In addition to the evolving trade environment, we are on the brink of another pivotal election year—one that is poised to impact global trade and U.S. regulations. To gain a deeper understanding of our current trade landscape and the potential implications of the upcoming election, we’ll answer some questions and explore insights and strategies to prepare.
What trade enforcement tools will be utilized by the United States in the coming year?
The United States has actively implemented several tariff measures over the past eight years. Perhaps most notably, Section 301 (China tariffs), 232 (steel and aluminum tariffs), and 201 (solar module tariffs). But there are two other areas supply chain professionals should watch.
First, stay up to date with enforcement resources. It’s possible there will be a significant increase in enforcement throughout the next few years. Customs officials have prioritized a wide range of focus areas over the years, including de minimis, antidumping/countervailing duties, and forced labor. As we progress into 2024 and beyond, it’s possible there will be greater scrutiny of trade diversion, specifically goods made in China, but transiting through other countries.
Second, watch legislative action that specifically addresses the de minimis value from China. This is a hot topic in Washington DC right now. It will not be surprising if Congress decides to reform or adjust the de minimis policy from China. CBP has increased enforcement on de minimis manifest entries under Section 321 and Type 86 entries.
This includes updating targeting to ensure that the ultimate consignee has a valid name and address, evaluating vague cargo descriptions, and ensuring cargo is valued properly and falls under the $800.00 de minimis threshold. Cargo descriptions need to be specific. CBP has a list of descriptions of what is acceptable and unacceptable. Additionally, CBP is working to increase targeting that will audit and ensure only goods worth $800 or less are entered daily, per consignee, to meet the requirements of the regulation.
What industries will U.S. Customs and Border Protection (CBP) target regarding forced labor?
Forced labor continues to be an issue that is front and center for many. As the second anniversary of the Uyghur Forced Labor Prevention Act (UFLPA) approaches, there have been significantly more companies added to the Entity List, which currently lists 68 companies.
Department of Homeland Security (DHS) added 26 companies to the list, including cotton manufacturers outside of Xinjiang, cotton traders, and warehouse facilities, on May 16, 2024. And an additional 3 companies, in the seafood, aluminum, and footwear products sectors, were announced on June 11, 2024.
Since its inception, as of May 1, 2024, the UFLPA enforcement statistics show over 8,465 shipments have been stopped with approximately 45% of these shipments being released. Over half of these products are from the electronics industry, which includes the polysilicon for solar panels.
Other significant commodities include apparel, footwear, textiles, industrial, and manufacturing materials industries. The DHS has stated they will continue to announce new priority sectors as they take action to enforce UFLPA. Enforcement also continues for categories outside of priority sectors as well.
“Companies must conduct due diligence and know where their products are coming from. The Forced Labor Enforcement Task Force will continue to designate entities known to violate our laws, and U.S. Customs and Border Protection will continue its vigilant enforcement at our ports,” stated DHS undersecretary for policy, Robert Silvers, who serves as Chair of the FLETF.
What is the potential impact on trade with the upcoming Presidential election?
The upcoming election is something everyone in trade is watching. It’s clear that neither candidate intends to return to the trade policy of pre-2016. With that said, if President Biden wins, it’s likely the industry should expect more enforcement scrutiny. President Trump, however, has increasingly viewed tariffs as punitive to China. He has spoken about significant increases in tariffs on Chinese goods above current levels, which are already set to increase on certain commodities in August by 50 and 100%.
What can you do to prepare for upcoming shifts in the trade environment?
When it comes to understanding your role in forced labor compliance, it is imperative you know who you are buying from and have traceability throughout the entire supply chain. Supply chain professionals who rely on China for portions of their supply chain should be both monitoring the campaigns and their trade rhetoric and scenario planning at the same time. Scenario planning helps identify gaps in understanding where trade regulations impact your company. You need to know who to involve—and when. Does marketing need to be aware? External communications? Finance?
If you import a commodity in a priority trade sector or a commodity from a company on the entity list, be sure your plan is together. To get started, organize and educate your internal teams, audit your suppliers and manufacturers in your supply chain, conduct a supply chain mapping exercise, review the UFLPA Entity List, engage the experts, utilize technology advancements, and review online CBP resources.
If a manufacturer is supplying inputs for your products, you need to understand all the parties involved—including tier 2 and 3 suppliers. In addition to the steps above, prepare your applicability reviews in advance. Better to be prepared before you get stopped by CBP. This step can save a lot of time and money once the cargo arrives at port.
Finally, review Best Practices for Applicability Reviews: Importer Responsibilities to demonstrate your merchandise was not produced in whole or in part in the XUAR or by an entity on the UFLPA Entity List. And of course, if while analyzing your current practices it becomes known your products are being manufactured using forced labor, you may also need to explore alternative sourcing options.
In closing
As the election approaches, and trade actions continue to shape our global economy, staying ahead of these changes will be crucial for all stakeholders in the trade community.
Remember, it takes some time to adjust trade policy. Proactive engagement and preparation are key. But any changes likely won’t be made immediately on January 21, 2025, but will instead be working through various agencies. By staying informed, conducting comprehensive risk assessments, and embracing supply chain diversification, you can successfully position your business to navigate the complexities of the current—and future trade landscape.
Stay informed
Developments in customs and trade continue to evolve—stay informed to be prepared:
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