8 Tips to Minimize Impact of New Trade Tariffs

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Are you concerned about trade uncertainties? Are you looking for ways to minimize the impact of the new trade tariffs on your supply chain?

Per the National Association of Manufacturers (NAM) Q3 Outlook Survey, “Trade uncertainties were the second most mentioned concern facing manufacturers, with 63.4 percent of those completing the survey reporting it as the top company issue.”

Trade tariffs certainly impact global supply chains. APICS Milwaukee hosted an event last week addressing the new trade tariffs.

Tom Degnan, Director of Global Transportation and Customs Compliance at WernerCo, shared the following advice on ways to mitigate the impact of tariffs on supply chains.

  1. First Sale: Reduces the dutiable value of the transaction by using the manufacturer’s cost for import valuation declaration with Customs. Process by which the manufacturer’s product valuation (first sale) is used for Customs value purposes versus the middleman/vendor (second sale) product valuation.
  2. Alternative Valuation/Duty Drawback: Alternative valuation establishes lowest level valuation for Customs entries. Duty Drawback elements include imported material has duty paid upon import, material is incorporated into a product that is exported and the duty paid on the imported material can be recovered from Customs (applies to 232 & 301 tariffs)
  3. Foreign Trade Zone (FTZ)/Bonded Warehouses: FTZs allow materials to be suspended from entering USA commerce until departing from FTZ into USA. In effect material never entered USA commerce. FTZs allow materials to flow through USA via bonded carriers without duties being paid (e.g. Import into LA, shipped to Chicago, exported to Europe). FTZ set up requires Customs approval and bond to be established.
  4. Supply Chain Change:  Evaluate global sourcing options for suppliers and countries. Review is alternative materials can be used. For Section 232, try to source from excluded countries and for Section 301 try to source from alternative countries. Consider assembly or manufacturing in alternative countries.
  5. Origin Planning: Confirm Country of Origin (CofO) is not reflecting the country where products are shipping from and confirm with suppliers the products CofO.
  6. Supplier Negotiations: Pursue having suppliers absorb tariffs for continued purchases or negotiate lower pricing to share tariff impact.
  7. Tariff Classification/Exclusions: Audit and verify the HTS product code application. Both Section 232 & 301 have an exclusion process for avoiding tariffs.
  8. Customer Pricing: Determine if market will support absorbing all or a percent of imposed duty or apply surcharges for tariffs as temporary line items. 

Special thanks to Bentley World-Packaging for hosting the event and providing a tour of their expansive facilities!

Bentley World-Packaging based in Milwaukee is one of the nation’s largest industrial aftermarket and commercial parts distribution partners.

They are uniquely able to handle and manage BIG. Big parts, big volumes, big requirements.

They also offer export packing that helps reduce shipping costs by utilizing a proprietary software that ensures optimal container loading and space maximization.

At APICS Milwaukee, we are proud to serve supply chain professionals in the Milwaukee area and host events on today’s most relevant topics.

We hope you can join us next month on December 10th for a Logistics Panel Discussion and dinner in conjunction with the Logistics Council.

We are also excited to announce new certification classes and Supply Chain Workshop series starting in February 2020. Check out our website Education page for more info on these offerings to help you and your company!