Five Essential Things Importers Can Do to Deal With Tariffs
September 28, 2018
To Our Valued Customers:
As you are well aware, we are living in an ever-changing world of increased tariffs and retaliatory tariffs. This clearly is having an impact on our import customers and we expect this environment to continue for the immediate future.
A quick recap: In June, 2018, President Trump announced a round of tariffs on $50 billion worth of Chinese imports. These Section 301 tariffs were separate from the imposed Section 232 additional tariffs on certain steel (25%) and aluminum (10%) products from various countries of origin. Section 301 additional 25% tariffs took effect on July 6, 2018 and applied to 818 HTS products made in China. An additional second round went into effect on August 23rd imposing an additional 25% duties on 279 more subheadings. And most recently, a third round of tariffs at 10%, which will impact more than 6,000 subheadings, went into effect September 24, 2018. President Trump has announced that this third round of 10% tariffs will increase to 25% on January 1, 2019. President Trump has also pledged to impose a fourth round of tariffs if China does not change its policies or if China implements more retaliatory tariffs.
If the proposed fourth round of tariffs goes into effect it will cover virtually every item we as a country import from China.
Virtually every one of our import customers will now be impacted, and for those, there are five essential things you can do to prepare now:
It’s all about the Continuous Bond: Duties (regular, antidumping, and countervailing) are considered when calculating your company’s bond limit requirements. Surety companies, who provide the bonds, may require importers to obtain larger bonds and possibly provide financial statements and collateral in order to secure bonds with higher limits if their commodities are subject to the new tariffs. Bonds are becoming “saturated” quickly with the increased duty liabilities, and bonds deemed insufficient cannot be used for import and may delay incoming shipments. It is recommended for importers to forecast the possible impact of tariffs on their business for the next 12 months and if necessary, obtain increased bond coverage now, rather than wait for an insufficiency notification from the surety company.
It is the importers responsibility to ensure that their bond limit is sufficient, so act now!
Use the ACE Tools US Customs provides: If you have not set yourself up on Customs’ ACE portal yet, do so now. It is an incredibly useful tool, and the link is below. Once you are using the portal, we suggest you monitor your import activity closely and on a regular basis via various ACE Reports in the portal. ACE Reports are a great tool to determine bond sufficiency and to ensure compliance.
Here is the link from US Customs website with instructions on how to apply for an ACE Portal account for importers that currently do not have one: https://www.cbp.gov/trade/automated/getting-started/portal-applying
Review your credit limit: - Additional tariffs will increase your duty obligations, and perhaps your credit needs with your broker / forwarder. So please review what the impact could be and assess your credit needs and communicate with your broker. To avoid shipment delays due to credit holds, clients can pay duties directly to US Customs via their own ACH bank account. They can select to have duties withdrawn from their ACH account within 10 days of clearance or once per month through Periodic Monthly Statement. Links to both are below:
US Customs ACH application process https://www.cbp.gov/trade/automated/ach
Importer Periodic Monthly Statements info: https://www.cbp.gov/sites/default/files/documents/section_1_pms_3.pdf
Discuss with your team: Share the above with your internal supply chain and finance stakeholders. And to remain compliant, implement internal measures to ensure additional duties are applied at time of entry and prior to statement.
And Stay Informed! A great place to start is US Customs & Border Protection website - Trade section (www.cbp.gov).
We are here to help! We are working with all of you to help navigate this as seamlessly as possible. Should you need any additional information or assistance, please feel free to contact your Laufer sales or CHB customer support personnel. Thank you very much for all your support!
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