The onset of tariffs sent shockwaves through the economy from capital markets shedding trillions of dollars to small businesses facing major supply chain concerns – yet for one local company, tariffs completely revived a struggling business.
Howard Hartry Inc. is a U.S. Customhouse broker in the Los Angeles Harbor which operates a bonded industrial warehouse and a foreign trade zone. While the two segments have certain distinctions, they both allow businesses to defer tariff payments of some sort on their imported goods.
From the time Howard Hartry began operating its bonded warehouse in the 1960s and into the 1990s, the facility made up a significant portion of the business and served a wide variety of clients comprised mainly of high-dollar commodities such as caviar, jewelry, makeup, liquor and beyond, said Jen Hartry, president of the San Pedro-based company.
Once goods are imported into a bonded warehouse, the owner does not have to pay tariffs on the inventory until they retrieve their goods from the warehouse. Similarly, exporters can house items in these warehouses until they are ready to ship them off internationally.
“(Businesses) will use the bonded facility to hold all of their inventory, and then they’ll pull out specific parts individually as they need them, and pay the tariff as they go,” said Danny Reaume, senior managing director of industrial services in Jones Lang LaSalle’s Los Angeles and Inland Empire region. “It’s dragging cash off their balance sheet.”
Eventually for Howard Hartry, business slowed as globalization strengthened during the 1990s and 2000s. With more amicable trade relations, the significantly higher costs of bonded warehouses no longer made sense for a lot of product types. In 1979, trade accounted for 36% of the global gross domestic product, according to United Nations Trade and Development. That percentage jumped to 60% by 2019.
“Once the economy changed and all these trade agreements changed, that business started dwindling a little bit and through the years, it’s gotten smaller and smaller and smaller,” Hartry said. “… We saw a lot of our clients leave because they didn’t need bonded services anymore. The global economy just had taken out that need.”
For decades, Howard Hartry’s bonded warehouse had 30 regular clients, Hartry said, but in November, it was down to three.
The industry waned in popularity and became more of a niche market, but in the last few months, everything seemed to turn the corner. The bonded warehouse service acted as a lifeline for businesses desperate for a moment to catch their breath as the weight of the tariffs loomed over their livelihoods.
“Everything came to a head and (the) bonded space became a safe haven from this crazy trade and tariff war,” Reaume said.
With only about 1,700 bonded warehouses in the United States – less than 1% of the total industrial warehouse landscape – companies like Howard Hartry were flooded with interest following what President Donald Trump dubbed as “Liberation Day” on April 2.
“The bonded space in the Southern California marketplace got gobbled up so quickly because anybody and everybody wanted bonded space because nobody could afford the tariffs, but they needed the inventory here in Southern California,” Reaume said, adding that SoCal ports are the “gateway to the Western U.S.”
In fact, the Los Angeles and Long Beach ports combined handle about one-third of international waterborne import and export containers in the U.S., according to the Port of Los Angeles.
Because the process for bonding a warehouse through Customs can take several months, all of the new and immediate demand that came with tariffs fell in the hands of the existing bonded warehouse supply like Howard Hartry’s facility. Bonded facilities began outpacing traditional warehouses, according to Reaume, who said every bonded operator he spoke to recently was 100% occupied.
Hartry said the boom in business came during the last week of April because shipments that were already on their way before April 10 were clear of the new tariff policy but shipments after that date had to pay the price.
“Shipments landed in L.A. and then there was a kind of panic,” Hartry said.
From the first quarter to early June, Hartry said revenue was up 80%.
“It’s such a weird feeling because I know so many importers and businesses where this has been so hard on them and I really feel for them, but for us, it’s been a little bit of a blessing in disguise,” Hartry said.
Prior to the trade war, Hartry said she and the team were taking a hard look at their business model, desperate for a strategy to turn things around but this year, tariffs “radically changed things for us,” she said.
Before tariffs, there were still groups and product types where it made sense to utilize the tax-saving advantages of bonded warehouses over the years, primarily high-dollar bulk items. Reaume pointed to the auto and pharmaceutical industries as common bonded customers.
For example, if a car manufacturer shipped $10 million worth of parts into the U.S. to have on hand for dealerships, it wouldn’t make sense to pay the duties in full on such a high value when the parts do not need to be available right away. Thus, as requests for parts come in, they can be pulled out based on need allowing for a more gradual flow of tariff payment, which creates optimized cash management.
“It’s a nuanced and niche part of the supply chain,” Reaume said.
For Howard Hartry specifically, its clients were suppliers for cruise ships and marine vessels, which typically had wholesale supplies of food and beverages. With the onset of tariffs, however, Hartry received interest from all kinds of products including motorcycle helmet visors, baby strollers, reels for a fishing pole, neoprene waist trimmers, gummy bears, supplements, rakes and shovels, and honey jars.
With increased interest came considerations for what Howard Hartry could handle in terms of space availability and the types of products it was equipped to hold and move. Its bonded warehouse sits at 20,000 square feet and can hold about 20 shipping containers.
Hartry identified smaller companies who are either direct importers or direct-to-consumer as compatible clients, including Amazon.com Inc. sellers.
“A lot of people who are trying to figure out that supply chain are Amazon shippers so they’re going to keep their product in our warehouse … and maybe once they have a bulk load of shipments ready, they’ll take their products out,” she said.
With little time to react, Hartry said the company had to jump into action and adapt to a new workflow both on the administration side as well as physically managing the space.
Customers, too, had to adjust as bonded warehouses come with additional hurdles, including a more complex application process that most folks were not accustomed to. While Customs is typically able to clear standard entries immediately, bonded entries take two or three days, Hartry said.
Simultaneously while both Howard Hartry and Customs were seeing huge influxes of bonded warehouse applications, they both needed to implement the new tariff protocol into their software systems, which caused further bottlenecks in onboarding and increased approval times.
“You had this crazy situation where the whole world had gone upside down and so then it took potentially a week for Customs (to issue clearances),” Hartry said. “Then you had containers just sitting on the docks waiting to get clearance and so there was a lot of upheaval.”
Despite increased demand and little supply, Hartry said the company has not raised its prices.
“We made a very conscientious choice to not raise our prices,” she said. “Customers already have an added massive tax and tariff on their product. If we increase our prices, that’s not going to help the supply chain at all.”
This does not appear to be the case for others offering the bonded service according to Reuters, which recently reported that bonded rent prices had doubled since the start of 2025.
Typically, warehouses operate from a cost-plus model, tallying up operational costs like rent and labor and then applying a percentage of that for their profit, Reaume said. Bonded warehouses are more expensive to operate because of annual fees to Customs and additional security systems required.
With the state of tariff policies shifting on a weekly and sometimes daily basis, it’s difficult to say precisely how long bonded warehouse operators will reap the benefits.
Reaume recalled a switch up in bonded space interest following the first reversal of tariffs following “Liberation Day.”
“All of the sudden, out of nowhere, we had a treaty,” Reaume said. “When that treaty came in place, everybody that had any inventory in bonded space pulled it out as immediately as they possibly could.”
To that end, Howard Hartry did experience some cancellations during that time, Hartry said, though interest has remained.
“Now we’re seeing a good balance of customers who are thinking, ‘This is probably going to be the new normal. The rates are probably somewhere where they’re going to be. I need to figure out a new supply chain business model,’” Hartry said. “We’re now seeing less (reactive action) and more customers looking for a long-term partner.”
Regardless of exactly where tariffs land, Reaume asserts that they will be higher and as a result, those who used bonded warehouses prior to this trade war will find even greater use with them.
“Theoretically, the bonded space for them is going to become more valuable, because if the tariffs are higher, the (benefits of) that cash management and that inventory scenario is only going to be better than in the past,” Reaume said.
As for the clients new to the bonded scene, some will stay and will go.
Given that many importers will need their inventory on shelves right when it comes, they will likely just pay the new tariffs and incorporate those costs into their business models, Reaume said. But he still believes occupancy for bonded warehouses will be higher than it was prior to the current tariff situation.
Part of this is because many people simply weren’t aware of bonded warehouses as an option or of the benefits they can provide.
“I do think there’s going to be an uptick in demand… A decent amount of groups are going to lean in a little bit… It might not be for their entire supply chain (but rather) portions of their inventory that are high value that make sense to use a bonded building,” Reaume said.
Essentially, bonded warehouse operators will see substantial increases in short term revenue with some lasting impact in the long term.
Hartry said she will be prioritizing specific client outreach for her company where she sees opportunity for long-term partners, eyeing Christmas products, 2028 Olympics gear and souvenirs, and builders bringing in construction materials for the post-wildfire rebuilding efforts.
