Tariff Impact: What You Can Do Now to Manage Risk

As U.S. importers, we live in interesting times. It can seem overwhelming just to keep up with what’s changing in tariffs, let alone know the full impact of those changes on your business. This quick summary brings you up to date on what’s happened in U.S. tariffs this year so far. It also provides ideas that can help you manage potential disruptions to your supply chain as developments continue to unfold.

First, a quick recap of what’s happened in 2018:

• Section 201 safeguard tariffs went into effect February 7 against any country importing solar cell/modules and large residential washing machines and parts into the United States.
• Section 232 national security tariffs added 25% tariffs on steel and 10% tariffs on aluminum imports from all nonexempt countries; they went into effect March 23.
• There were also Section 301 unfair trade practice tariffs against China.
• List 1 tariffs on $34 billion of products went into effect on July 6.
• List 2 tariffs on $16 billion of products went into effect on August 23.
• List 3 tariffs on $200 billion of products at 10% duty went into effect on September 24, 2018 and scheduled to increase to 25% duty January 1, 2019.
  • On December 2, 2018, U.S. and China leaders met at the G-20 summit and agreed to a 90-day hold on the List 3 increase for January 1. If no deal is reached between the U.S. and China within 90 days, then tariffs could increase to 25% around March 1, 2019.

That’s where things stand today.

Beyond knowing what’s changing, companies are wondering how their current customs clearance programs ought to change to fit the new realities. There are things your company can do now to stay agile and keep up with changing times.

What you can do to manage risk

1. Look carefully at product classifications.U.S. Customs and Border Protection (CBP) will be looking for misclassification and valuation issues, and you can expect increased oversight. Utilizing a Customs professional with classification expertise may assist in determining if product is properly classified and actually subject to safeguard duties.Once you have determined you have the proper tariff classification, you will want to review and understand your potential exposure to these tariffs. Look at both direct impact—what you, as an importer, pay to CBP on these tariffs, easily tracked in your ACE reports or your broker report—as well as indirect impacts. Indirect impacts include goods you buy domestically or have imported by another U.S. party that could be subject to safeguard tariffs.

2. Avoid potential delays in the import process.Delays can be expensive, with shipments accruing demurrage, non-clearance due to insufficient bond values, and more examinations by CBP.Ensure you have provided proper classifications, any exclusion or exemption information, and proper country of origin to your customs broker. Review your current Customs bond amount and estimated duties for the next year based on the safeguard duties, and ensure your bond is current.You can attend a webinar on Wednesday, December 12, at 3 p.m. EST to learn how to assess whether your bond is sufficient.If the safeguard tariffs impact any of your product, CBP may require an increase in bond amount, and the surety may require collateral as part of that required increase. Getting bond amounts increased can take longer than normal–sureties are requesting financial statements and in some cases collateral based on the increased exposure of high bond amounts.

3. Strengthen your trade and customs compliance programs and practices.Go to CBP’s website to read guidance on the Customs audit/survey, Centers of Excellence (CEE), Customs valuation encyclopedia, tariff classification, Section 201, 232 and 301 tariffs, and how to receive and respond to CBP Forms 28 (request for information) and 29 (Notice of Action) in ACE.Keep your personnel trained in changes to regulations.Many companies offer full-day seminars to help you stay abreast of the latest information.The information offered here is broad in nature, and is not meant to cover every aspect and provision of the above topics. Be sure to discuss your specific questions with your customs broker, legal counsel, and/or CBP.Finally, stay up to date with changes. One way to do this is to sign up for our free Client Advisories, and we’ll automatically notify you as future developments occur. You can also get answers to your questions and explore specific strategies with our Trusted Advisor® experts in trade compliance to help maximize compliance and reduce costs.

Monica joined C. H. Robinson in 1998 and became a Licensed Customs House Broker in 2001.  She has been an active participant in the local Detroit Customs Brokers and Freight Forwarders Association (DCBFA) serving as an officer for many years and President for the past two years.  Monica also serves on the Customs Committee Co-Chair for the Northern Border Customs Brokers Association (NBCBA) and participates at a national level with the National Customs Brokers and Freight Forwarders Association of America (NCBFAA).  Monica has consulted clients on a number of import compliance matters including tariff classification, bond sufficiency and valuation matters. Monica is located in our Southfield, MI, Detroit Global Forwarding office.