Today US importers and shippers are looking for ways that they can mitigate the future impact that US tariffs will have on imported goods like steel and aluminum. This impact is going to be between 10% and 25% in additional tariffs. Thankfully there are a handful of ways that shippers can decrease costs.
Some of these may apply to more companies than others, but even using one or two of these methods can help save a great deal of money on additional tariffs for shippers who are trying to keep a business going between Asia and the United States. By working with a freight broker, you can make sure your shipments are compliant while still taking advantage of as many of these financial workarounds as you legally can get away with.
The Department of Commerce, the Office of the United States Trade Representative, and China, in particular, have implemented a process to help certain companies avoid these extra tariffs. Companies can explain how and why the goods they are shipping are critical to the US economy and cannot come from anywhere other than Asia. If they can do that, particularly for aluminum and steel products, then the Department of Commerce might approve the request and as a result get rid of these extra costs. It is certainly worth applying to see what happens.
Right now, the courts are trying to change the way that tariffs are engineered, an idea that has faced some resistance in the past but in light of the new changes to exports and imports between Asia and America seem to be the only option on the table. Importers from different Industries that typically face High Duties can now legally take advantage of classifications for the things they are importing that have a lower fee.
For example, if a shipper normally ships turbine generators into the US, they will have to face an increased 25% tariff, but they can now change the products and say that those are components that fall under a different category, not turbine generators. Each group of imports a different level of costs and for that reason shippers are now able to take advantage of merely moving the items they are shipping into a different category so that they are not charged as much.
This doesn’t have to be everything that a shipping company is importing. It can merely be one component or two components. If the products themselves are comprised of multiple components, each one is going to face an increase of 25% in fees and getting one or two of those into a different category is going to save a lot of money.
If your company is not able to change the imported product, you might be able to change the country of origin. For example, if you have some of your parts for a motor assembled somewhere else, you can shift the operations from somewhere in Asia to a different location where the fees you would face for imports are not nearly as high.
First sale valuation is one strategy that has been used for a very long time. Importers typically only pay Duty on the price that a trading company is going to pay the manufacturer. The importers do not pay a Duty on the higher rate that the Importer has to pay the trading company. In this case, if additional fees are applied the value is going to be lower and using the first sale valuation is going to cost companies a lot less.
Companies that manufacture goods and imports for export trade might find a bonded facility to be the best way to protect themselves against extra cost. Items that are admitted into what is called the foreign trade zone underprivileged foreign status get to keep the Tariff classification they had initially, so they are not subject to additional fees when they enter into the US. You might be able to take the products you have as a shipper and store them in a Bonded Warehouse for five years, and at that point, they can enter the US after the extra tariffs are no longer in effect or you can export them directly from the warehouse to avoid those additional costs.
Drawback typically provides for a refund of 99% of all the costs that you pay in extra fees on the goods that are imported into the US. The president right now doesn’t necessarily have the authority to get rid of the drawback under this new import law. This means that shippers might be able to save money using the duty drawback option.
Section 321 De Minimis
Right now, regulations allow for a duty exemption for any goods that are valued at less than $800 in fair retail value within the country of shipment if a single person imports them on just one day. If you want to take advantage of this, that means that you would have to ship no more than $800 in fair retail value worth of products per day. It might be worth it to divide the products you are shipping so that they fall under this category. Make sure that everything you have is accurate so that there are no potential seizures or cargo holds because of non-compliance issues.
Taking advantage of all of these options or at least one or two of them will help you to circumvent additional charges that you might face because of the upcoming rules and regulations that are going to profoundly impact the cost of imports and exports between Asia and the United States. Moreover, having a freight broker can help you to maximize the potential savings with all of these new options and keep you compliant with any regulations so that there are no hold-ups or legal issues to come from you using these methods of circumventing the extra costs.