PART-1: Navigating U.S.-Canada Trade: Importing and Exporting in a Tariff-Fueled Economy

Summary

Highlights

• The US has introduced new 25% and 20% tariffs on certain goods from Canada, Mexico, and China. 📈
• Understanding the complex landscape of multiple overlapping duties is crucial. 🤯
• Mitigation strategies are crucial to manage financial impacts of new tariffs. 💼
• Staying informed through official channels is vital to avoid misinformation. 📰
• Tomorrow's session will focus on Canadian imports and discuss similar issues in depth. 🇨🇦

Key Takeaways

• Stay updated with federal publications and official messages for the latest tariff changes and regulations. 📜
• Utilize strategies like tariff engineering, valuation adjustments, and free trade agreements to mitigate tariff impacts. 📉
• Chapter 99 tariff class is applied for additional duties; keep a keen eye on the correct application. 🔍
• Duty drawbacks are not applicable for newly introduced tariffs under current programs. ❌
• Collaboration with experts can help navigate the complexity of international trade compliance. 🤝

Overview

Chapters

• 00:00 - 02:00: Introduction and Overview The chapter serves as an introduction and overview for the session. It begins with a greeting and informs the audience that there will be a brief wait for more participants to join before the session starts.
• 02:00 - 04:00: Session Outline This chapter titled 'Session Outline' seems to contain a minimal or placeholder text with just the word 'what'. It likely indicates the absence of a detailed conversation or points discussed under this chapter. To generate a meaningful summary, more content or context would be needed from the transcript.
• 04:00 - 07:00: Speaker Introduction The chapter titled 'Speaker Introduction' begins with a brief note indicating that the session will start shortly. The speaker asks for a few moments for others to join before proceeding.
• 07:00 - 09:00: Housekeeping Items The 'Housekeeping Items' chapter introduces the 'Navigating US and Canada Trade Tariffs' webinar series, hosted by Danny Sone, GM and head of customs broker CH Pur leader. The webinar aims to address the dynamic changes in tariffs and trade policies over the past six weeks, provide crucial information on navigating these changes, and explore their potential impacts on businesses.
• 09:00 - 11:30: Introduction to US Trade Developments The chapter, 'Introduction to US Trade Developments', covers the latest U.S. tariffs on goods originating from Canada, Mexico, China, and Hong Kong, specifically focusing on steel and aluminum tariffs. It also reviews duty mitigation strategies. The session is a part of a two-part series, with the first session focusing on U.S. tariffs and the second session (to be held tomorrow) focusing on Canadian surcharges on selected U.S. origin goods.
• 11:30 - 18:00: Canada and Mexico Tariff Overview This chapter covers an overview of tariffs involving Canada and Mexico. Key topics discussed include the impact of tariffs on goods, with a focus on steel and aluminum, the distinction and impact of CER tax versus tariffs, and strategies for mitigating these effects. The chapter also mentions expert-led discussions that aim to further explore these topics.
• 18:00 - 24:00: China and Hong Kong Tariff Overview The chapter discusses the overview of tariffs between China and Hong Kong. It is led by Jill Hurley, a senior director at Livingston in the US, who is a licensed attorney in New York. Her expertise includes registration, export license applications and management, extraterritorial control for foreign companies, and sanction regulations. In her role at Livingston, she provides valuable insights into trade and tariff issues.
• 24:00 - 28:00: Steel and Aluminum Tariff Expansion The chapter titled 'Steel and Aluminum Tariff Expansion' focuses on understanding company business models and practices relevant to determining risks in trade and providing solutions for risk management and compliance. It emphasizes the expertise of Jeff Fraser, with over 30 years of experience, who will guide the session particularly on Canadian imports. Key areas include customs valuation, tariff classification, international trade agreement compliance, and dispute resolution procedures.
• 28:00 - 36:00: Tariff Mitigation Strategies In the chapter titled 'Tariff Mitigation Strategies', the discussion centers on helping companies manage risks and improve customs compliance in their international trade activities. The speakers mentioned include Jeff, who is a certified trade compliance specialist in both the US and Canada, affiliated with the Canada Border Services Agency. As a director at Livingston, Jeff's expertise lies in minimizing risks related to sales and excise taxes, audits, and anti-dumping legislation. The chapter sets the stage for the webinar series where both Jill and Jeff will share their knowledge on the subject matter.
• 36:00 - 55:00: Q&A Session The chapter begins with the moderator providing housekeeping details for a presentation and Q&A session. The presentation is expected to last 35 to 40 minutes followed by a question and answer segment with Jill and Jeff. They encourage participants to submit questions via the chat function and assure that unanswered questions will be addressed afterwards. Jill Hurley is introduced to lead the discussion focused on the impact of tariffs related to US imports.

PART-1: Navigating U.S.-Canada Trade: Importing and Exporting in a Tariff-Fueled Economy Transcription

• 00:00 - 00:30 good morning everyone we're just going to give it a few minutes for uh some additional people to join and then we'll get started
• 00:30 - 01:00 what
• 01:00 - 01:30 folks just joining we're going to give it a minute or two just to allow everyone else to join then we'll get going okay
• 01:30 - 02:00 well good morning and welcome to the navigating US and Canada trade tariffs webinar series my name is Danny Sone I'm the GM and head of customs broker CH Pur leader and I'll be your host for today and tomorrow's sessions it's been uh an eventful six weeks in the world of tariffs and trade with constantly changing tariff landscape and dealing with many unknowns this two-part webinar series is intended to provide information you need to know in dealing with the evolving trade policies and how they might impact your business
• 02:00 - 02:30 these two sessions are jointly facilitated by puror and Livingston and we've broken the series down in two parts with the first part of today's session specifically focused on providing you the latest us tariffs on Canadian and Mexican origin Goods steel and aluminum tariffs tariffs against Goods originating in China and Hong Kong and finally reviewing Duty mitigation strategies part two of our series tomorrow's session will be focused on Canadian sir taxes on select us origin
• 02:30 - 03:00 Goods or what's being referred to as tranch one similar review for goods impacted in tranch 2 the regulations against steel and aluminum tariffs impact of CER tax versus tariff and finally review some ctax mitigation strategies so if I could have you advance the next slide perfect so we're thrilled to have two experts leading discussions today and tomorrow tomorrow today's session on
• 03:00 - 03:30 us Imports will be led by Jill Hurley senior director global trade Consulting with Livingston in the US Jill is a licensed attorney in the state of New York she has expertise in ddtc registration export license applications export license management extr territorial control for foreign companies covered under e itar and sanction regulations and in her role at senior director of Livingston Jill works with
• 03:30 - 04:00 companies to understand their business models and practices to determine risk and also to provide solutions for risk management compliance and penalty mitigation for tomorrow's session that will be more focused on Canadian import our expert will be Jeff Fraser director global trade Consulting with Livingston and Canada with over 30 years experience Jeff has extensive knowledge in customs valuation tariff classification International Trade Agreement compliance appeals and dispute settlement du
• 04:00 - 04:30 recovery sales and excise tax entry Audits and anti-dumping legislation Jeff has a professional designation from the Canada Border Services Agency and is a certified trade compliance specialist in both the US and Canada in his role as director with Livingston Jeff is focused on helping companies minimize risk and Achieve higher levels of Customs compliance in their International Trade activities I welcome both Jill and Jeff we're excited to have them share their expertise on this webinar series before we kicks
• 04:30 - 05:00 things off I just want to go through a few housekeeping items we expect the presentation portion to last about 35 to 40 minutes and then following that we'll have Jill and Jeff address some of your questions in order to submit a question please enter it through the chat function we're expecting there'll be many questions and while we may not be able to get to the mall in the time available note that we will be following up with responses to all the questions we couldn't get to and now I'd like to welcome Jill Hurley to lead the discussions on the Tariff impact aligned with us Imports Jill
• 05:00 - 05:30 thank you Danny uh I appreciate the invitation to speak to you all today um I will be addressing uh the US side of of the current uh trade developments that we've experienced this year uh I will start out by talking about the uh tariffs against Canadian and Mexico Goods including steel and aluminum I will also address China in Hong Kong um I'll address the expansion of the 232s against steel and in aluminum including
• 05:30 - 06:00 uh their derivatives and then we'll talk about some Duty mitigation strategies because most of the questions that I receive um in the US are are about how to um uh mitigate any impact of the tariffs um and design your business around them uh just a quick introduction about Livingston global trade management of which I am a member um global trade management is a business unit within Livingston uh that provides support to our client iance uh in times of both
• 06:00 - 06:30 trade turbulence and uh in designing and implementing and maintaining strong internal controls our motto is a a compliant export as a compliant import and vice versa um and you'll see how we can um support your business from export to import and back again uh through various Services uh to ensure that you are compliant with the regulations related to the control of your goods on the way out as well as the proper compliance uh reporting of your goods on
• 06:30 - 07:00 the way in including support um uh with our trade sphere Solutions it has been quite a whirlwind um since Inauguration Day in the US regarding uh tariff regulations and what applies and what does not um our experts provide a lot of guidance to our importers and exporters uh about what is currently in force how to report proper information how to account for certain information that will factor into the calculation of new
• 07:00 - 07:30 duties uh as well as uh exemptions how long they're going to last and what new developments are arising this helps our our clients uh particularly in the US import space to remain compliant with CBP and also take advantage of opportunities to mitigate any new tariffs as they impact your business so let's talk about uh the US and and the state of trade as it is today it is constantly changing
• 07:30 - 08:00 um and uh it it really uh can be quite challenging to stay up to date with the regulations all I'll start with uh uh Canada and Mexico first so they were sort of at the top of the list uh right after inauguration um and first received notification uh official notification that we would be experiencing those 25% tariffs against uh Canadian and Mexican origin Goods um so the original notification that sort of went out to
• 08:00 - 08:30 the public was on February 1st um and then it was supposed to originally go into force on February 4th so we got a weekends and and one week day uh to prepare for these possible implementation of Duties as originally uh proposed uh it was going to be 25% uh of uh uh 25% tariff rate against Canada and Mexico origin Goods with the exception of energy uh which was at 10%
• 08:30 - 09:00 once this uh deadline sort of got kicked down the road to March 4th um in between then and when they went into effect po as was also included as um a 10% Duty rate as well so 25% for everything and then of course uh the 10% for energy and uh potach now energy does actually have a pretty specific definition which um is found in the energy RS um but includes things that come from the ground
• 09:00 - 09:30 including uh condens and other things associated with with drilling crude um energy uh Commodities it's important to note that um eventually those low value shipments will also be included in this um and you will hear me talking about this with with China and Hong Kong as well um that the DI Minimus uh the application of Dom Minimus and allowing Goods to come in through Section 321 or type 86 when these duties apply um would not actually
• 09:30 - 10:00 apply to uh these these countries where uh these tariffs have been implemented so the increase in Duty rate or the application of this additional duty to these Commodities is not an increase in the in the most favored nation rate the standard Duty rate that you find in the Tariff um but is implemented according to the international emergency economic Powers act so similar to what you may be familiar with with um the first Trump
• 10:00 - 10:30 Administration where you had the 301s and the 232s you'll actually see this Duty as sort of an additional line on your line items uh for your entries when they cross the border so that uh let's take for example if you um had natural gas coming in from Canada to the US that is a 0% Duty rate and that's the standard Duty rate that's still the standard Duty rate um but this additional duty if you could not um uh demonstrate usmca eligibility um would
• 10:30 - 11:00 be 10% in addition to the standard Duty rate so it's important for everybody to understand that this is in addition to whatever the standard rate of Duty is it's not flat 25% for everything um it doesn't take the place of the standard Duty rate is an addition to and it's implemented under the iepa and you will see an additional 99 chapter 99 classification to account for this Duty calculation um so as I just mentioned one of the developments that has come up
• 11:00 - 11:30 uh in relation to Canada and Mexico um is this um Goods meeting the usmca rules of origin are Exempted for now at least um and so what that means is that eligibility for usmca becomes even more critical now than it had perhaps been previously so if you had been importing into the US an article where the standard rate of du
• 11:30 - 12:00 um was zero or free um and you weren't worried about mpf it was relatively small there are a lot of importers that were not utilizing usmca because the cost behind the scenes of determining eligibility and documenting it and maintaining uh a free trade compliance program outweigh the benefits of perhaps only um paying mpf on your entries and uh statistics showed that something like
• 12:00 - 12:30 only uh 40% of goods coming into the US from Canada and Mexico were utilizing uh usmca so with this new sort of exemption from this additional duty uh you will be um uh more likely to and more inclined to implement uh a proper FTA program in order to avoid these iepa duties the other piece of the puzzle with uh Canada and Mex me is that there is uh no Duty
• 12:30 - 13:00 drawback allowable for this so um much like the 232s were in the first Trump Administration you can't draw these duties back once you pay them you pay them and you're going to pay them every time uh the goods cross the border um so even more important to uh have them be eligible now there might be the opportunity to uh retroactively draw back duties on preferential Duty under usmca so by that I mean you're actually recovering Duty
• 13:00 - 13:30 uh using um uh the 520d process right where you're actually updating the entry but beyond that the idea of being able to draw back uh these very large duties on on Goods coming from uh Canada and Mexico is is not an option so you really are stuck with them once you start paying them um uh let me see as we move on here one other important note and that it has
• 13:30 - 14:00 come up a lot um is that the usmca exemption is only valid until April 2nd it's very important to note that if you read uh the executive uh order on the White House website or uh in the Federal Register there is not actually an expiration or end date as it relates to the usmca applicability of goods and uh the ability of usmca to avoid these additional tariffs um and this is where
• 14:00 - 14:30 uh I talk about how because the the trade uh uh dynamic in the US is Shifting so quickly and so often um that you will hear you will hear news about tariffs changing um usually first from the press secretary or something the president said um but that it does not start to become a reality until you see an official post um either on the white house uh press site or um in the Federal
• 14:30 - 15:00 Register and also uh that it's very important to watch those csms messages that come from CBP on how these tariffs will be implemented so if you have all those things and you've got instructions from CBP on how your um Brokers are going to be declaring this information and how um it should be properly reported that's really when it becomes real so cautionary tale as we talk about tariffs and as you mon monitor the news
• 15:00 - 15:30 related to changing uh tariff environment uh over the course of this Administration is that um try not to manage too quickly to the news cycle and look more for official Publications from the White House website uh official executive orders appearances in the Federal Register and folding in those csms messages to get a clear picture of what's actually going on so as it relates to April 2nd um there's no end date listed in the
• 15:30 - 16:00 executive order related to usmca eligibility allowing for the avoidance of these additional duties what may be the case as we move on is that um the the uh reciprocal tariffs uh are likely to be announced on April 2nd and there may be some overlap between that program and this program which would cause you to pay an additional duty on goods from Mexico or Canada that are usmca eligible so uh as new programs come out you'll
• 16:00 - 16:30 have to watch on what the interplay is um and I'll talk about steel and aluminum later and how that uh sort of overrides this FDA eligibility of the iepa uh as an additional program and make sure that you fully understand what all of the implications of all these additional uh tariff programs may have for you but this is uh Canada and Mexico and a nutshell there haven't been any huge developments on this issue isue um
• 16:30 - 17:00 since uh March 7th when the usmca uh eligibility was announced um as um uh being an exemption from these tariffs um there was some small interplay between the premier of Ontario related to the application of uh uh sort of a an export sech charge on electricity coming to the United States which resulted in the president uh stating that he would bump up the Canadian tariffs an additional 25% because that but they have um both
• 17:00 - 17:30 pulled back on that since so as you see it on the slide today that is the current state of affairs as it applies to both Canada and Mexico pending any new uh updates after this state so let's talk about uh China in Hong Kong um similarly to Canada and Mexico um this went into effect on uh February 4th but unlike Canada and Mexico this did actually go into effect
• 17:30 - 18:00 on February 4th there was no agreement between uh the president and um she related to China and kicking the can down the road and and putting these off until March 4th so this has been in place since February 4th uh the initial tariff rate uh additional tariff rate uh was was 10% so if you're already paying for example those 301s on Chinese origin Goods this was going to be 10% on top of that or a new 10% if you had
• 18:00 - 18:30 successfully avoided 301s on your China origin Goods so far um as of March 4th uh this was increased to 20% so as it stands today this um IA tariff on China uh is 20% again this is a separate program for any other additional duties you might be paying on Chinese origin Goods so if you're paying the 301s let's say your 7 point or your 15% on goods from China you will also pay 20% related
• 18:30 - 19:00 to this particular program and China um also had this uh low value good it was going to apply to for low value Goods as well it was going to take things out of uh di Minimus and you were going to pay this tariff and actually the implementation of China is what uncovered that CBP really was not ready from uh uh a processing perspective to handle the volume and properly get these entries in um uh once you take away that
• 19:00 - 19:30 that low value uh entry process um so through that Discovery that's why you have the same sort of delay for Canada and Mexico that you do for China it's important to note that this did not go away so I've heard a lot of chatter in the industry about how they got rid of uh um application of these tariffs to low value goods and that is simply not the case um what they have done is put it on hold hold pending cbp's
• 19:30 - 20:00 confirmation that they can actually handle the volume and get entries uh within a certain threshold so $250 and above um entered properly um as as as entries as opposed to type 86 or section 321 entries and we do not have a timeline for when that is going to go into effect so if you would be affected by this let's say you've set up a uh a supply chain where maybe you're you're holding Goods in a bonded Ware house in Canada for uh final entry into the US
• 20:00 - 20:30 under an e-commerce structure for example you do need to prepare that eventually CBP will get their ducts in a row and say okay we can turn this on and then these duties will apply to those low value shipments so it's not gone forever it wasn't stricken from the original executive orders um but it has been placed on hold pending CBP ability to process those entries uh just a reminder again that these are an addition of any most favored nation rates maybe you're paying anti-dumping
• 20:30 - 21:00 this is an addition to those U maybe you're paying 301s this is an addition to those so the tariffs that uh uh the president has implemented against China and Hong Kong is a completely separate program from many duties you may currently be paying on on Chinese origin goods and is in addition to what you might be already paying it has its own uh chapter 99 tariff classification that you will see on your entry under your line to account for it and it's
• 21:00 - 21:30 calculated based on your value there are no exemptions um so originally uh many importers got used to the 301s and uh the huge amount of uh uh exclusions that were uh listed there is no similar process for these current new duties um there's no applic uh application process for exemptions or exclusions uh and there's no Duty drawback unlike 301s
• 21:30 - 22:00 which can be drawn back so much uh harsher program in the sense that uh if you fall within the bounds of it again you're paying it you can't get it back through Duty drawback uh there is no exclusion process and it will apply um uh regardless of how many times it crosses the Border uh the other important note as well both China both the China Mexico program and the China program uh are based upon the country of
• 22:00 - 22:30 origin so if you have these Goods uh going into Mexico and then coming into the US the China tariff will apply if the country of origin is China um you know barring any substantial transformation that may happen in a third uh country all of these programs are based upon the country of origin of the product that is being imported into the United States um so just keep a keep an eye on that make sure you're pulling your data you understand what the country country of origin is versus the country of export and how that's going
• 22:30 - 23:00 to affect your goods one of the biggest talks of the town right now is the expansion of the steel and aluminum tariffs um so this is not actually a new program uh this is the the 232s on steel and aluminum that were implemented uh in the original Trump Administration so this is not a new program there wasn't a new in um investigation or study anything like that these are the
• 23:00 - 23:30 232s uh many countries that uh us importers uh were getting steel and aluminum from uh were exempt including uh Canada Mexico even South Korea um you know uh Argentina I believe there's a whole list there were a lot of exemptions um or tariff Ray quotas related to 232 so effectively what happened on March 12th is that those went way right and and it applies to uh
• 23:30 - 24:00 everybody regardless of country of origin now uh the Tariff rate is 25% so for steel it always has been but from for aluminum that went up from 10% to 25% uh so that is absolutely an increase on those aluminum uh products and um what is uh also interesting is that there were a lot of exclusions so if you were an importer of steel and aluminum you would get your own importer specific
• 24:00 - 24:30 um exclusions you would apply for them through the Department of Commerce and and get them specific uh to your importer of record volumes specific products all of that if you still have those um either because they're still active by date and or they still have volume on them you can use the exclusions you may have today through exhaustion however they have not provided for app an application process cess for new exclusions and so even
• 24:30 - 25:00 those individual importer exclusions um that have been issued once they're exhausted they're gone uh so that is the biggest change here aluminum has gone up to 25% to match steel uh and there are no exemptions from a country perspective or tariff rate quotas and there are no um uh opportunities for individual importers to apply for exclusions so um if they apply they apply it's an additional program so let's say you're
• 25:00 - 25:30 importing from Canada and we've got the 25% uh on some steel article you're importing from Canada based on the those IA tariffs you're going to pay the 25% maybe it's usmca eligible so you're not going to pay those you still have to worry about um the the steel uh tariffs here that is an entirely separate program it's going to have its own uh chapter 99 uh line within your entry to calculate those duties and so the two
• 25:30 - 26:00 are exclusive of each other they are different programs so usmca will not get you out of this one and also uh there are now derivatives associated with steel and aluminum so these are um lists of tariff classifications of uh products uh derivatives of either steel or aluminum that are not classified in chapter 73 and 76 um so they are elsewhere in the Tariff and the Tariff is only going to apply to the value of
• 26:00 - 26:30 the steel or aluminum content within that derivative so it's not the whole value of the good uh it is the value of uh the steel or aluminum contained within it which is now uh you'll want that to be as accurate as possible um because you don't necessarily want to pay on the whole value when we're talking 25% of something you can't get exclusions from uh so it'll be very important if you fall within those itive lifts which have been
• 26:30 - 27:00 published uh that you understand how to properly calculate uh the the content the steel or aluminum content associated with that derivative but that is an expansion uh they give us very little time to implement that on the broker side so it was a bit of a scramble um but those are in effect now um there are small exemptions for steel derivatives um melted and poured in the US and in aluminum derivatives smelted and cast in the US so you if you have
• 27:00 - 27:30 that us origin uh steel or aluminum within the derivatives themselves you'll want to ensure that you have the proper documentation associated with that um so that you're not paying on us origin steel or aluminum contained within uh those derivatives um all those exemptions as I mentioned in exclusions they have gone away uh and there's no Duty drawback available there never has been for the 232 um they could not be drawn back um uh
• 27:30 - 28:00 originally when they were implemented back in 2018 so that's just a continuation of of that of the application of that program that is an overview of the current tariff programs in place in a nutshell uh I understand that there are still things that are in the pipeline um so everybody is watching April 2nd uh to see what happens with reciprocal tariffs
• 28:00 - 28:30 um and anything could change at a moment's notice so as I mentioned you may be closely following the new cycle just remember if you see it on TV or even sometimes I will see uh news articles from um uh reputable news outlets that say this will happen but until you start seeing documentation on the White House website through executive order uh through the Federal Register and even csms message um from from uh CVP it could change uh drastically from one day to to the next so you're going to want to make sure that you're watching only those official
• 28:30 - 29:00 channels uh in addition to that remember that um uh in the US uh tariffs are being utilized for negotiation purposes um so what is in place today may not be so forever um and so you still will want to keep your eye on these programs um to ensure that they're being applied properly to your products so the number one without a doubt question uh I have been getting in 2025 is how do I mitigate these how do I
• 29:00 - 29:30 lessen the impact uh how does Livingston suggest that we go about um lessening the impact of these Duty programs uh these new Duty programs on our supply chains on our Goods which may not have even been able to have been accounted for until they appeared in French so there are a few different uh ways that we talk to uh importers into the us about how to mitigate um uh the impacts of these programs uh so tariff
• 29:30 - 30:00 engineering um is is something that uh is available to uh certain importers uh whereby you are slightly changing your product in order to compliantly uh change the Tariff classification so that notorious example that everybody uh likes to talk about is um shoes that may have a velvetine bottom or another sort of fuzzy bottom to get them classified as slippers because slip slippers have a lower Duty rate than shoes do right so tariff
• 30:00 - 30:30 engineering uh in and of itself that's that's kind of what uh you're trying to do how can I change the characteristics of my product to substantiate the use of a different classification which may have a lower Duty rate um uh so that may be helpful or and Engineering is another one and when we're talking about the Trump tariffs um this is where it may become uh a lot more relevant right because these new programs are based on
• 30:30 - 31:00 on country of origin um and are very broad so tariff in and of itself may not be enough to to help you change the impact here and that's where you're shifting uh complex assembly in order to meet substantial transformation in a country other than the one which uh the duty program applies to so we saw this a lot um when the initial uh 301s went into effect uh for China where many companies chose to uh Nearshore at least
• 31:00 - 31:30 enough of the process to Mexico for example uh to uh substantially transform the article in a different country um that became a little more uh tenuous as Mexico got wrapped up in its own uh Terror factions from the Trump Administration however currently utilizing usmca that would still be uh an option now uh because there has been some Ambu ambiguity about April 2nd whether or not
• 31:30 - 32:00 that usmca exemption is is going to continue on after that date or perhaps something else might be published um from a reciprocal tariff perspective remains to be seen I might not recommend that you move everything uh between uh now and then uh to a place like Mexico which also has its own program until we see this play out a little bit more but it is an option uh in order to get outside of these country of origin specific programs valuation and first
• 32:00 - 32:30 sale as part of valuation um is an area that a lot of importers are now starting to really pay attention to and explore uh the value you're declaring at at time of Entry is the value that's being used to calculate these adum Duty rates and if it's possible to again compliantly Lower the value that you are declaring to customs then you are at least chipping away at the impact that these Duty programs are going to have on your
• 32:30 - 33:00 product so there's a couple things there's the general valuation study where you might sit down and say are we taking all our proper deductions are we utilizing a a related party transfer price or other valuation that um we can visit um calculation of um are there better ways to calculate our value take out everything that can be taken out like certain Transportation costs and Etc ET and and lower that value that
• 33:00 - 33:30 that duty is calculated from and first sale um as far as valuation goes which is an option into the US it's kind of unique to us importers is um uh you know being able to um utilize a a sale that is further back uh within the the purchasing structure of what caused the good to come into the US to begin with so if you're using a buying agents for example overseas or you're going through a related party uh
• 33:30 - 34:00 to contract with a um uh with a manufacturer overseas is it possible to get that original first sale between the manufacturer and whomever they sold it to to apply to your goods that further down the line come into the US so there are options to play around with um from a valuation perspective it might not eliminate the impact of these new Duty programs but it certainly can um help you to mitigate the financial impacts of
• 34:00 - 34:30 them uh where applicable free trade agreements are a big one of course we talked about usmca being that um basis for current exemption from uh the Canada Mexico tariffs and um uh many importers have been Cavalier over the years if they have a product that um had a 0% standard Duty rate now you're looking at 25% if you don't qualify so getting uh those free trade agreements uh the usmca compliance the
• 34:30 - 35:00 documents the eligibility calculation all of that in order uh could be saving you a lot of money right now and long term as long as they continue on past April 2nd um barrowing any other reciprocal tariff actions uh could really alleviate the impact of those Canada and Mexico duties on on the on the uh what you're paying as they get imported into the us but also the US has quite a few free trade agreements with other countries so
• 35:00 - 35:30 as we're talking to our importer clients about sourcing where um perhaps Mexico always seemed like the best option from a lowcost manufacturing perspective it's close um and uh you know you were getting that us MCA rate before uh let's say the US MCA exemption goes away on April 2nd and or um you can't get the good to qualify is it now um more of an option to consider other suppliers that
• 35:30 - 36:00 we may have uh free trade agreements with in other countries where um you know uh the cost of manufacturing may be slightly higher or maybe transporting it um by vessel instead of being able to rail at or truck across the border uh is offset by such a a large amount of Duties on Mexico or origin goods for example so 25% um and can we also avoid uh paying standard d Dy rates um from other countries as well so exploring your
• 36:00 - 36:30 supply chain uh looking at uh who are the other suppliers you may have considered in the past do we have free trade agreements with those countries once you add up the total land and costs utilizing that supplier versus A supplier which is now falling within the bounds of all of these new Administration tariff actions you may find that uh it's a a better Financial option to move to uh another supplier outside of the one you're currently utilizing so we take a look at those um
• 36:30 - 37:00 and then I'm just going to jump down really quick to classification studies and end with prior disclosure and say this um especially when it comes to the seal and aluminum derivatives we have gotten a lot of questions about doing classification reviews now that is all fine and good uh you are going to want to make sure that your classification is accurate that it's justifiable that you have an uh a rational Al supporting it um and that is
• 37:00 - 37:30 reasonable you've taken reasonable care to sign a tariff classification of your goods what I will advise against is um trying to change the Tariff classification of your goods in order to get outside of the steel and aluminum derivatives list and and here's the reason when you you shouldn't do that anyways right should be reasonable care when you assigned classification however uh within the uh uh executive orders is a provision that if you are uh
• 37:30 - 38:00 penalized uh because Customs has determined that you have changed the classification of your goods incorrectly to specifically avoid the steel and uh aluminum derivative tariffs that those penalties cannot be mitigated now uh there there are some legal actions that are already being comp contemplated U because there is already uh statutory and administrative remedies associated
• 38:00 - 38:30 with penalties but as of right now that's the current state of affairs um and that can be uh twice the dyable loss um so twice what you would have paid in duties would be your penalty and then you'd still pay the duties and that can add up real fast um and to not be able to mitigate those or initially have Customs push back and say we have decided that you did this to avoid these so you can't mitigate this penalty that will still linger until the question whether or not they can actually make that carve out specific to um steel and
• 38:30 - 39:00 aluminum is determined to be legal and valid so now you could end up with this huge liability hanging over your head um and current state of affairs is that you cannot you cannot mitigate it or they won't process uh mitigation right and then you end up in sort of legal limo limbo until they decide whether or not that car out can actually be made but right now that is the text of the executive order um which uh leads me to Prior disclosures um uh
• 39:00 - 39:30 and to in order to avoid Customs penalties so if you are conducting a review or you do identify now that the steel Alum aluminum derivatives are in place uh that there has been an incorrect classification we do also uh support our clients in doing those prior disclosures in order to avoid penalties right if you disclose properly then the timeline uh prior to an investigation by CBP you can avoid penalties so you would still have
• 39:30 - 40:00 to pay those duties um but as part of a financial impact you are disclosing it so you can get up to speed uh and not be penalized uh for something that currently doesn't have a mitigation option uh so that is how we've been guiding a lot of our clients on how do I navigate the tariffs how do I mitigate their impact and what sort of pitfalls uh do we have to watch out for I'm sure there are a lot more questions um but that is the current state of affairs in some of the most popular ways
• 40:00 - 40:30 that we've been assisting our importers uh with navigating the new trade landscape in the United States so with that Danny I'm going to uh move on to uh Q&A that we may have while I have been presenting thank you Jill and uh fantastic job ton of great information provided there just as a reminder for everyone uh if you have a question to post it into the Q&A within the uh
• 40:30 - 41:00 within the the team session um there's a number of questions that come through uh I'm there's no real order to them so I'm just going to hit you with the the questions and so we take it from there uh the first one is related to electricity and it's it's a multi-part question so I'll read the entire thing and we can probably dive into each specific one but the Canadian embassy advised our team that electricity will be covered as energy resource at 10% is that your understanding do you expect the gas entry summary
• 41:00 - 41:30 model to be applied and do you believe electricity will will be treated as originating Goods subject to preferential treatment despite Duty yes so electricity is actually listed as within the definition of energy so when you read the um executive order it refers you to um a different statute unrelated to um uh Imports uh but defining energy and electricity is included within that so that would uh
• 41:30 - 42:00 necessarily be uh included within that energy description uh that we have for the 10% as far as originating you'll still have the same you know sort of uh hurdle to climb as far as uh is it originating likely the answer is yes but I don't want to give a a blanket yes without knowing more about the specific energy transaction but if we're talking about you know um hydroelectric power for example yes of course um if it's if it's generated in in Canada right so
• 42:00 - 42:30 that's just an example perfect thank you uh then we've got a few questions sort of related to China Hong Kong tariffs so the first one is regarding the Tariff rate of 20% that was put in place as of March 4th the verbiage of of the executive order was a modification of the February 4th 10% up to the 20% uh rather than an additional 10% being implemented moving forward can you confirm that there is no retroactive chargeback raising import tariffs to 20%
• 42:30 - 43:00 back to February 4th yes I can confirm that and that's where um you know I spoke earlier about um looking at all of the available resources that come out because this moves so fast um it can be difficult to keep up uh the confirmation we got that it wasn't retroactive actually came from CBP themselves in a csms message uh the um uh the evening prior to implementation so there is no retroactive application of the additional 10% on China it was merely a
• 43:00 - 43:30 go forward from that date great thank you uh next one's still related to China more on the steel and aluminum side um are the tariffs on China Steel and aluminum at 25% plus 25% plus the 25% or any mfn duties hopefully yeah yes so they all add on to each other right these um so uh you've got something from China
• 43:30 - 44:00 it's like I said let's say you've got uh let's see you have something aluminum because I want to fold in some anti-dumping in there right uh you've got something uh from China uh let's say it's uh classified on the Tariff such that it's got a standard Duty rate but it also has a 301 Duty rate that's a separate program and it also falls within uh the Chinese anti-dumping uh case right so that's another program and now you've got um this addition um 20% on Chinese origin Goods yeah
• 44:00 - 44:30 you're adding all those together they're all separate tariff programs so the Chinese uh duties of 20% that were currently implemented by the Trump Administration those are iepa duties so that's the statute that they're implemented under that's a separate program right you're anti-dumping that's case that's been around for a long time that's a separate program the standard Duty rate still applies uh the 301s that is a section 301 that's a separate program so yeah you are adding all of
• 44:30 - 45:00 those together okay perfect thank you um okay now we're off to more the Minimus so if section 321 and entry type 86 is removed what will be the process for low value shipments entering and clearing under type 01 or type 11 and I I'll SEC the second part of that question is does the US recipient who is the purchaser of the low value order need to provide their SSN or Ein for Customs clearance yes so how you're going to do this is I
• 45:00 - 45:30 believe in uh forgive me because uh I don't have this open in front of me uh but $250 in up will be the uh requirement for application of these duties it will be a formal standard entry and you will need all the information you would need on any of your other entries in order to process that entry properly so you'll need the Importer of record number you'll need a consign number you'll need all that information if you fall within those guidelines to do a a standard Customs entry where
• 45:30 - 46:00 before um something that might have been $300 uh would have cleared on manifest or Ben a type 86 and he would had a reduced uh number of Duties so it will be standard import entry uh you will need the information that you would convey to your broker for any other standard entry uh to clear that that information uh clear those goods properly uh and transmit that information great thank you uh for the next one it's
• 46:00 - 46:30 related to Chinese Goods so for Chinese Goods Shi to Canada and then return to the US within three years can you utilize 9801 and not pay the new 301 or 232 or E AE EPA tariff on Chinese Goods if you provided proof of export from the US yeah so with the um China same thing for Canada and Mexico um they do not uh apply to anything that rightfully um and compliantly Falls within provisions of
• 46:30 - 47:00 chapter 98 so you've got previously exported with within three years you need to be able to demonstrate that and um understanding that CBP is going to be uh increasing enforcement in certain areas so expect those CF 28s if you're going to be utilizing 9801 a lot for example um but it does not apply to Goods that fall Within Chapter 98 this also includes um uh uh Goods that maybe were bringing in
• 47:00 - 47:30 um uh like Health Care stuff that may have had a special 98 provision uh to be dutyfree there are a lot of different programs that are Within Chapter 98 um that those duties won't apply to you do need to be able to document that you qualify for that use and you do need to expect that there will be increased scrutiny on articles that are utilizing chapter 1 9801 chapter 98 um but like things like 9801 in particular um
• 47:30 - 48:00 especially if in your import history you didn't use it previously where you're now increasing its use because CBP can mine Ace data and look for those patterns um so as long as you properly qualify you've got the right documentation to back up that you exported it in the past three years and are bringing it back uh then no those duties would not apply great thank you the next one's it's a good question related to drawback with regard to no drawback is that applicable to the original rate of Duty
• 48:00 - 48:30 or just the penalty tariffs the 25% yeah so that's just the new tariffs you can still use drawback I don't want to um have people shut off their their drawback program so let's say you import something from Canada it's not usmca eligible uh I'm not GNA use Canada I'll use China um because usmca gets weird with with drawback uh you import something from China you're going to pay 20% extra but you also are still going to pay your your standard rate of Duty maybe you maybe you're paying 301 right so what you have been able to draw back
• 48:30 - 49:00 before has not changed that standard rate of Duty maybe those 30 ones uh you will not be able to draw back the new tariffs under the new program uh the iepa tariffs great thank you uh the next one here it's what are the potential risks with product engineering if we used one code I'm assuming they mean an HS code and now changing to another one will it draw mention so I'm going to say yes it could
• 49:00 - 49:30 uh and there are risks to tariff engineering right um I would say it's not something you want to take lightly as far as oh we're going to make this minor change and it's it's definitely going to substantiate um use in a different tariff provision and I I advise a lot of caution if you're going to try to do this to get out of a steel or aluminum derivative tariff classification because the penalty provision I talked about where they're trying to eliminate the ability to mitigate those um when you sit down and
• 49:30 - 50:00 consider um tariff engineering uh you're going to want to be able to uh look at the around what I say around the Tariff so if I make a minor change is the classification I'm moving to definitely the right one um you're going to want to be able to substantiate with published jurist Prudence so that would be those uh CIT cases or rulings that may
• 50:00 - 50:30 demonstrate a similar product with the new characteristics that you're moving it to um and uh you're going to want to document all of that really strongly demonstrate reasonable care that you have considered um all options based on this slightly changed product um to get it into the new tariff classification and remember that uh no matter how much of a science anybody says they can try to make tariff classification there is uh just a hint of of subjectivity in it all the time so
• 50:30 - 51:00 it's really all about making the case for why your product is uh in the classification that you were declaring it as and that you can substantiate that properly and that you've used reasonable care to assign it the risk one of the biggest risks being you could invest in making these changes um and without a binding ruling from Customs where they agree with you down the line Customs could disagree agree with you and now you have the liability of the Tariff
• 51:00 - 51:30 class tariff rate associated with the old classification hanging over your head while you dispute it with customs and if they disagree with you um that you may have to pay that back over a uh however longterm it is you use the new one so I strongly advise uh a lot of research um don't just look at the Tariff schedule itself and say if I make this slight change it'll be this you're going to want to look at the uh uh legal notes for the Tariff uh do that research
• 51:30 - 52:00 uh rulings I tend to lean towards headquarters rulings because you get the legal um uh analysis behind why they chose the classification and even CIT cases to bolster your case uh that the new classification you want to move to based on a slight change in your commodity uh is the most accurate great great response thank you now this next one is going to speak to valuation of it it's it's a bit generic but maybe it'll lead you to sort of just a an overall sort of response on valuation is sort of how that plays a
• 52:00 - 52:30 role so is your value for Duty retail or cost of the product as everyone retails cost is calculated the same um so maybe obviously difficult to answer that specific one but maybe if you could just talk to the the valuation sort of approach in general sure so valuation can be tricky um and when folks start telling me that their cost is also their uh their goods for for Customs value uh I tend to um cringe a
• 52:30 - 53:00 little bit because uh it it's what at a minimum what you should be looking at is what your landed cost of an article is at a minimum um but valuation in and of itself is very subjective um a lot of what we depend on when we um do our valuation studies and assist our clients um with researches something called the Customs valuation encyclopedia which is an informed compliance publication right cbp's website um it compiles uh Juris
• 53:00 - 53:30 Prudence that's been published over decades and sorts it by topic um and it is over 500 pages long now right so value is often um applied for in rulings it appears in court cases and the circumstances of your sale are so very specific to your business structure that it's um almost impossible to find a published Juris Prudence uh on a of another case that's identical to yours which is why this encyclopedia is over 500 pages long uh so what I'll say is
• 53:30 - 54:00 this at a minimum your value is going to be your landed cost value which includes things like transporting it to get it to your door any insurance some other things uh at a minimum um and that cost um is is rarely rarely um the actual acceptable Customs value um that you'll want to ensure that you understand your circumstances of sale they're might be options for you first sale using your related party value making sure that's
• 54:00 - 54:30 acceptable for Customs purposes even computed value where you're building up based on the costs that have G gone into the article um and and structuring it so that again it's Justified based on published jurist Prudence perhaps um uh you've even gone to customs and sought advice on valuation um so that you're using the most compliant lowest value possible to calculate your duties great thank you uh this next one I think
• 54:30 - 55:00 uh catches a lot of people off it's um it's related to usmca so if we had a usmca eligible shipment that crossed between March 4th and March 6th can those duties then be uh claim back after March 7th because of the rule that was put in place for usmca qualifying Goods that is uh an interesting question uh I do not off the top of my head a strong answer for that um so without I'm
• 55:00 - 55:30 going to not confirm or ji it yet without uh further research that was a very small window um I will say I speculate the answer is yes that you can utilize that but I do not want to send you off to file 520 DS if that's not actually the case understood uh next one is related to uh actually bonds it's a great great question around bonds so as a large organization do we need to increase our CBP bonds to cover the extra costs and
• 55:30 - 56:00 tariffs uh Yes actually so what you will be doing um you know your Customs bond is based on the perceived uh Financial liability uh that you may have to customs for uh onee period right um so now that you're looking at um uh duties and you're looking at uh possibly 25% possibly 10% depending on uh let's just say uh uh Canada and Mexico I'm focusing on here um which one you fall within how
• 56:00 - 56:30 what is your volume uh will you qualify for usmca uh and I would say that it's more likely the case that you're going to want to include uh the value of uh the duties whether or not you qualify for usmca based not only on uh the possibility that uh CBP uh can always come back and say you have substantiated eligibility but that we simply don't know how long um this Administration is willing to extend that uh exclusion
• 56:30 - 57:00 right so yes absolutely you will be sitting down and recalculating what the value of your bond needs to be based on uh the updated uh tariff programs that we have in the US great thank you um bit of an open-ended one here will we know when the diminus exemption begins to charge Duty on Chinese made Goods yeah so um it's as I mentioned it's it's on sort of ongoing pause right
• 57:00 - 57:30 now while CBP figures out how they're going to be able to handle the volume and process properly uh articles that are low value that will fall Within These programs there will be a notification so it won't be an absolute surprise one day um there will be at least a little bit of notification although because uh the derivatives uh the broker's got three hours notice uh I can't guarantee that there will be a long notice period um but yes definitely there will be um some kind of notice period not only for the
• 57:30 - 58:00 trade in general but also those Brokers will have to be processing those as well great thank you um one related to ftz so with the volle on again off again tariff approach on various items could an importer Leverage The ftz to hold inventory and release of the ftz when it's advant advantageous to do so I when there's a tariff pause of some sort or something along those lines yeah so uh special te programs like ftcs are very popular right now we've been talking to
• 58:00 - 58:30 a lot more people about ftcs than ever before because of that fact right so even if you do nothing else uh but bring in the goods and hold them in there until you're ready to release them and there are certain um you know business structures that are more conducive to that it certainly helps with cash flow a lot um if you are importing and exporting anything unchanged at any time even if it's a small amount of value it may be worth it for you to set up an ftz so that you're not paying duties uh those those iepa duties that cannot be
• 58:30 - 59:00 drawn back at a later time um so ftz is absolutely uh can be um uh utilized to minimize the impact uh of the duties whether or not it's cash flow perspective or um uh even just uh not paying those duties if you plan on exporting at least some of them at a later time uh the one thing I will say that they may not help with as much is if you were considering uh setting up an ftz to manufacture Goods um that um come
• 59:00 - 59:30 out as something else um the goods that are subject to these current I tariff programs uh go in uh I'm trying to remember the specific term foreign privilege foreign foreign privilege status uh so that tariff may follow it out of the ftz as well so it's not 100% foolproof if you were going to utilize it for that but I'm simply holding it there until you're ready to bring it out and paying the duties then helps with cash flow uh putting Goods in there and then only paying on the stuff
• 59:30 - 60:00 that's going to stay in the US and not on Goods that may move on to another country um it's good for that so there are many benefits to utilizing an ftz absolutely that's fantastic thank you Joe all right so we've got a number of questions um but we're we're coming up on time so as a bit of a reminder first of all thank you Jill uh fabulous presentation and and the information was uh was was incredible um the questions are fast and furious as we expected um we we'll be sending off responses to the
• 60:00 - 60:30 questions uh following this so anyone that we didn't get to the question we will be sending off responses related to that um just a reminder that tomorrow we have a second part of this series and that and that will be the focus on Canadian Imports and you see Jeff on screen so Jeff will speak to sort of the tariffs related to the Canadian side and we'll we'll sort of mirror what we've done today um in in sort of the structure but really again more focused on Canada um just a reminder as well there'll be recording provided of of this session and as well tomorrow session and for those of you that have
• 60:30 - 61:00 not yet registered for the session tomorrow you still have time to do so please please uh follow the link and and register um but on that uh Jill thank you very much for the time today and the great information shared and I want to thank everyone for their attendance and for the fabulous questions and that now ends the webinar thank you