News
Tariff Updates
June 7, 2019 •Avalon
Keeping up with tariffs on goods from China or Mexico? The last few months have been busy for importers as there have been multiple tariff updates. Here's a recap of the unknown tariffs and looming deadlines:
Mexico – Tariffs are employed as part of an emergency economic sanctions measure. On May 30, 2019, the White House issued a statement indicating that as of June 10, 2019, there would be a 5% tariff on all goods imported from Mexico. The tariff increases are meant to encourage Mexico to quickly address the flow of immigrants to the U.S. The tariffs will continue to increase by 5% every month through October. The statement indicates that the tariffs would be removed if the number of immigrants is drastically reduced. Tariffs would stay in effect at the 25% rate “until Mexico substantially stops the illegal inflow of aliens coming through its territory.”
There are concerns about the tight deadline of June 10th as the ACE portal is not ready to handle the changes. Importers who currently do not pay any duties under NAFTA will have to deal with bond insufficiency issues as well as figuring out how they will be able to issue duty payments when they currently not set up to pay the U.S. government.
The National Customs Brokers and Forwarders Association of America (NCBFAA) has issued a letter to Speaker Nancy Pelosi regarding this issue as the impact of the tariffs would be “swift and severe.” The letter also indicates that the “disruption caused by these tariffs will be significant.” At this time, neither the U.S. Trade Representative or U.S. Customs has issued an official notice regarding these increases. We will keep you informed as to any updates on this matter.
Canada/Mexico – Steel and Aluminum On May 19, 2019, CBP announced the termination of Section 232 duties for steel and aluminum products from these two countries. The lift was effective as of May 20, 2019. As a reminder, Principals that import steel and/or aluminum from Canada and/or Mexico, may not be able to reduce the limit of their C1 bond right away. A principal’s last 12 months of duties, taxes and fees must warrant the lower bond amount to avoid any insufficiency issues.
China – Section 301 Tariffs used to counteract China’s unfair trade practices.
List 1: As of June 4, 2019, there are now additional goods that are excluded from the additional 25% tariff on the $34 billion worth of imports from China under List 1. The exclusions will be retroactive to July 6, 2018 and will remain in place until June 4, 2020. Importers are able to apply for refunds on any tariffs paid for the goods listed in the Notice issued. It is important to note that the scope of each exclusion is governed by the scope of the product descriptions in the Annex of the Notice. Click here to read the full USTR Notice. There have been previous exclusions issued in December 2018 and in March, April and May 2019 for commodities subject to List 1. Importers should make sure they have reviewed all exclusions issued to see if they are able to request a refund on commodities they’ve imported since July 2018.
List 3: The U.S. Trade Representative announced on May 31, 2019 that a Federal Register Notice will be published that would extend the amount of time certain goods exported from China have to enter the U.S. before the tariffs increase from 10% to 25%. The deadline to enter the U.S. was June 1, 2019 and will now be June 15, 2019. The notice was to be issued this week but to date has not been published.
List 4: There have been talks about a proposed list 4 that would cover any item not on list 1, list 2 or list 3. As of today’s date, this has not been implemented.
Make sure bond limits are sufficient.
New tariffs have been causing significant increases in bond limits. We continue to see requests from CBP to increase Activity Code 1 Continuous Bonds from the $50,000 minimum to more than $25 million with very little time to get the bonds underwritten and a new bond in place. Importers are ultimately responsible for making sure their bonds are sufficient and meet CBP’s requirements. They may risk additional costs and delays of their shipments should their bond be deemed insufficient. Therefore, encourage your importers to review their expected import activity to determine if they might need a higher bond limit.
Avalon is here to assist you in helping your clients manage their bond needs. If you have any concerns about bond sufficiency or the effects of these ongoing tariffs, please contact your Avalon representative to determine bonding needs or our underwriting department at bondunderwriting@avalonrisk.com.
Featured Articles
Categories
- ATA Carnet (1)
- Business Insurance (9)
- Canada (1)
- Cargo Insurance (15)
- Claims Corner (10)
- Combined Transit Liability (3)
- Compliance (4)
- Contingent Auto Liability (1)
- Contingent Motor Truck Cargo (1)
- COVID-19 (3)
- Customs Bonds (17)
- Cyber Security (10)
- D&O Insurance (3)
- EPLI (3)
- Events (10)
- General Average (7)
- Industry Insights (23)
- Press Release/Company News (13)
- Special Quest (10)
- TIA (3)
- Trade (21)
- Trade Credit Insurance (2)
- Truck Broker Liability (1)
- WESCCON (4)
The Quest Newsletter is designed to provide critical information in the transportation industry. Avalon Risk Management is not responsible for the accuracy or reliability of information contained in articles. The reader/user assumes all risk in the use of such information.