Recent Trade & Tariff Perspectives

October 6, 2021 | Jessica Woltering Manager, U.S. Import Compliance

Are You Paying More in Duty Than Necessary?

U.S. Customs and Border Protection (CBP) may have a program to help your company save on duties, safeguard tariffs, and Merchandise Processing Fees (MPF) if your company imports goods into the United States temporarily.

There are options to save money if your goods fit the requirements

The cost of importing has risen significantly in the past three years. With Section 232 and Section 301 safeguard tariffs, the additional costs have increased anywhere from 5% to 50% in the customs clearance portion alone, let alone the space restrictions and delays at the ports and rails. These factors put a strain on importers, shippers, and end users as costs continue to rise across the board.

Companies are always looking to decrease their costs. Conversations between importers and customs brokers continually revolve around cost-saving measures and programs. At one time, these programs were disregarded because of the additional work and cost of their record-keeping requirements. Now they are being reevaluated because the risk versus cost savings may be justified.

Use of Temporary Importation under Bonds (TIBs) has drastically increased industrywide. TIBs are one cost-saving measure being used more often because of additional tariffs initiated by the previous administration. If imported articles are staying in the United States temporarily for specific uses determined by CBP, TIBs make it possible to import the goods without paying duty and Merchandise Processing Fees, and then re-export the goods within the required timeframe (usually one year).

What types of products can be imported using a TIB?

Articles imported on a TIB must not be imported for sale or for sale on approval. For articles being processed, they must not be processed into alcohol, perfume, or other commodities containing ethyl alcohol or wheat products.

TIB articles are allowed entry into the United States for one year under bond and may be extended for two more years, not to exceed three years total. The exception is articles that fall into heading 9813.00.75 (automobiles, auto chassis and bodies, cutaway portions of any of the foregoing and parts…when intended solely for show purposes), which can only stay in the United States for six months and cannot be extended. After the permitted time period, the articles must be exported or destroyed to satisfy the TIB requirements and to avoid being subject to liquidated damages from CBP.

Articles allowed TIB into the United States include those for:

• Manufacturing and processing
  • Articles to be repaired, altered, or processed
  • Articles of special design for temporary use exclusively in connection with manufacturing or production of articles for export

• Competitive purposes
  • Exhibitions or shows
  • Races or contests

• Research items or tools of the trade
  • Articles intended solely for testing, experimental, or review purposes
  • Professional equipment, tools of trade, repair components
  • Experiments, study, or breeding

• Retail and sale
  • Samples solely for use in taking orders for merchandise
  • Models of women’s wearing apparel imported solely as models in their establishments

• Certain items imported for artistic purposes
  • Articles for use as models in illustrator and photographer establishments
  • Articles for examination with a view to reproduction
  • Motion picture advertising films
  • Certain works of art, philosophical and scientific apparatus imported by professional artists, lecturers, or scientists for purposes specified by CBP

Additional provisions and exceptions along with a full account of articles that may be imported under a TIB are listed in the HTSUS in Chapter 98 Subheading XIII.

Zero duty always equals more risks

When an importer uses a duty-free classification or program to recoup duty, it adds risk to the customs entry. CBP wants to ensure these classifications and programs are not being misused and that they are receiving all duties owed to them. Each company must weigh the risks and additional work against the duty savings to decide if TIBs are right for them.

If additional time is needed beyond the one year, an extension may be requested from CBP. However, CBP can deny extension requests. If this happens, the articles must be destroyed or exported, or a consumption entry must be made so the articles can stay in the United States. Liquidated damages may be assessed if the goods cannot be exported or destroyed before the permitted timeframe or if the extension was not filed timely.

TIBs require close monitoring of the articles, waste, and irrecoverable loss of product throughout the entire time the goods are in the United States, in addition to following and keeping records through the exportation process. If the TIB extension or closure are not completed timely, this could result in liquidated damages from CBP. Proof of export is also required, and if the importer is not able to produce proof, this will cause issues resulting in penalties.

TIB breaches may occur if it is found that the goods do not qualify for TIB or if it is anticipated that the goods will not be exported within the required timeframe or destroyed under CBP supervision. If this occurs, CBP must be notified and allowed to view as a requirement of the TIB.

Liquidated damages from CBP are double the duties, taxes, and tariffs that would ordinarily be due (including MPF, Antidumping and/or Countervailing duties, and safeguard tariffs). For articles entered under TIB HTS 9813.00.20, 9813.00.25, or 9813.00.50, liquidated damages will be equal to 110% of the value of the goods.

How can C.H. Robinson help?

TIBs can be a very valuable cost-saving option, especially when the duties and tariffs are higher than ever before. While valuable, they can also be full of risk, so importers must take all the requirements into consideration to determine if using TIBs would be right for their company.

C.H. Robinson’s Qualified License Customs Brokers (QLCBs) are knowledgeable in the programs and cost-saving opportunities available to importers. If you think you may be able to participate, connect with one of our trade policy experts to learn more.

Additional resources

• Title 19 Code of Federal Regulations (19 CFR) 10.31–10.40
• Harmonized Tariff Schedule (TIB section starts on page 44)
• CBP.GOV—Temporary Importation under Bond