As we have posted about earlier this month, new tariffs have been making headlines. Tariffs are additional taxes on imported goods, assessed at the point the shipments clear the U.S. Border and U.S. Customs. They are a targeted means of governmental revenue generation and domestic industry protection, and are applied on top of the standard rate of tax or duty.
All tariffs are based on the Harmonized Tariff System (HTS/HS) Code of the product and the country of manufacture, and are paid by the Importer of Record before, typically, being passed on to the purchaser.
Earlier this year, the US imposed a new 10% tariff on all items made in China (bringing the total up to 35%). Raw materials, like steel and aluminum, regardless of origin, were also hit with new tariffs of 25%. In addition, the De Minimis exemption, covering shipments under $800 in value, is being phased out, making smaller shipments to all consumers subject to tariff, duty, and other tax assessments.
The original package of tariffs was also intended to include new import taxes on an undefined number of goods from Canada and Mexico, potentially upending decades of free trade between the continental neighbors. These tariffs were put on pause after originally being announced in February, but appear to still be on track to start up next week. However, there are not any definitive rates or product definitions announced, as of yet.
What’s more, there are now discussions of additional port fees being imposed on domestic US port calls made by Chinese-manufactured and/or managed vessels, regardless of current flag or ownership. This could potentially add $100s to the already high cost of importing a containerized shipment from any overseas vendor. This is presently still a proposal, not an observed rule or directive, however it is something that many shippers and vendors across the U.S. need to be mindful of – indeed, there are many “edge” cases that the present proposal does not cover.
This is clearly a developing situation. As the tariffs and fees on imports evolve, items ordered but not yet through U.S. Customs could be affected. Even product that is not strictly made or manufactured in the affected countries could be impacted by rising material costs, and reciprocal tariffs could escalate the situation further.
Our best recommendation is to work closely with your vendors to properly understand how their products and supply chains have been affected, and how their costs could be changing – they are your best point of contact for questions about specific orders. Additionally, our Freight Team can provide resources and leverage our experience to help you make informed decisions in conjunction with information gathered from specific vendors and instances.