Escalating trade issues lead to increased due diligence requirements

Escalating trade issues lead to increased due diligence requirements

When U.S. President Donald Trump announced plans to impose tariffs on aluminum and steel, it sent a shockwave through affected countries.

In China, it sent more than a jolt: it triggered a retaliation.

Companies are now revisiting their import and export compliance programs in the face of escalating trade war fears as tensions grow between the U.S. and China.

The situation has created a climate of constant flux, with tariffs, country of origin requirements, and free trade agreements expected to have daily to weekly changes for the foreseeable future.

It has also created panic among manufacturers that import aluminum, steel and/or products made in China, particularly those with long-term purchase agreements that may be impacted by the new tariffs. They are now under increased pressure to collect, sort and cross-reference country of origin certificates, and Harmonized Tariff Schedule (HTS) codes to understand applicable tariffs.

An increase in raw product material costs of up to 25 percent could be catastrophic for a company using a large amount of impacted materials and components, especially for mass produced products such as automobiles and industrial equipment.

In order to properly calculate the new risks and cost of sourcing raw materials — especially materials from China — companies must collect HTS codes, which classify products based on size, value, composition or other factors, and country of origin certificates. Many manufacturers source the majority of their aluminum and/or steel from China, sometimes from a single supplier, which further exaggerates the risk and impact.

Are you interested in learning more about U.S.-HTS codes and the impact to your company? Download Harmonized Tariff Schedule Codes : How to Avoid Unexpected Tariffs to find out more.

Accurately calculating tariffs is critical to understanding the product’s profit margin and the impact of these tariffs on a company’s bottom line. To prepare for changing tariff fees, companies should survey their supply chains to ensure they have the proper HTS codes for all products being imported into the U.S. They should also survey for country of origin certificates, and cross-reference the two data sets against the tariff schedule.

This process should also take into consideration free trade agreements. For the time being, Canada and Mexico have both been declared exempt from aluminium and steel tariffs, but the Trump administration has made no guarantee the exception will be permanent. In the wake of Trump’s announcement, more countries are likely to seek their own trade agreements to exempt themselves or reduce tariffs.

Assent Compliance’s Vendor Management Suite allows users to cross-reference HTS numbers with country of origin certificates. The software provides access to free trade agreement certifications and provides meaningful, streamlined data collection, while creating a database of critical intelligence that simplifies the process of analyzing a product’s country of origin and HTS classification. It provides a reliable, consistent method for surveying suppliers and verifying information, cross-referencing against tariff schedules to ensure data validity.

For more information on how Assent can help you mitigate your risk of unexpected tariffs and manage supply chain data collection, email