International Tariffs: What Shippers Need to Know & What’s Ahead for International Transportation
By: Linda Bravo, Corporate Customs Broker, International, Transplace
There have been many recent headlines surrounding international trade and the potential impact of a number of tariffs being put into place by the U.S., most notably the tariffs on steel and aluminum last month. These tariffs affect all shippers who may be importing or exporting from Mexico, China, Canada or a number of other countries – and there have been some recent key developments in this trade situation that shippers need to be aware of.
The tariffs that are currently in place, as well as those that may be on the near horizon, have the potential to create supply chain scenarios that are very unfamiliar to many, if not all, U.S. shippers – and there is new information coming out every day regarding the ongoing situation. For shippers to ensure that their transportation operations and costs stay on target amidst the growing tariff chaos, they need to stay informed.
Here is a brief timeline of the current tariff situation:
January 23, 2018: The first of the tariff increases began with Presidential Proclamation 9694. This was an initiative regarding the unfair pricing of washers and certain washer parts and began the tariff escalations that are now ongoing. Canada and Mexico were excluded from these tariffs.
March 1, 2018: Presidential Proclamations 9704 and 9705 were signed by President Trump. The official tariff changes were sent from U.S. Customs and Border Protection on March 15, 2018 and went into effect only three weeks after the President’s approval. These proclamations put into place a 25% additional duty on steel and a 10% additional duty on aluminum. This was a major escalation, and although Canada and Mexico were initially exempt, that was later rescinded and both countries became subject to the additional duties beginning May 1, 2018.
April 2, 2018: News broke that China was considering tariffs on $38 billion in U.S. goods.
April 4, 2018: As part of the U.S. response to China’s trade practices, the Office of the U.S. Trade Representative (USTR) published a proposed list of products imported from China that could be subject to additional tariffs. The USTR indicated that the list of products was based “on extensive interagency economic analysis and would target products that benefit from China’s industrial plans while minimizing the impact on the U.S. economy.” The proposed tariffs covered industries such as aerospace, information and communication technology, robotics, and machinery and included approximately 1,300 separate tariff lines.
April 5, 2018: President Trump threatened $100 billion in Chinese goods entering the U.S., “upping the ante in an already high-stakes trade confrontation between the world’s two largest economies,” according to Reuters.
April 10, 2018: China officially filed a World Trade Organization complaint challenging the U.S. tariff hike on imported steel and aluminum.
For shippers, these tariffs can cause additional challenges and headaches in a market already short on capacity. To combat these issues, shippers must know their products inside and out, exactly the nature of what they may be importing and exporting, and the origin and destination of all shipments. By making a comparison of their products to the lists mentioned above, companies can determine if alternative sourcing options need to be put into place or where transportation costs may be most affected.
Shippers should also look to the expertise of their 3PL partner to help keep them informed of any tariff updates or escalations, as well as to glean deeper insights into their supply chain and optimize their transportation strategies to increase efficiency and reduce costs in light of the current international trade landscape.
Have international tariffs impacted your shipping operations?