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Duty Drawback 101

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Duty Drawback 101

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What is Drawback

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If you are new to the import and export business then it can be hard to understand what duty drawback is. Duty drawback is similar to how you are refunded sales tax when you return an item to a store. You essentially claim a duty refund when you export an item that was previously imported. It is a refund of duties, fees and taxes paid on goods imported into the U.S. that are subsequently exported from the U.S. With that said there are three major types of drawback. Unused merchandise drawback, manufacturing drawback, and rejected merchandise drawback.

Unused merchandise duty drawback is when you import something and then export it in the same, unused condition. For example, you import 50 generators paying Customs duties of $500 or $10 per generator. You come to realize that you only need 30 generators and you want to export the remaining 20 to a foreign customer. The unused merchandise can then be exported and you will qualify for a refund for the duty you originally paid.

Manufacturing drawback is slightly different. This type of drawback applies when you import an item that is then manufactured into a different item. For example, if you imported bicycle tires and export finished bicycles, then you can get the duty you paid for the bicycle tires refunded when you export the finished product.

Rejected merchandise drawback is when imported merchandise does not conform to sample or specifications, shipped without consent, or determined to be defective at the time of import. For example, if one of those generators or a few of those bicycle tires arrive in bad condition or are simply the wrong model that you ordered then you qualify for rejected merchandise drawback. You qualify to get a duty refund on all of the defective products.

Understanding duty drawback can be challenging especially if you are new to the import and export industry. If you have any questions please do not hesitate to reach out to us here at DutyCalc.

Reinstated Tariff on Aluminum

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Reinstated Tariff on Aluminum

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What is Drawback

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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

Biden and  U.S. Trade Policy Duty Drawback Software | Import Export Consulting | Processing Filing | Full Service

Biden and  U.S. Trade Policy

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What is Drawback

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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.

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Insurance Types for Your Import Export Business

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What is Drawback

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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.  

Biden Administration & China

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Biden Administration & China

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What is Drawback

With the Biden administration taking over the White House this election it is apparent that many things will be changing. One thing, however, that is not projected to change that much is the trade tension between the U.S. and China. Earlier this year Biden wrote, “The United States does need to get tough with China” in a “Foreign Affairs” article. He went on to say, “If China has its way, it will keep robbing the United States and American companies of their technology and intellectual property. It will also keep using subsidies to give its state-owned enterprises an unfair advantage – and a leg up on dominating the technologies and industries of the future.” With that said China is hopeful that because there is new blood in the White House, this new Biden administration will welcome new negotiations. China’s Vice Foreign Minister Le Yucheng believes that the Biden administration would “meet China halfway” according to state media. Xu Hongcai, deputy director of the Economics Policy Commission at the China Association of Policy Science believes that “Biden is reasonable” and “Biden, Obama, they understand the basics of holding a dialogue.” In Biden’s acceptance speech the ongoing trade war with China was absent. Since Biden’s acceptance speech he has still yet to bring up the issue. How Biden will actually handle the intense trade war that the Trump administration has left him, is still an unknown. What we do know is that Biden will have to prove that he can work more effectively with U.S. allies in order to win the heart and soul of the nation that is now in his hands. More news and updates will be coming up quickly as the White House transition continues. For information on the ongoing trade war between the U.S. and China, please stay updated here on our monthly blog or reach out to us here at DutyCalc.

Importing Wholesale

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Importing Wholesale

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What is DrawbackContact usImporting wholesale is a common starting point among those who are just entering the import and export industry. Anyone can go into this business as it is not too difficult to learn how to find suppliers and manufacturers, import from other countries, and sell products for a good profit. When importing wholesale, it is important to take these five steps as you go along.Do your research by studying the latest trends, studying emerging trends, identifying niche markets. The last thing you want is to import goods from another country and lose money because they will not sell.Identify good suppliers by taking the time to authenticate and verify the integrity of suppliers that you do business with. If you look for suppliers online be careful of fraudulent websites. Make phone calls, study them, and read all reviews and feedback received.Do not be afraid to contact the supplier to get the specifics and arrange for a small sample order. By getting a small sample order you will be able to do things like test, validate, and inspect the product.Once you have done your research, found a good supplier, and tested your supplier/product you are ready to place an order. When doing so make sure you contact a certified customs broker to ensure that you have filled out the correct forms and all import requirements are addressed.Lastly, receive the goods and turn it into a profit. This last step can be hard because although you did your research and studying beforehand, you have to continue to do so as you sell. Markets change, customers change, preferences change. To make sure that your products keep bringing you a profit, continuously do your research and stay informed!Take these five steps when you are importing wholesale and you will be off to a great start to success.
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COVID-19 Impact on Imports and Exports

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What is DrawbackContact usThe COVID-19 pandemic has no doubt affected both U.S. imports and U.S. exports significantly. Because the U.S. imports more than they export, U.S. imports have overall gone down more in U.S. dollars than exports. That being said both sides have seen drastic changes because of the COVID-19 pandemic. For example, imports of crude oil have decreased by ~40% since the beginning of the COVID-19 pandemic. This makes sense simply because people are driving a lot less. This led to a price decrease and we have seen that oil prices have been down dramatically as of recent. Also, things like cell phone and television imports are down. We have seen that on average people are holding off on purchasing these expensive technology devices. This might be due to lack of income or simply the fear of going out to retail stores. And although these industries have seen a decrease, some industries have seen a drastic increase. Medical devices and equipment for example. U.S. imports of medical equipment are holding up and imports of pharmaceuticals are up ~15%. We are seeing that this pandemic has created opportunities for some industries yet created serious problems for others. On the U.S. export side of things two of the biggest exports, aircraft and automobile parts, have seen a drastic drop of 30-40%. But like the scenario with crude oil, it makes sense. Airlines all over the world are cutting back their expansion plans. People are holding their money tight and pushing back those big purchases for things like autos. On the other hand, industries like semiconductors do not seem to be suffering as much. U.S. semiconductor exports increased by 12% since the beginning of the pandemic. This partly reflects that Asia is recovering quickly from the recession. So, though exports have been down overall in the U.S. some industries are seeing a slight surge. Overall, the import and export business in the U.S. is hurting. Most industries are suffering yet there are some that are benefiting. You can expect that if the COVID-19 cases in the U.S continue to rise these import and export trends will continue. It will not be until a vaccine is safely tested and distributed or case numbers decrease that we see a change in the import and export business.

Importing from China

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Importing from China

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What is Drawback

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Many companies within the U.S. import goods from China. Last year China’s trade surplus reached $422 billion U.S. dollars. Why? Well, China is a low-cost labor country, their raw materials cost about 1/10th of U.S. raw materials, and the Chinese are simply the best designers. Their vision of product design across industries is second to none. That being said, it is not hard to see why many companies choose to import from China. If you run a company that is looking to import goods from China, well, that is not a bad idea at all. But, you should consider doing a few things.

Define your product’s quality benchmark. In order to do this, you and your team need to work on three design aspects. First work on your ideal design and specifications. Then, finalize the flow of work to be carried out on raw materials. Lastly, decide on a benchmark. Know what your ideal quality standards are and your acceptable levels of flaws.

Next, you need to communicate quality standards to the supplier. Define things like protocols and timing. Communicate in person as much as possible. Form that relationship and do not get comfortable doing business only online.

You should also ensure that your product’s quality criteria is fulfilled by the supplier. In other words, compare what they give you to the benchmark that your company has created. A good way to ensure that your product is up to your standards is to implement pre-production audits, in-progress audits, and post-production audits. In these audits, you can sample test and make sure everything is on track.

Lastly, delegate a responsible authority for conducting those quality control audits. It can be you, it can be someone on your team, it can be a hired on experienced professional, or it can be through a contract with a third party. Whichever option you choose, make sure someone is in charge of checking the quality of your products through audits.

Importing from China can have various benefits but highly consider doing these things when doing business with them. You will be in a much better position to succeed if you follow these suggestions.

For more information on importing and exporting stay updated here on our monthly blog.

 

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