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Author Archives: Matthew Zehner

Navigating Today’s Trade Risks

The United States collected a record $7 billion in import tariffs in the month of September as new duties went into effect on apparel, tools, electronics and other consumer goods from China, according to recent data reported in the Wall Street Journal.  This sharp rise was driven by a new 15% tariff imposed on consumer goods as of September 1st, cites the WSJ article. Although the U.S. already had been collecting tariffs on some items, under the Trump administration duties have risen with a new series of levies against China in an effort to curtail trade practices harmful to businesses in the U.S. In this article, we take a look at the trade remedies traditionally available in the U.S. and measures that have been taken in the last few years to level the playing field with Chinese imports, as well as the impact these tariffs are having on customs brokers, and measures brokers and importers can take to mitigate losses in today’s trade climate. Trade Remedies Global agreements under the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA) have traditionally been the preferred method of settling disputes. The U.S. and other member countries can bring complaints before the WTO seeking trade remedies for unfair practices that are typically instigated by local businesses or because of business concerns. For example, the U.S. may file a complaint with the WTO against another member country claiming its subsidies on a specific import are hurting the U.S. industry, and argue that, as a result of these subsidies, there should be additional duties imposed. Antidumping & Countervailing Duties (Section 731 and 701 – Tariff Act 1930) The U.S. can also take unilateral action against a country for unfair trade practices, which typically involves a much more expeditious process than bringing disputes before the WTO or NAFTA, including the levy of antidumping and countervailing duties. Dumping involves companies exporting goods at prices lower than those at which they sell in their home market. For an antidumping investigation to be initiated, local businesses must demonstrate evidence of dumping, injury to themselves and a causal link between the dumped prices and the injury to them. Countervailing is a mechanism designed to offset the unfair domestic market advantage foreign suppliers and manufacturers gain from their governments that grant them subsidies for imports to the U.S….
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Trade War Escalation: Tariffs Will Impact More Imports

Last updated on June 11th, 2019 With the rate hike on many Chinese goods, and a new round of tariffs proposed, importers and customs brokers need to be vigilant about monitoring bond sufficiency. May 2019 was a very busy month for the Trump administration and changes to tariff rates.  Some importers will see some relief with the reductions and/or removal of tariffs on aluminum and/or steel from Turkey, Canada, and/or Mexico.  India and Turkey will  soon have their GSP eligibility revoked. And, the automobile and parts tariff decision was delayed for up to 6 months.  However, hikes to existing tariffs and the initiation to impose tariffs on brand new Chinese categories will impact far more importers in far greater amounts. The Section 301 Tariffs imposed on the “List 3”Chinese goods increases from 10% to 25% and is being phased in based on combinations of export and import dates, but should be fully implemented by June 15. This is projected to impact nearly $200 billion of imports annually.  Also, the administration started the process for inclusion of nearly everything else from China not already subject to the Section 301 Tariffs.  About $300 billion of imports, predominately toys, apparel, and footwear, could be subject to 25% rates by the end of summer. Tariffs proposed in late May on all goods from Mexico have been suspended – pending the implementation by Mexico’s government of successful measures to stem migration to America’s southern border. But, if Mexico’s steps don’t meet U.S. expectations, the tariffs could be revived. Importers and customs brokers must continue to closely monitor their continuous import bonds for sufficiency.  CBP’s policy is a continuous bond must always be no less than 10% of annual duties, taxes, and fees.  These amounts include special classes of duties, such as the assortment of Trump Tariffs, countervailing duties, and antidumping duties.  Parties that import merchandise under bond, such as using bonded warehouse facilities or TIBs, should take into account the duties, taxes, and fees those importations would incur had they been entered for consumption.  Prudent importers should take steps to project import activity over the next 12 months to see if and when changes to the continuous bond will be necessary.  CBP is not asleep. A dedicated team reviews each and every importer monthly, and when they identify insufficient bonds, CBP usually (but not always)…
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Fresh Tomatoes from Mexico

Last updated on April 15th, 2019Will we soon see the resumption of a 23-year old investigation? The U.S. Commerce Department’s International Trade Administration recently informed representatives of Mexico’s tomato growers the current suspension agreement would soon terminate. U.S. government officials and representative of both US and Mexico’s growers are negotiating new terms and price floors. Unfortunately, it does not appear all parties will be in agreement prior to the early-May deadline, resulting in the resumption of the 23-year old antidumping investigation. Strong indications are pointing to the end of the existing suspension agreement covering imports of Mexican fresh tomatoes. Termination of a suspension agreement, expected to occur around May 7, means the resumption of the original ADD investigation which already reached the stage of an affirmative preliminary determination and the commencement of provisional measures.  Around May 7, we anticipate CBP will be instructed by Commerce to, once again, suspend liquidation of covered entries and enforce provisional measures based on the following growers’/exporters’ ADD margins:   The resumption of the investigation is as if the affirmative preliminary determination will have been published in May, 2019. It was originally published Nov 1, 1996, 23 years ago. All of the ensuing investigation deadlines (75 to 135 days for Commerce’s final determination as to the ADD margin; then 45 more days for the US ITC’s final determination as to injury) will be reset and commence upon the 2019 resumption of the investigation. Even though the Commerce Department rewrote its regulations1 over eight years ago amending how CBP would be instructed to handle provisional measures, that regulatory action applied prospectively. Since this petition regarding fresh tomatoes from Mexico was filed in 1996 it is exempt from the 2011 rewrite of §351.205(d). However, the trade environment and posture of the present administration might mean there could be some statutory or regulatory provision that gives the Commerce Department enough discretion to deny the availability of a bond-in-lieu-of-cash option, making cash deposits the only option. Planning ahead for the next steps: 1. Plan for an underwriting review and/or pre-approval of higher bond limits. Roanoke encourages southern border U.S. customs brokers to contact their clients to determine those that import, or are likely to import, fresh tomatoes from Mexico. Importers need to be aware of the imminent drastic changes to current-day duty-free imports. Importers should be planning for how…
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