The past few weeks have been a rollercoaster ride for shippers trying to stay on top of the latest tariff announcements and their impact on shipping activities. No wonder almost half of shippers say uncertainty around tariffs and trade policy is a pain point.
As a company that manages 37 million shipments annually, we know that every shipper’s needs for navigating challenges like tariffs are unique to their operations and goals. But there are steps that every shipper should consider to stay in front of today’s fast-changing trade and tariff landscape.
We discussed this guidance on our recent webinar “Navigating the New Tariff Landscape,” which you can watch now on-demand if you missed. Now, let’s explore further some of the top questions that drove the webinar’s discussion and that continue to be on the minds of shippers as they plan for what’s next.
How quickly will new tariffs go into effect?
Timing can vary, but as we’re now seeing, tariffs can go into effect in just days rather than months when issued under the International Emergency Economic Powers Act (IEEPA). The executive orders imposing tariffs on Canada, Mexico and China were issued on Feb. 1, and the tariffs took effect Feb. 4 (the tariffs on Canada and Mexico were paused shortly after). Shippers should not assume there will be ample preparation time between announcement and enforcement of new tariffs.
With the trade landscape changing so rapidly, shippers should also be mindful of where they’re getting their information to ensure they act with purpose. News coverage and social media can help shippers follow the public discussion and anticipate what’s to come. However, shippers should only act in response to announcements from official sources, like the White House and Federal Register.
We’ve compiled a list of trusted trade and tariff resources.
How can I control costs as I face higher duties?
Controlling costs is top of mind amid the latest tariffs. The Trump administration indicated they will not entertain tariff exclusions on new tariffs which are often used to minimize financial impact. Shippers should consider a range of strategies to help lower or defer their duties and other costs:
- Foreign trade zones (FTZ) can be used to defer or eliminate tariffs on products that will be later exported. This is an ideal option for importers of high-value products that don’t need to ship right away. Instead of paying duties on all the products at the time that they’re imported, the shipper can instead pay that duty when the product is withdrawn from the FTZ, potentially several months later.
- Shippers should also consider paying U.S. Customs and Border Protection (CBP) directly if they’re going through a customs broker today. They’ll not only realize savings by no longer having to pay their broker’s outlay or advance fee, but CBP also offers longer payment terms when using Periodic Monthly Statement. Additionally, higher duties are driving some brokers to require higher credit lines from shippers and that shippers pay duties and taxes in advance – added cost pressures that can be avoided by directly paying CBP.
- Offerings like our entry consolidation program (ECP) also provide another way to cut costs. The program combines multiple truck or ocean-based shipments into one customs entry. This single, consolidated entry can reduce a shipper’s overall merchandise processing fee and has saved some of our customers millions of dollars annually.
What are some best practices for ensuring compliance?
With the latest tariffs, the Trump administration is taking action to curb duty evasion. These schemes become more common any time tariffs are imposed on individual countries. Some shippers in affected countries may seek to evade tariffs by, for example, shipping their products to a nearby country and slapping new “made in” stickers on their products.
Shippers must do their due diligence to understand the true origin of their freight. They should question suppliers who claim they can quickly source products from alternative countries. And shippers shouldn’t hesitate to take steps that may have seemed unreasonable in the past, like visiting factories they work with or asking for video to confirm the location of production operations.
Taking these actions can also help shippers mitigate potential forced-labor violations, which the Trump administration has indicated is still a priority.
As always, a trusted partner with extensive customs experience can act as an extension of a shipper’s team as they work toward compliance.
How can I find and use data to better respond to new tariffs?
Shippers that have a strong grasp of their import data can understand not only the movement of their products and what they’re paying in duties, but also where they can be more flexible, such as using new suppliers or leveraging free-trade agreements. However, nearly 4 in 10 shippers say they need more data and insights to find savings on tariffs and duties.
The Automated Commercial Environment (ACE) portal is a good place to start. It provides a single source for all export and import data no matter how many providers a shipper works with. It can help identify trends, risks and opportunities for improving processes and controlling costs.
However, obtaining raw import data from the ACE portal is just the beginning. Shippers also need a way to turn it into intelligence that can inform better ways of operating.
Many of our 83,000 customers use U.S. Customs Analytics. Using this tool, shippers can drill deep into their import data and get insights like how new trade measures impact them at the SKU level. Our sourcing analysis tools also allow shippers to view and compare their import data against broader trade data. This can help them explore new markets for production and identify where trade agreements exist that could help reduce their landed cost.
Adapting to the ever-changing flow of global trade
Tariffs have long been an aspect of global trade and will continue to be in the decades ahead. However, this latest round of tariffs serves as a reminder of why shippers should be proactive in preparing for disruptions in their supply chains and why diversification in particular should be considered now more than ever.
If you haven’t already, check out our webinar “Navigating the New Tariff Landscape” to learn more about how you can keep your organization prepared for trade and tariff changes amid ongoing uncertainty.
