Proactive Steps to Guide You Through the Trade Wars
April 22, 2020
The Trade Wars have been on everyone’s mind ever since President Trump said that a 10% tariff on $300 billion worth of goods would go into effect on Sept 1. The constant discussion of tariffs, changing trade policy and an overall environment of uncertainty are leading many companies to take a “wait and see” approach to investment and expansion. Uncertainty over tariff amounts, origin, timing and related retaliation persists.
As a result, many companies are hesitant to commit to large investments or expansion plans unless they can be certain they’ll see a long-term payoff. Whether these companies need to change their supply chain strategy, find alternative sourcing or re-source materials, they don’t feel confident implementing these initiatives without more evidence of stability in trade policy.
Although the next round of tariffs may be out of your control, you can be proactive in preparing for changing trade policies by considering these steps to weather the storm:
Consider a complete customs solution for your business
Charter Brokerage is a leading global trade services customs broker company providing complete customs, import, export, drawback and related services. As a customs broker, Charter provides prompt and efficient import and export clearance of merchandise. Charter is the premier duty drawback services company in the United States, with more claims filed than any other drawback professional.
Consider free-trade zone opportunities
Too often, manufacturers overlook available opportunities provided by free-trade zones. The free-trade zone option allows companies to develop a product and then export it to a U.S. customs territory or foreign destination, potentially bypassing any tariffs on the product.
Establish a dedicated trade and customs compliance group
Consider forming a trade compliance group with clear governance. Charge this group with developing strong “what-if” capabilities to understand the impact of various tariff and trade scenarios, including inventory and supply chain strategies, sourcing alternatives and modeling multiple data sources.
Take advantage of exclusion processes
When granted, exclusions apply retroactively to the date a tariff became effective. The Commerce Department reviews exclusion requests for Section 232 Steel and Aluminum tariffs, while the United States Trade Representative (USTR) provides a mechanism to request exclusions for Section 301 (China) tariffs. The Commerce Department has shown a willingness to provide exemptions in certain cases, particularly since March when the tariffs of 25 percent on steel and 10 percent on aluminum went into effect, making it all the more important for manufacturers to evaluate opportunities for exclusions.
Assess imported product classifications
Each product’s classification dictates whether or not it is included in the tariff order. Whether there is an accidental misclassification, an intentional misclassification by the overseas seller or a product that falls within a gray area, an audit of the classifications of imported goods will help manufacturers elude surprises and potential liabilities – and could even result in the avoidance of higher tariffs.
Import sooner rather than later
Manufacturers with source material subject to the 10 percent tariff may want to procure more before the tariff leaps to 25 percent.
Time will tell the extent to which new tariffs and trade policy will impact US companies. Regardless of today’s uncertainty, you should take steps now to prepare and protect your business interests amid the shifting trade environment. Call Charter Brokerage today to learn how we can help.