As you know if you have been reading or listening to the news, $300 billion in U.S. imports from China are at risk of being subject to 25% duties. If you are a U.S. importer that relies on Chinese imports – or an importer in general who could use a refresher in best practices – here are five recommendations for you:
- Know your imports, intimately. Import duties are calculated based on the duty rates published in the U.S. Harmonized Tariff Schedule (HTS) applied to the value of the goods imported. Your goods are classified based on HTS numbers, and many goods are arguably capable of classification under more than one, each subject to a different duty rate. First and foremost, importers need to make accurate classifications. If your goods are misclassified and subject to a higher rate than they should be, you should change that!
- Know your suppliers. For quality control reasons, you need to know your suppliers and their operations, especially if the goods supplied are subject to U.S. regulatory requirements. You also need to know where the suppliers are located. Not only do different HTS numbers correspond to different duty rates, but goods classified under the same HTS number but coming from different countries may be subject to different duties (i.e., goods from China are likely to carry higher duty rates than the same goods from Canada). If you were saving money importing from one country due to lower duties and they go up, you need to reanalyze the situation and perhaps change purchasing patterns.
- Diversify your supply chain. Importers purchase goods from different places around the world for a lot of reasons, but I bet margins are likely number one. Sometimes single-sourcing can’t be avoided, but most of the time it can. Qualify as many suppliers of like goods from different regions as you can and keep them in play with some purchasing activity. Don’t be stuck with just one when trade problems arise.
- Police your agents. If you are an importer you are probably using customs brokers and freight forwarders that you have given a power of attorney to file documents for you with U.S. Customs and Border Protection (CBP). If they screw something up, guess whose problem it is? Yours! Make sure that whatever your supply chain management team is doing internally is communicated to all of the agents you have working for you to clear your freight into the country. Their wrongful actions or omissions are likely your problem.
- Keep reading the news. The Trump Administration is not the first to leverage executive powers to achieve economic objectives related to trade. Executive actions can come in the form of tariffs and sanctions, and private actions may be taken against importers by their competitors that lead to anti-dumping duties. If your goods are going to be subject to any of these, you want to be prepared!
For more information on this topic, please contact Scott Lloyd at email@example.com.
ABOUT SCOTT LLOYD
firstname.lastname@example.org | 301.575.0357
Scott Lloyd is a registered patent attorney who specializes in intellectual property counseling and commercialization work. He has served as a technology commercialization specialist and advisor to companies in a diverse array of markets, including biotechnology, pharmaceuticals, medical devices, food and beverage, specialty chemicals, technology, and engineering. In addition, Mr. Lloyd spent ten years as in-house general counsel to small and mid-sized companies, where he managed corporate matters and resolved commercial disputes in addition to intellectual property strategy, and now serves in the same capacity for entrepreneurial clients. He serves as counsel to small and mid-sized business owners seeking to implement growth strategies and succession plans.
While in house, Mr. Lloyd has also contributed to the successful formation of international affiliates of domestic businesses as well as a $400,000,000 business acquisition.
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