U.S.-China Trade War Threatens American Importers With Higher Tariffs

U.S.-China Trade War Threatens American Importers With Higher Tariffs

The U.S. will resume applying tariffs to imports from China on March 1. American companies will need to evaluate their supply chains for ties to the region, and also be prepared to show country of origin documentation for any goods imported into the country.

In December, both countries agreed to stay new tariffs levied against imports for a period of three months, allowing for more negotiation to end the dispute. However, the deadline of March 1 is fast approaching, and if the two countries don’t reach an agreement in the meantime, tariffs will increase between 10 to 25 percent on thousands of products.

With no agreement in sight, companies should be prepared to account for reinvigorated enforcement of these tariffs very soon. This reality, combined with increasingly sophisticated customs entry screening technology, introduces significant complications, given the evasive measures taken by a number of Chinese exporters. To avoid tariffs, companies are routing their products through surrounding countries, such as Malaysia. The goods are then repackaged as exports from these alternative sources, which can result in substantial penalties and fines to complicit parties.

Learn more about the Assent Trade Classification and Origin Module, and how we can help you navigate the international trade landscape.

As a result, the U.S. is taking a very close look at any goods with covered HTS codes that are entering the country, not just those explicitly labeled as Chinese imports. This could potentially impact any kind of good, from steel to textiles, and every industry, from aerospace and defence to retail. Moreover, harmonized classification between suppliers and customers is becoming increasingly vital to avoiding penalties and business continuity issues.

Your company will likely be impacted by the enforcement surge in many ways. If goods you’ve imported have been determined to be from China, but falsely labeled, they may be seized at a port of entry. This could prevent you from filling orders on time, reducing profits and voiding work contracts.

Should you decide to keep the goods, they could be subject to tariffs of up to 25 percent, perhaps allowing you to fill orders, but reducing profits.

How Supply Chain Data Management Can Help

The most cost-effective solution is a comprehensive trade compliance strategy that allows you to acquire HTS codes, Export Control Classification Numbers (ECCNs), and preferential and non-preferential country of origin data from suppliers. Collecting this data not only helps your company avoid tariffs, fines and product seizures, but also helps you navigate free trade agreements and claim tariff deductions in a manner that benefits your company’s bottom line substantially.

A supply chain data management service provider can help gather this essential documentation and support your efforts to track country of origin information. This can mitigate the risk of unexpected financial damage caused by tariffs resulting from global trade wars, such as that between China and the U.S., and ensure the profitability and ongoing viability of products.

The Assent Compliance Trade Classification and Origin Module, part of Assent’s Vendor Management Suite, automates communication with vendors, enabling companies to collect, store and validate country of origin data. Data collection is performed through the powerful Assent Campaign Manager, displayed and reportable through an intuitive dashboard.

For more information, contact our experts at info@assentcompliance.com.