Open this photo in gallery: Customs brokers and other industry specialists are seeing a surge in consumer packaged goods, chemical and automotive supply companies rushing to hoard inventory in Canada as a result of U.S. President Donald Trump's Tariff policies.Carlos Osorio/Reuters A growing number of businesses are rerouting U.S.-bound shipments from China to Canada to avoid crushing tariffs in hopes of a swift resolution to the escalating trade war. But the approach risks flooding the Canadian market with their discounted goods and raising competition for already scarce warehouse storage, according to some experts. Flexport, a platform that co-ordinates global logistics, reported a 50-per-cent spike in consignments from China to Canada in just one week in mid-April. Customs brokers and other industry specialists are also seeing a surge in consumer packaged goods, chemical and automotive supply companies rushing to hoard inventory in Canada. Even Amazon and Walmart‘s third-party sellers have reportedly been hoarding goods in the country. Their strategy: storing goods in Canadian warehouses, including bonded storage facilities where imported items can be held without immediate payment of duties – all in hopes that the Trump administration rolls back tariffs as high as 145 per cent. “Inquiries are increasing daily,” said Michael Kotendzhi, chief executive officer of Burnaby, B.C.-based 18 Wheels Warehousing & Trucking Ltd. He has seen a steady flow of businesses reaching out to ask about the company’s bonded storage services. In Toronto, Steve Bozicevic, CEO of A&A Customs Brokers, has fielded calls from five companies looking to explore the rerouting option in the past three days - three to Mexico and two to Canada. “There’s lots of outside counsel in the U.S. that really believe that the tariffs are gonna drop soon. And they’re advising customers on that,” Mr. Bozicevic said. Clayton Castelino, president of Orbit Brokers in Mississauga, has also noticed clients exploring this option. But he generally advises against it. He and his team don’t anticipate a resolution to trade tensions south of the border until negotiations around the United States-Mexico-Canada Agreement reopen next year, which means businesses may ultimately need to seek alternative markets for their stock. “The cost to store goods in a bonded facility for that amount of time would typically outweigh the cost of the tariff, ” he said. “In some cases, they are more likely to sell into the Canadian market at a reduced price instead of store in a warehouse for an indeterminate amount of time waiting for tariffs to be reduced or eliminated.” While estimates vary, Mr. Castelino said the stalling method could cost sellers $200 to $250 a day per container. That’s an additional $1,750 a week in storage costs alone for an indefinite period. Those costs may be even higher as Canadian operators struggle to meet the unprecedented demand for massive amounts of storage space across Canada, said Jim Bookbinder, a professor at the University of Waterloo specializing in supply chain and logistics research. “There’s going to be a limited quantity that could be stored that way just because of the amount of capacity for the bonded warehouse system in Canada,” he said. “That can’t go on for very long.” Even traditional warehouses – where duties aren’t deferred until the product ships to the end-user – are seeing an influx of business from clients rerouting to Canada in a bid to wait out the impact of tariffs. Lauren D’Amico, president of 3D Warehousing & Logistics in Hamilton, said that 38 per cent of their new inquiries in April were related to this issue. For seasonal items, such as apparel, the ability for sellers to keep the item in storage without risking losing value and future sales would be high, Prof. Bookbinder said. If Mr. Trump doesn’t budge on his sweeping tariffs, many of the businesses storing inventory in Canada will be forced to sell it into the Canadian market at steep discounts. That might mean cheaper prices on some goods for consumers and other end-users. But Mr. Castelino warned that this influx of diverted product could pose a threat to Canadian manufacturers. “Among the reasons Trump would implement additional tariffs on foreign goods is that the goods were being sold at a price that threatened domestic production,” said Mr. Castelino. “When these goods are diverted to the Canadian market, that would then threaten Canadian production.” But Isik Bicer, associate professor of operations management and information systems at Schulich School of Business, said it might be challenging for some companies to sell product destined for the U.S. here instead. “The [stock keeping units] sold in the U.S. may be different from those in Canada,” he said, referring to the unique product codes on packaging. He believes the more likely option is destruction and waste. Mark Morgan, president, commercial operations at supply chain management software company Kinaxis, said those storing their goods may also face a new set of challenges if the trade war ends. “You’re going to see a massive surge of shipments both in Canada and in the U.S.” when trade flows resume, he said. “Because what you’ve had is this glut … and then that demand is going to spike, which is going to cause a huge increase in international shipping costs.”