This brand was running a clean, cost-effective setup. All products were made in China and shipped to US customers from ShipMonk’s Mexico warehouse using Section 321.

That exemption let them bypass US tariffs for small shipments. It worked well - until the rules changed.

That setup worked well - until it didn’t.

In December, Mexico updated its importation laws. For certain categories like apparel, brands had to pay VAT up front. Around the same time, the US said it would end the Section 321 exemption for Chinese-origin goods.

Suddenly, the brand’s landed costs increased. Cross-border shipments slowed as trucks backed up at the border. Customer support tickets rose as delivery delays mounted. The cost advantage of shipping from Mexico was disappearing fast and the CX risks were growing.

In response, the brand worked with ShipMonk to understand their options. They wanted to see how much it would cost to shift to a US warehouse, and what that would mean for service levels.

ShipMonk helped them model costs, delivery times, and performance across different US sites. 

The California warehouse made the most sense. It was closest to their customers, close to the Port of LA, and could handle their current and future volume.

By mid-January, the brand was able to switch to the US quickly if needed.

That decision paid off.

On January 3, ShipMonk provided a detailed comparison of Mexico versus California, laying out:

On January 15, the brand signed a contract that reserved space in California and gave them the ability to switch quickly. This gave them a clear path forward without needing to make a final decision right away.

On February 1, new U.S. tariffs went live. Border delays followed. The brand decided to move.

On February 4, ShipMonk started moving inventory to their US warehouse.

The brand shared demand data for thousands of  SKUs. ShipMonk used that to decide what to ship first. Fast-selling products were moved in the first trucks so they could go live as soon as they hit the new facility.

ShipMonk moved several truckloads of inventory across the border. They handled the customs paperwork, coordination, and inbound planning.

Some trucks were delayed, but ShipMonk stayed in constant contact.

By February 14, the brand was fully live in California.

Once core inventory was received, the brand updated its shipping logic. Orders started going out from California. They also turned on express shipping for U.S. customers, which hadn’t been possible before.

If you’re thinking about a similar shift, here are a few takeaways from the project that stood out to me.

Most brands were waiting for formal policy changes. This brand acted early, before Section 321 was officially removed, because the signals were clear. That gave them first access to capacity and helped them beat the border chaos.

California wasn’t the cheapest option, but it offered faster delivery, port proximity, and available capacity. In a shifting logistics landscape, those factors can outweigh cost alone.

All didn’t go smoothly during this project; trucks were stuck at the border during the migration. But ShipMonk kept the brand informed with nightly calls, photos, and updates. That visibility kept teams aligned and confident.

The brand didn’t need to start from scratch. They were already using ShipMonk’s Mexico facility, so shifting to California required minimal operational changes. That continuity meant faster go-live and fewer internal handoffs.

I put together this step-by-step playbook based on my conversation with ShipMonk. If you're currently fulfilling from Mexico and wondering what it would take to switch to a US warehouse - especially with a partner who already has the network - this guide breaks it down. 

Hope it helps.

Start by understanding if your current setup is still worth it.

Even if you're not ready to move, build the option to act fast.

Don’t default to the cheapest location - consider speed and reliability.

Not everything needs to transfer at once.

Once inventory starts landing, get your systems ready.

You won’t know if the move worked unless you measure it.

If you want to go deeper on this project, here’s my full conversation with Aras and Kimberly. We talked through the decision-making process, the operations behind the migration, and what other brands can learn from their experience.

This conversation has been edited for length and clarity.

How was the brand’s fulfillment network set up before the move?

Kimberly: From a fulfillment perspective, they were using our Mexico warehouse to ship all their U.S. orders. Everything was sourced from China and routed into Mexico through San Diego. 

They had access toSection 321 to avoid duties on shipments under $800. 

And when the rules started changing, that strategy suddenly had major risks.

When did the brand start thinking about switching to U.S. fulfillment?

Aras: Late December is when things started moving. We were seeing announcements from the Mexican government and signals from the new U.S. administration that Section 321 was going to change. For brands sourcing from China and shipping under 321, this was a big deal.

To their credit, this brand didn’t wait. They forecasted ahead and said, “Let’s prepare a Plan B.” That gave us a couple of weeks to model the options, reserve capacity, and prepare. By the time tariffs officially hit, they were ready to pull the trigger.

Kimberly: They were extremely proactive. We were talking to them almost nightly, just staying close to the changes. When the news broke about the additional 10 percent tariffs on China-origin goods, they called us the next day and said, “We’re ready to move. What do we need to do?”

How did they decide on California as the new fulfillment site?

Aras: We ran a full network analysis across all of our U.S. sites, looking at TNT (time in transit), delivery zones, fulfillment cost, and invoice data. California came out as the most balanced option. They had a large customer base in the state, which meant faster shipping. It’s also close to the Port of LA, which helped with inbound traffic from China.

A lot of brands talk about cost per order, but this team was thinking about the full picture, how to reduce customer service tickets, how to improve the overall delivery promise. They treated it as an experience upgrade, not just a reaction to tariffs.

What were the major cost changes driving the decision?

Kimberly: Two things hit at once. First, Mexico began requiring VAT to be paid upfront on goods like apparel. That was a significant new cost for them. Second, Section 321 was eliminated for shipments from China. That meant all of their U.S.-bound shipments would now require formal entry with duties.

Those two changes erased most of the margin advantage of fulfilling from Mexico.

Aras: We’re seeing this with a lot of brands now. It’s not just the tariffs. It’s how quickly the cost structure changes and how hard it is to predict. This brand didn’t wait to see how bad it could get. They made a call early and got ahead of the chaos at the border.

What did the actual transition look like from the brand’s perspective?

Kimberly: Surprisingly light. They had thousands of  SKUs, so the main thing we needed from them was a prioritized SKU list, what to move first based on demand. We handled the rest.We coordinated transportation, managed the paperwork, and worked with our launch operations team to get inventory from Mexico to California.

It was multiple truckloads moved over about 10 days. Some of those trucks got stuck at the border due to congestion, but we kept the brand updated every step of the way.

Aras: We sent daily updates. Sometimes even photos of the truck queues, just to give visibility. In these moments, communication is everything. Silence leads to mistrust, so we made sure they knew exactly what was happening, even when it was out of our hands.

What did the brand have to change internally?

Kimberly: Not much. They were already on our platform in Mexico, so the backend systems were in place. The key changes were updating shipping mappings and enabling express options for U.S. customers, which they hadn’t offered before.

There was also a short period where they had inventory in both Mexico and California. We used our system to automatically split backorders so customers didn’t experience delays or partial shipments.

Aras: That’s where having a single partner helped. They didn’t have to manage multiple 3PLs or systems. We owned the full flow, from modeling, to contract setup, to inventory transfer and go-live.

What kind of impact did they see post-migration?

Kimberly: Their U.S. order volume more than doubled. Fulfillment got faster. They were able to offer better shipping options. And customer service stabilized.

Aras: Most importantly, they had peace of mind. No more border risk. No more guessing about new tariffs. 

Are other brands making similar moves?

Aras: Yes, but most are late. A lot of brands are still stuck in evaluation mode. They know changes are coming, but they’re waiting for full clarity, which usually comes too late.

Some are looking at Canada or bonded warehouses to manage cash flow and duty exposure. But what’s different now is how unpredictable everything is. There’s no stable 12-month plan anymore. That’s why optionality matters more than ever.

Kimberly: We’re also seeing brands become more price-sensitive than usual. Everyone’s under pressure. But the smart ones aren’t chasing the cheapest option. They’re looking for stability, reliability, and long-term flexibility.

What would you tell brands facing similar risks?

Aras: Don’t wait for perfect information. The window to act is always before the news is official. Once everyone’s reacting, you’re stuck in a crowd.

Kimberly: Work with a partner that can execute the entire migration. The fewer handoffs you have, the faster you can move. And prioritize your SKU strategy. Get your top sellers live first, and phase the rest.

Aras: Lastly, treat fulfillment like a strategic bet, not a fixed cost. This brand didn’t move because they had full clarity. They moved because they knew the risk of waiting was higher than the cost of switching. That mindset made the difference.