International Trade With Russia
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
Russia invaded Ukraine about a month ago and since then the U.S. and allies have pursued a series of economic sanctions against Russia in retaliation for the invasion. On Friday March 11, President Biden said that the U.S. and other G-7 nations will deny Russia from a favored nation status. This meaning that the U.S. and allies will revoke Russia’s most-favored nation trade status. How will this impact the U.S.? Today we will break down some of the numbers.
According to the Census Bureau, Russia was the U.S.’ 23rd largest trading partner, totaling $36.1 billion in two-way goods trade in 2021. $29.1 billion of which account for Russian products into the U.S.
60% of what the U.S. imports from Russia is in energy, including oil, coal, and natural. In 2021 the U.S. imported an average of 209,000 barrels per day of crude oil from Russia. Russian oil accounts for about 3% of what the U.S. imports each year, but that is still enough of a jump to drive up gasoline prices for all of us.
Energy aside, other goods imported from Russia will see an increase as well if they have not already. The move to revoke Russia’s most-favored nation trade status will cause the U.S. tariff rate on Russia caviar to jump from 15% to 30% and levies on plywood will increase from 0 to 30%, according to the Wall Street Journal. Vodka will also be subject to a tariff of $1.78 per liter.
As the war continues the U.S. and allies will continue to do what they can to support Ukraine, even if it is just an economic blow. However, doing so will likely lead to more inflation not just in the U.S. but globally.
For more information on import and export news please stay tuned here on our monthly blog.
Expedited Shipping
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
As a business one of your top priorities is to satisfy your customers, right? You want to keep them happy so they keep doing business with you (aka spending money). If you are an importer one of the best things you can offer your customers is expedited shipping. Sure, lead times are through the roof because of the problem at the ports, but if you can navigate around those barriers and offer quicker shipping, this can really help your business grow. Here are the benefits to offering expedited shipping.
If you offer expedited shipping, you can offer your customers more products. By this we mean, you can ship time sensitive products like perishable goods or government documents. If your business offers a product that is time sensitive, expedited shipping will allow your business to ensure that your things arrive at their ultimate destination while still viable.
Additionally, have you ever been part of an inventory or cycle count? If you have, you know that it is a massive headache if you store a lot a product. The more product you are in charge of the more likely you are to lose it. This is the last thing you want to tell your customers. Expedited shipping allows your business to maintain a lean inventory. Lean inventory reduces the number of products you store at your facility and this will reduce overall inventory costs, thus saving you money.
Lastly, the most important reason you should offer expedited shipping is because you create an improved customer service experience through decreased transit times and the transparency of delivery processes. If customers can get their products quicker they tend to be a lot happier. If they can place their order, track it, and get it in their hands in a timely manner, as consumers they will have no reason to spend their money anywhere else.
Expedited shipping is a great way to keep your customers happy and keep your business ahead of your competitors. Consider offering expedited shipping if you do not already because it can really help all parties involved.
Mitigating Risk
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
Doing business and mitigating risk internationally can be tricky, especially if you import and export. There is so much to know about the import and export business and if you do not know all of the rules and regulations then your business can fail very quickly. One way to ensure that your business succeeds when importing and exporting is to mitigate risks where you can. Today we are going to go over ways you and your business can mitigate risk when importing and exporting.
Pay attention to the details and do not take short cuts. Do this by developing formal import and export policies and standard operating procedures. This is like business 101. Create a customs manual specific to your operation. A document like this will be an overview of your business. You will articulate where you import from and export to. You will state any customs programs you participate in and outline your key international processes. This will ensure that no step is overlooked when doing business. All employees need to have a good understanding of this document.
Be organized and document everything. This is important because Customs can review your previous five years’ worth of import transactions. If there is anything that looks odd or if Customs thinks you are breaking the law then your business is in big trouble. The best way to record keep is to do it electronically through the cloud or outsource it to a trade partner such as a customs broker.
Invest time in and prioritize self-audits. Again, this is to avoid problems with Customs. You need to make sure that your trade processes are current with things like the classification of your goods or parts database, any required customs or government agency documentation, or maybe a NAFTA Certificate of Origin. Self-audit annually at the very least. To be safe it is always recommended to do a mid-year or quarterly review as well.
Doing these things from the get go is the best way to mitigate all risks when it comes to importing and exporting. Working with a customs broker is never a bad idea but if you have a good foundation, a broker is not always necessary. Do the right things up front so your business can survive the tricky import and export industry.
China Trade Policy
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
President Biden took office in January and has yet to show any real progress in the trade war with China. Many United States companies want the Biden Administration to drop tariffs on Chinese goods and provide clarity about the current relationship with China. The relationship between the United States and China is still hurting from the last administration and companies are looking for President Biden to fix it as it has been nine months since he took office.
A New York Times article by Thomas Kaplan and Alan Rappeport reminds us that in June, Biden issued an executive order adding more Chinese companies to a prohibition on American investments in Chinese firms that have links to the country’s military or that sell surveillance technology used to repress dissent or religious minorities. In July, Biden expanded the list of Chinese officials under sanctions by the United States for their role in undermining Hong Kong’s democratic institutions. That being said President Biden and his top advisers have yet to elucidate how they view economic relations with Beijing, saying they will make the administration’s approach known once a broad review of China trade policy concludes.
The problem with this is that businesses do not want to wait around. The United States’ trade relationship with China is one of the largest in the world, economically, and companies are getting impatient. Businesses have been waiting for Biden to change course from Trump’s trade policies and are losing money with tariffs in place. Businesses are being forced to borrow more from banks and having to pass along costs of import duties to their customers. The impact these tariffs have are causing major financial hardships across the entire business supply chain and Biden is in the driver’s seat and needs to make some adjustments.
The trade war did not work and as promised, Biden needs to take action to help companies that are struggling. For more information on the trade war with China stay updated here on our monthly blog.
Importing and Exporting Done Right: Part 2
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
A couple of months ago we outlined some helpful tips on how to import and export the right way. Today we are going to continue that conversation by giving you three more tips. Let us get started!
Having the right logistics strategy and even making changes can yield savings on tariffs. For example, Donald Hoffman who is the president of Harmony Logistics Group in Oakdale, New York, and chairman of the Long Island Import Export Association (LIIEA) once helped a company that used to move product from Morocco to France for repackaging, and then shipped it to the U.S. This logistics move helped save the company a lot of money because they took advantage of the Morocco Free Trade Agreement. This agreement allowed the company to direct-ship their product from Morocco and come in duty-free. This logistics strategy seemed like a big move at the time but ended up helping the company save a good amount of money.
In addition to this, creating a formal operation run by an expert is crucial to having success whether you are an importer or exporter. You must develop a formal program to manage functions, with written policies and processes. Ideally, a company that imports or exports significant volumes will put a staff member in charge of meeting all applicable tax and regulatory obligations, even when the company also uses a customs broker or other provider. The last thing you want is to lose money because a product was misclassified, someone failed to file a declaration, or because a product was exported to a person on the U.S. government’s denied parties list. Put someone in charge of the operation to avoid such problems.
The third thing you can do to put yourself in the best position in this industry is to understand requirements on both sides of the border. There are different regulations in terms of time frames, hours of service, and ways that you can load freight into certain types of equipment. For example, if you are exporting to Mexico, you will need a government-authorized trading partner south of the border. Not every company in Mexico can legally import cargo. Similarly, if you are exporting to Mexico from the U.S. you must be carful about where in Mexico you plan to ship. This is because big cities might have the industrial parks with sufficient infrastructure to receive all kinds of shipments. However, some less-developed areas, tractor-trailers sometimes require special permits. If you understand rules on both sides of the border you will be fine. It is just a matter of doing your homework.
Use these tips to help you nail importing and exporting. It can be a hard and daunting task to get everything in place but if you do it right you can have great success. For more information on importing and exporting stay updated here on our monthly blog.
Importing and Exporting Done Right
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
The import and export industry is huge. There is so much to learn and understand especially if you are new. If you want to get into this booming industry but do not know where to start, you are in luck. Today we are going to give you some helpful tips on how to import and export the right way.
The first thing you need to do is get into the habit of staying updated on industry news. Monitor rule, tariff, and status changes. For example, keep an eye on overseas suppliers in case they make changes that affect your tariff obligations. Similarly, watch for tariffs themselves, in government regulations, and in the status of customers. A good example of this is what happened when the U.K. officially left the EU at the end of last year. This move changed the industry drastically. So, stay updated and keep your eye on international news because one single move could influence the entire industry.
The second thing you need to learn is how to leverage programs that reduce tariffs. Gaining a tariff advantage is not an easy task as it requires initial vetting and having appropriate controls in place with the foreign supplier. However, doing so could save you a lot of money. For example, even when a product is made in a country with good tariff opportunities, it might not qualify if the manufacturer imported some of its components. Also, a product that meets the bar for tariff advantages today might not qualify tomorrow if your supplier starts to buy materials in another country. Be careful and be proactive in leveraging programs that help you stay away from those high-tariff loopholes.
Lastly, pay attention to design. A products design can influence tariff obligations just as much as its origin. For example, whether a jacket is lined or not lined, or has zippers or stitches, could impact the tariff. Depending on the case, it could cost less in tariffs to import components and assemble them in the U.S. than to import the finished product. Think strategically when it comes to design and you could save your company loads of money.
There is so much to know about the import and export business. These three tips are only the tip of the iceberg. For more tips and information stay updated here on our monthly blog.
Reinstated Tariff on Aluminum
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
In March of 2018, former President Donald Trump imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from a variety of countries, including the United Arab Emirates (UAE). On his final day in office Trump lifted the aluminum tariff. However, that did not last long as on February 1, current President Joe Biden reinstated the 10 percent aluminum tariff on imports from the UAE. As predicted by experts that covered the Biden administration this reinstatement is no surprise.
The reinstatement suggests that it is unlikely that the Biden administration will remove that aluminum tariffs imposed by the Trump administration. In a statement regarding the issue Biden said, “In my view, the available evidence indicates that imports from the UAE may still displace domestic production, and thereby threaten to impair our national security.” Union workers applauded Bidens move saying that Trump’s plan to lift tariffs on imports from the UAE would undermine the effectiveness of the program and essentially exempt the vast majority of aluminum imports. That being said, not everybody is happy with Biden’s reinstatement. Sure, union workers are all for it but manufacturers across the country are left disappointed.
These tariffs have sparked an outcry from downstream American industries that use steel and aluminum to make products like cars, boats, recreational vehicles, and cans. With the new tariff in place, it will increase costs for these manufacturers and narrow their profit margins making it even more difficult for their products to compete on the global market. The reinstated tariff on aluminum is one of Biden’s first big moves as the new president of the United States. What Biden will do going forward regarding imports and exports as a whole is not particularly clear but he has indicated that things will not change all that much. For the latest updates on import and export news stay updated here on our monthly blog.
Biden and U.S. Trade Policy
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
With inauguration right around the corner there are expected to be changes in the White House. Some very drastic changes, some very minor. One of the minor changes, at least for now, will be U.S. trade policy. President-elect Joe Biden is expected to take a more measured and multilateral approach to trade policy than President Trump. However, experts say that he is unlikely to make significant short-term changes to the tariffs and other restrictions imposed by President Trump. Though they seem to be each other’s worst enemy and cannot seem to agree on anything during this election season, Republicans and Democrats do agree on the need for the U.S. to take a tougher line on trade with China. President-elect Joe Biden probably will not levy any new tariffs on China but on the other hand he will likely maintain those already in place until a better solution to the problems the tariffs were designed to address become available. President-elect Joe Biden does intend to enlist the help of major trading partners to resolve longstanding trade grievances with China. With that said, the White House is likely to be much more proactive in advancing efforts to secure reforms at the WTO that will enable that body to more effectively address not only China but also various other trade issues. Another big reason why President-elect Joe Biden is not expected to make that many changes to U.S. trade policy is because he is focused on fixing this country. He is focused on domestic policy. He is focusing on his plan for economic recovery. He is focusing on alleviating the pandemic. He is focusing on how to bring America back together. Sure, the U.S. trade policy subject should not be slept on but the priority right now is his country. As mentioned before, with inauguration around the corner many things are going to change. For more information on the latest news regarding tariffs stay tuned here on our monthly blog.
Insurance Types for Your Import Export Business
Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service
To run your import/export business successfully you need to make sure various parts of your business are insured. This includes employees, export credit risk insurance, and cargo insurance. Today we will be breaking down what each of these three types of insurances entail for your import/export business. To begin, you need to care for your employees. Most insurance plans cover illnesses or injuries that your employee might incur on the job. One thing to be aware of is that workers’ compensation insurance laws vary among states so you should check with your insurance agent for details in your area. Another thing to be aware of is that employees that work from home might have different policies. For example, if your employee gets injured in their home office, your homeowners’ insurance may refuse to pay on the grounds that it’s actually a workers’ comp case. You will also need export credit risk insurance. You can purchase several types of export credit risk insurances that are designed specifically for the new exporter and small to mid-sized enterprises. These policies protect you in the event that your foreign buyer decides not to pay you for either commercial or political reasons. Cargo insurance is the last kind of insurance that you will need. The cost of insurance usually runs about 1 percent of the insured value. With cargo insurance you will get peace of mind and, in the event of a cargo misadventure, your insurance coverage should include enough to repay you for not only lost or damaged products but for your extra time and trouble and those lost profits. Choosing to insure your employees, export credit risk, and your cargo is something that all import and export businesses should do. Your business will survive when the unthinkable happens and be able to handle any financial bumps in the road. For more information on import/export businesses stay updated here on our monthly blog.
