Recent Trade & Tariff Perspectives

December 15, 2021 | Ivana Gavroski Manager, U.S. Customs Compliance

The Year Ahead in Customs and Trade

The past year in global trade was volatile and unpredictable, challenging all areas of the supply chain—including U.S. import compliance. As agency enforcement increases, and trade negotiations rapidly take place, it can be difficult to not lose sight of what needs your undivided attention.

Now is the time to take a step back and revisit your compliance program. Consider the following compliance items and recent trade developments as you prepare for the year ahead.

Watch this week’s Trade & Tariff perspective:

How resilient is your trade compliance program?

A resilient compliance program is proactive. It should prepare your organization to implement change when customs and trade developments take effect, but it should not lose sight of basic customs requirements.

By having a clear set of guidelines for what your organization needs to target in your import compliance program, you can proactively navigate future changes in customs and trade. C.H. Robinson’s comprehensive 20-point Customs Clearance Checklist can help you get started.

Review your Harmonized Tariff Schedule (HTS) classifications

On January 1, 2022, a new version of the Harmonized Tariff Schedule of the United States (HTSUS) will go into effect and impact more than 350 products. This is an especially important time to review your HTS codes. Changes to HTS codes can have numerous implications on your business including:

Punitive tariffs, such as the China, steel, and aluminum tariffs, which may be added or removed for certain products, increasing your duty spend, or decreasing it, respectively.
Modification to the HTS can potentially change your eligibility for participation in preferential trade agreements.
Antidumping and countervailing duty cases could flag products that previously were not flagged.
Where duty rates have changed, consider front-loading or delaying imports of certain products as a cost-savings measure.
If you believe your products have not been properly identified in the Harmonized System (HS), consider proposing a change. While the HS Committee meets every six months to review proposed changes, preparation to request changes should begin now.

Consider implementing the following steps:

Study the correlation tables to analyze the changes from HS 2017 to HS 2022. The two tables can be used as a guide to compare the various amendments. Not all modifications will result in a new tariff heading.
Use the HS tracker, created by the World Customs Organization (WCO) to visually see changes throughout the previous HS iterations and gain insight into the rationale behind such changes.
Read the United States International Trade Commission’s recommendations to the President and guidance on the amendments for the HTSUS.
Provide your updated HTS code database to your customs brokers as soon as possible.

Act now to avoid costly delays and significant compliance issues in your supply chain.

Need help classifying your products? Our dedicated classification team can help you navigate through the upcoming tariff changes and assist with the classification of your products. Connect with one of our trade policy experts.

Revisit your customs Powers of Attorney (POAs) and customs bonds

On an annual basis, review the customs POAs which you provided to U.S. customs brokers, or revoke any POAs for those customs brokers with whom you no longer wish to work. We recommend any POA you extend to your customs brokers has an expiration period, allowing all parties a time to revisit and review.

If you have recently moved, review the addresses listed on your POAs and customs bonds to verify they are updated with U.S. Customs. This will ensure customs correspondence, such as notices, bills, and checks, are sent to the correct business addresses.

This is also the time to confirm that your bond amount is sufficient, which can be determined by your import activity over the last, rolling 12-month period. U.S. Customs and Border Protection (CBP) has the right to determine if your bond is insufficient and may require you to increase your bond amount—so proactivity is critical.

This is especially important if any of the following factors apply to your import activity:

There have been changes to your import volume, or you are anticipating a large increase in volume in the year to come.
There has been considerable duty impact to Section 301 China tariffs or Section 232 steel and aluminum tariffs.

Reconsider having multiple entities on the same bond. Although it can bring cost savings, potential risks to consider include:

Each entity shares liability if CBP issues a demand against the bond.
If any entities on the bond terminate the bond, this can disrupt business for the other entities on the bond, potentially causing significant delays.

Review your customs broker instructions

Do you have customs broker instructions that you send to your U.S. customs brokers regularly? Broker instructions build the relationship you have with your customs broker and ensure there is a clear understanding of any unique, import compliance requirements your organization may have.

Examples of important topics that can be covered within the instructions include:

Related party verification instructions
Partner Government Agency (PGA) applicability
Application and eligibility of Free Trade Agreements (FTAs) for your products
Your HTS classification database, or how you will provide your HTS codes to your broker

As your Trusted Advisor® experts, we encourage you to provide us with instructions as to how you want your entries declared to CBP for these and many other topics.

Request updated Certificates of Origin

If you have not already done so, we highly recommend you are proactive with your foreign suppliers to obtain updated, annual blanket Certificates of Origin (COO) for any program in which you would like to claim preference.

It is also important to send the certificates to your customs broker, so they have them on file at the time of clearance. If you do not obtain your certificates in a timely fashion, your potential annual duty savings may be impacted.

Take advantage of the ACE Secure Data Portal

Managing your trade data can be a daunting task without the proper tools. The Automated Commercial Environment (ACE) Secure Data Portal (ACE Portal) is a powerful tool that enables you to:

Access transaction and financial data in ACE Reports
Receive paperless notifications from CBP
Monitor your brokers
Audit entries in real time

If you do not already have an ACE Portal account, you can apply for an account online to take advantage of the system’s numerous benefits. In addition, CBP regularly updates its development and deployment schedule, so you can keep up to date on any changes.

Stay informed on customs and trade developments

Numerous customs and trade developments have emerged over the past year. The following recent developments should be considered as you review your compliance program and how potential changes could affect your supply chain.

U.S. Innovation and Competition Act (USICA)

The U.S. Innovation and Competition Act was passed through the Senate on June 8, 2021, and currently resides with the House of Representatives. If enacted, your supply chain should be aware of these key aspects of the USICA:

All previously covered China tariff exclusions would be reinstated from the date of passage of the legislation through the end of calendar year 2022, and exclusions that expired on December 31, 2020, would be made retroactive between January 1, 2021, and the date of passage.
The Generalized System of Preferences (GSP) and the Miscellaneous Tariff Bill (MTB) would be renewed, thereby providing tariff relief on certain products.

In a November joint statement, Senate Majority Leader Chuck Schumer and House Speaker Nancy Pelosi agreed for the House and Senate to go to conference on the USICA, and will “immediately begin a bipartisan process of reconciling the two chambers’ legislative proposals” to deliver a final piece of legislation to the President’s desk “as soon as possible.”

Discussions are underway regarding the conference process and whether GSP or MTB will ultimately be tied to the USICA or become part of their own similar legislations. On December 2, 2021, House Ways and Means Subcommittee Chairman, Earl Blumenauer announced he would consider including GSP and MTB in the final USICA bill, but that “critical and reasonable reforms to both programs” would need to be made before they are “included in any reauthorization.”

Uncover your Section 301 duty savings potential using C.H. Robinson’s U.S. Tariff Search Tool.

Agreements reached on Digital Services Taxes

On October 21, 2021, the United States entered into an agreement to terminate the currently suspended 25% tariffs related to the Section 301 Digital Services Taxes (DSTs) investigation for goods from Austria, France, Italy, Spain, and the UK.

The termination is the result of a compromise among the countries to take a transitional approach in taxing multinational corporations. Under the agreement, DSTs that U.S. companies accrue during the interim period will be creditable against future income taxes accrued under Pillar 1, under the Organization for Economic Co-operation and Development (OECD) agreement.

Following the October agreement, the USTR made two announcements in November that agreements were reached between the United States and Turkey, and the United States and India on the treatment of DSTs. These agreements allow Turkey and India to continue to collect digital services taxes without the threat of retaliatory tariffs.

Preparing for the year ahead

By staying informed on customs and trade developments and knowing what to target in your compliance program, your supply chain can proactively navigate the changes to come. Connect with one of our trade policy experts to learn more.

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