Is Your Business Protected? The Trade War Ensues.
Aloft the hurried press releases and media outlets regurgitating less-than-articulated political disputes, reads a comprehensive synopsis of the impending trade wars. Actionable processes being aimed and implemented based on NAFTA amendments, tariffs hitting the auto industry, unfair trade applications, international retaliations, and increased steel and aluminum duty rates are all on the current trade talk docket. Aside from increasing market volatility, these actions can conjunctively increase the cost of doing business, resulting in lost clientele and in-depth supply chain restructures.
Fully understanding the direct effect these trade discussions have on your business is imperative; prioritized only above knowing the appropriate steps needed to shield your company. Below you will find our top 7 proactive steps on which immediate action should be taken, thus ensuring your business is adequately protected:
Restructure product import origins: Does your company import products that have been exposed to the tariff increases? If so, plan to change these locations to a country with lower import duty rates. When changing the country of origin on these shipments, clarify that the country is the actual origin of the product and not a hub for rerouting purposes. But stay in close contact with your legacy suppliers. Increased tariffs will not last forever and it may make more business sense to return to the original product origin later on.
Alter product assembly level: Oftentimes, duty rates differ from unassembled parts versus a finished product. Consider an overseas assembly or partially assembled product to adjust U.S. Import tariffs.
Product exemption request: In certain instances, permission to submit exclusion requests allowing for product exemption is permitted.
Speed up shipment times: If your business is importing a product with an impending tariff increase tagged to it for the future, accelerate shipments and back-stock inventory.
Amend long-term contracts: Update purchase contracts, purchase orders, and terms of sale. Include provisional statements that create a loop hole for your company to forfeit payment of duties that exceed a set point. Update and review Incoterms as well. This ensures you are well aware of who pays what, and when.
Carefully comply: With U.S. Customs, that is. Safeguarding legalities not only holds weight in day to day shipments, but in the case of mitigation. Always be prepared for worst case scenario with pertinent documents in hand.
Stay proactive: Get involved in the conversation. Understand the impact and work through an action plan. Express your thoughts to colleagues, your executive network, to congress, etc. A little discussion mixed with action goes a long way.
If you have any questions or would like a free consultation regarding your HS codes or status of your current U.S. imports, email us HERE.