Here’s What Happens If You Abandon Your Car At Port Because You Can’t Pay Import Duties

Americans have been getting used to the word “tariff” a lot lately. As the American government levies tariffs on imported goods and our nation’s trade partners retaliate, some businesses are finding themselves in a rough position of having cargo on its way to America and facing high tariffs. Reportedly, some exporters are just ditching their cargo before the ship even reaches an American port. There has been a question floating around the car import world lately. What if, for whatever reason, you’ve found yourself unable to pay an import duty? What happens to your car?

As of this publishing, the United States has hit China with 145 percent tariffs. Meanwhile, China hit us back with its own 125 percent tariff on most products. Earlier this month, President Trump also announced reciprocal tariffs, which would have shackled the imports of roughly 90 countries with varying tariffs up to 50 percent. Those tariffs are on pause until July or whenever Trump changes his mind again.

If your head isn’t spinning yet, you should also know that Trump is also levying up to 25 percent tariffs on imported vehicles and imported car parts. Thankfully, Trump has since eased these tariffs somewhat, so domestic automakers don’t get bludgeoned as much by the government.

The other good news is that enough time has passed that I’ve finally gotten a confirmation from U.S. Customs and Border Protection (CBP) that a 25-year-old car is exempt from the auto tariff and should also be exempt from the reciprocal tariffs. That’s great, and gives me more confidence in importing my 1997 Honda Life this summer. If you’re interested in the meat and potatoes of the auto tariff as originally published, click here to read my previous coverage.

To be completely clear here, if you just bought an imported car or plan on buying one soon, you should be fine. Your car should not be hit by the auto tariff or the reciprocal tariffs when they go live. The import duty for a passenger car should remain just 2.5 percent, while the duty for trucks should remain 25 percent due to the Chicken Tax.

Yet, some consumers and businesses, for whatever reason, end up abandoning their imported cars at a port. After enough time, the government has a way to get rid of them.

Exporters Abandon Ship

The idea of abandoning a shipment is on the minds of some folks right now, in part thanks to some recent reporting involving the fallout of tariffs. On April 9, the South China Morning Post reported that some Chinese shippers have responded to the tariffs by abandoning entire containers while they were en route to the United States, from the South China Morning Post:

Industry insiders have dubbed the move “preparing for the Long March”, a grim metaphor for what many see as a prolonged and punishing downturn in cross-Pacific trade.

A staff member at a China-listed export company, who requested anonymity, said its US-bound container volume had plummeted from 40 to 50 containers a day to just three to six as a result of the new tariffs on Chinese imports imposed by the second Trump administration. It has increased tariffs by 104 per cent this year, taking the total impost to around 115 per cent.

“We’ve halted all shipping plans from the Philippines, Vietnam, Indonesia and Malaysia,” the employee said. “Every factory order is halted. Anything that hasn’t been loaded will be scrapped, and the cargo already at sea is being re-costed.” One client had told the company it was abandoning goods already on the water and giving them to the shipping company, as “no one will buy them after the tariffs are imposed”.

According to a follow-up report from South China Morning Post, trading groups in Hong Kong are urging Chinese shippers to refrain from abandoning their containers. The Hong Kong Shippers’ Council warns that in abandoning cargo, shippers will lose everything, including the cargo, all money spent, and insurance coverage. The organization also warns that cargo abandonment could result in retaliation from the customer, as well as a diminished reputation.

South China Morning Post elaborates further:

[Lin Sun-mo, chairman of the Hong Kong Shippers’ Council] said that if the exporters transported the goods under the shipping arrangement of Free On Board (FOB), which sets the price of goods that includes delivery at the seller’s expense to a specified point and no further, it would be the responsibility of the US buyers to pay the tariffs.

“If the buyers refuse to do so, then the Chinese exporters have to swallow the tariffs first to fulfil the contract and then claim insurance to recoup the losses,” he said.

For Landed Duty Paid, under which the price is the final amount paid by a buyer for the goods manufactured, Lin said there was no reason for exporters to ditch the goods at sea as they would risk being sued by the buyer and potential customers for compensation as high as three times.

All of this has just been a total mess. As CNBC reports, some consumers and businesses are avoiding this headache entirely by reducing or canceling their orders from Chinese suppliers. Other businesses are telling their suppliers to hold off on new shipments. Reportedly, businesses in some Chinese industries, including apparel, furniture, sports equipment, and toys, have seen near-total halts of orders from the United States as nobody wants to pay 145 percent tariffs.

As CBS reports, the tariffs are also leading to a slump in shipment traffic in American ports. The Port of Long Beach registered a 10 percent drop in traffic last week, and the port is expecting the decline to deepen. But that’s not surprising, as that’s going to happen if companies and consumers are reducing or canceling orders.

Shippers Are Abandoning Containers

Likewise, as CNBC reports, more cargo is expected to be abandoned at ocean ports and airports. However, what happens to that cargo isn’t exactly clear because each port has its own rules about what to do if cargo arrives and nobody pays for it. From CNBC:

Port officials tell CNBC they are not typically notified of abandoned cargo. The New York Terminal Conference Agreement states that cargo remaining on the terminal in excess of 30 days will be considered as abandoned and sold for collection of demurrage charges due to the NYTC — charges assessed for leaving freight at terminals for an excessive period of time. It also says the ultimate responsibility of the costs usually depends on specific shipping contracts. “If the BL (Bill of Lading) hasn’t been transferred to the consignee, it is the shipper’s responsibility. The shipper could decide to take the cargo back (i.e. re-export the cargo), destroy or donate it.”

Shippers usually prepare a “letter of abandonment” for U.S. Customs purposes for the cargo to be sold or auctioned, with proceeds from the sale/auction paying any expenses, such as use of container and chassis, and with the balance for the terminal.

The terminal can move abandoned cargo to a bonded warehouse or leave it on the terminal and sell it from there. There is a market for buying abandoned freight. Companies such as JS Cargo & Freight Disposal, FR8 Auctions or Merchandise USA buy abandoned cargo and then sell it in discount stores, outlets, liquidators, online sellers like Amazon, drug chains, variety outlets, redemption centers, liquidators, and closeout buyers.

Alternatively, abandoned goods may be disposed of in a landfill. This will happen if the imported goods are extremely low value, perishable, or hazardous materials. Here are some regulations if you like a nice, dry government read.

Cars Also Get Abandoned

CBP has been known to hold auctions of items abandoned by importers, which include land, air, and sea vehicles brought to America and left behind in a port. As CBP writes, in 2013, one July auction included the following:

Items for sale on July 11 include men’s sweaters, adult T-shirts, food stuffs (assorted pickles, sweet relish), a 2000 Ford Expedition, a 36 ft. fishing boat, two 1948 Rolls Royce, jewelry, artwork, all-terrain vehicles, and personal effects.

CWSAMS is one portal that gets you access to these auctions, and the goods in them are pretty neat. Customs has an auction set to launch on April 30 at 5:00 pm ET. That auction includes synthetic twine, greased O-rings, textbooks, a 2007 Ford Explorer, a 1996 Mitsubishi Minicab, a 1996 Subaru Sambar, an excavator, a Chevy Equinox, and an electric scooter.

Unfortunately, all of these vehicles, except for the excavator, were deemed ineligible for entry. Due to either their abandonment or another circumstance, they’re considered illegal imports. Thus, the buyers of those vehicles are required to export them to another country that’s not Mexico or Canada within 60 days.

Sadly, a lot of cars get caught up in this. Here’s a 1999 Nissan Skyline that got the “Export Only” kiss of death:

These vehicles are often auctioned off in the condition they were found in at the port. So, some won’t have keys, haven’t been started, may not roll freely, do not come with any documentation, and could be broken. Additionally, you may also run into cars stamped “Export Only” if a vehicle was purchased by a foreign dealer. Some of the salvage cars that you may find on Copart or IAA may also have the Export Only brand. You’re not supposed to be able to register these cars, but some people find a way.

One more alternative is that you somehow end up pissing off the wrong party. One of our readers, Tyler Barg, once attempted to import a custom 1996 Subaru Sambar van that was painted to resemble a Volkswagen Bus.

As the Drive reported, CBP reached out to Volkswagen of America, which declared the cute Suzuki a fake VW instead of an innocent custom car. CBP ultimately seized the vehicle, and it was believed to have been destroyed. Barg was out $9,500 and had nothing but frustration and aggravating emails from VWofA’s legal counsel to show for it.

You can reduce the chances of a bad experience at the port by calculating your costs before you buy your car. Import duties are calculated against the purchase price of your imported car, and you can get a quote from a Customs broker before you import your car. If the government changes import duties while your car is on the boat or aircraft, you should also be shielded from the new rate on that import.

You can also ask your importer about what they might think the costs will be on your end. Don’t purchase that car until you have as clear a picture as you can get. Sadly, Barg’s tale is also a warning that you might also want to be careful about what car you’re importing. You’d think an old Suzuki wouldn’t matter in the eyes of Volkswagen, yet, here we are.

So, that’s what could happen if you abandon your imported car at a port or some part of its importation goes horribly wrong. There’s a high chance it’ll end up on a sad government auction where the feds will demand it be sent anywhere else but America. Or worse, maybe your vehicle gets mistaken for contraband and gets destroyed while you’re powerless to stop it. Either way, you will lose every dollar you spent getting the car to America. If you can swing it, always try to see an import through to the end. Good luck!