US – NEW YORK
KEY TAKEAWAYS
Tariff programs and exclusions: Importers should monitor tariff programs and submit comments or petitions for exclusion to minimise duties, especially with potential increases on goods from China. Lobbying the administration can also be beneficial. Duty reduction strategies: Importers can reduce dutiable value through programs like the “first sale program,” which uses factory prices instead of higher trading company prices, requiring vendor cooperation.
Goods from China, however, are likely to feel the impact of increased tariffs. The President has a number of statutes that will enable him to put these tariffs in place (e.g. section 232 and section 301 of the tariff act). These programs have successfully supported the imposition of increased duties in the past, and they are likely to be used to impose higher tariffs. To put these tariffs into place, all the U.S. has to do is claim that China has not eliminated its prior trade abuses as a result of our prior tariff increases, or that some other threat exists, so more medicine has to be doled out. Importers need to be vigilant in the coming months and they should take advantage of their opportunities to eliminate or minimise duties that are surely in the offing: • Many of the tariff programs imposed. You should also consider supplementing your petition for exclusion by also lobbying the administration as to the reasons why your products should not receive these additional tariffs. • Most duty rates are expressed as a percentage of dutiable value. If additional tariffs are imposed, then importers should review various options which might be able to reduce dutiable value. Our most successful program is the “first sale program” which permits dutiable value to be the factory price, which is lower than the prices charged by trading companies that are involved in the supply chain. • The new tariffs to be imposed will be identified based on the tariff classification that is used when the goods are imported, and they will likely be limited to goods that are made in specific countries. There are over 25,000 tariff provisions. We have found that as duties rise, importers are more interested in reviewing the tariff classifications of their products to see if they can find a pigeonhole that is not subjected to incorporate an opportunity to provide comments before they are implemented. In the past, these petitions have resulted in the exclusion of products from the additional tariffs that were
The general rule is that the date of entry is the date that U.S. Customs releases the shipment. However, there are procedures to choose an earlier date – when the goods enter the port with intent to unlade – if the customs broker makes certain requests at the time of entry. Sometimes requesting the earlier date of entry can save huge amounts of customs duties. So, looking ahead to the future, we can see that additional tariffs are likely, but there are tools available to minimise the impact of these tariffs. The concepts discussed here are called “tariff engineering”. It has been established by over 100 years of court-made law that holds that importers have a right to fashion their merchandise and/ or arrange their business affairs to minimise duties. The other subject that will be taking up large blocks of time in the U.S. import future relates to forced labour. In these cases, importers will be requested to prove that their products are not made in whole or in part of materials from Xinjian Province, in China (UFLPA program). It is not enough to be able to show that the product itself was not made in Xinjiang, importers will have to be able to trace the materials back to their source to get goods cleared.
EXPERT VIEW A roadmap for U.S. importers facing new challenges
Tariff classification and sourcing adjustments: Review product tariff
Tariff engineering
classifications to avoid new duties, and consider shifting production to countries not facing tariffs, ensuring substantial transformation of materials to claim a non-tariffed country of origin.
the new duties. Similarly, importers can shift production to factories that are not located in countries whose goods will be subjected to additional tariffs. • Any new tariffs that will be imposed will have a starting date which will be tied to the “date of entry” of the shipments. As we get closer to these deadlines, it is incumbent on importers to try to get their entries filed before the hammer drops.
Robert B. Silverman Partner Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
Robert B. Silverman is one of the firm’s founding members and heads the Firm’s litigation group. Mr. Silverman routinely assists clients across a wide variety of industries in structuring import transactions to minimise customs duties, ensure regulatory compliance and eliminate penalty exposure. He represents companies during audits involving classification, valuation and eligibility under Free Trade Agreements such as NAFTA, CAFTA, AGOA, GSP, etc. He also counsels clients in connection with Customs investigations, seizures, exclusions, penalty and liquidated damages assessments. Mr. Silverman is also regarded as one of the foremost footwear classification experts in the United States and has been involved in all major footwear controversies affecting imports for over 30 years. Prior to entering into private practice, Mr. Silverman served as a trial attorney in the Customs Section of the Civil Division of the US Department of Justice where he represented US Customs in proceedings before the Court of International Trade, Federal District Courts, and the Court of Appeals for the Federal Circuit.
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gdlsk.com
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP is one of the nation’s largest law firms devoted exclusively to international trade and customs matters. The firm represents a wide variety of clients, ranging from privately held companies to Fortune 100 corporations engaged in the manufacture and distribution of textiles, consumer electronics, foodstuffs, computer and telecommunications equipment, pharmaceuticals, chemicals, automotive products, steel, wearing apparel, agricultural products and a host of other consumer and industrial products. Our clients include domestic and foreign manufacturers, importers, exporters, trading companies, customs brokers, trade associations and
Y ou don’t have to be much of a visionary to see the future with respect to importations of merchandise into the United States. President Trump has made it very clear that he plans to use tariff assessments as part of his foreign policy platform. Increased duties on imported goods have been threatened against Mexico and Canada to enlist them to strengthen their border crossing activities. We do not know whether those increased duties will be imposed.
foreign trade associations. The firm’s lawyers have substantial experience practicing before the government agencies responsible for the administration and enforcement of our international trade and customs laws. Many of our lawyers gained experience with US Customs & Border Protection, the Department of Commerce, the International Trade Commission, the Court of International Trade and the Department of Justice.
+1 (212) 557-4000 RSilverman@gdlsk.com irglobal.com/advisor/robert-silverman
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