to help protect your cargo from theft, establish sound security procedures at your warehouse and while transporting your goods for shipment. Do not give narcotics smugglers an opportunity to use your cargo to transport narcotics.
Become Familiar with Incoterms
When exporting products to the United States, it is important to understand your responsibilities over the goods being shipped. International Commercial Terms, commonly known as “Incoterms,” are the contractual rules that govern the movement of international freight. Published and periodically updated by the International Chamber of Commerce, Incoterms help determine how goods are shipped and which party is responsible—the seller or the buyer—for the shipment.
Three of the more common arrangements under Incoterms are the following:
- Carrier Paid To (CPT)—The seller of a product is responsible for the payment of freight to ship that product to the import country. Once the product has been delivered to the carrier, the buyer accepts responsibility for the shipment and its destination.
- Ex Works (EXW)—The buyer arranges the full shipment from the supplier’s warehouse to the cargo’s destination.
- Free Carrier (FCA)—The seller arranges most or all of the shipping stages from the exporting country. The buyer accepts liability once the goods arrive at the carrier’s terminal for export.
There are a total of 11 Incoterms and their language can be complex. Before making an international shipment, work with an in-house specialist, a customs broker, a freight forwarder or a third-party logistics provider who understands international shipping rules.
For more information on Incoterms, check out our blog article: https://www.rtsinternational.com/article/importance-incoterms
Know the Cost of Exporting
U.S. Customs’ duty or tariff is a tax placed on goods that are transported across international borders. Taxes and tariffs increase the cost of your product to your U.S. buyer. Knowing the final cost to your buyer is essential to pricing your product for the U.S. market. If you are based in a country with which the U.S. has a free trade agreement, your products may be duty-free.
If you know the classification number or “HS code” for the product you are exporting, you can use several online tools to help estimate U.S. tariff rates on your products. The U.S. Department of Commerce International Trade Administration’s website Export.gov contains several links to websites that can help calculate the cost of exporting to the United States.
Consulting your trade partner or a licensed professional is the most effective way to learn how to export to the United States. The following resources also contain helpful information about U.S. Customs and other regulations:
- Customs Rules Online Search System
- Customs Trade Partnership Against Terrorism
- Basic Importing and Exporting Information
- Small Business Administration: Importing Goods into the U.S.
For personalized assistance with starting the exporting process to the U.S., contact RTS International today!
Sources: TheBalance.com, U.S. Census, U.S. Customs and Border Protection, The Guardian, Export.gov, Investopedia.com, American Bar Association, Gov.UK