Perpetual Demand For Import And Export Businesses
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Import and export businesses play a vital role in the global economy, facilitating the movement of goods and services across international borders. Despite the constantly evolving nature of the world economy, there are three enduring reasons why there will always be demand for import and export businesses.
Firstly, resource disparities among countries create a fundamental need for import and export activities. Every nation possesses unique resources and capabilities, such as natural resources, skilled labor, or advanced technology. Importing allows countries to access resources that are scarce or unavailable domestically, fostering economic growth and development. Similarly, exporting enables nations to capitalize on their competitive advantages by selling surplus goods and services abroad. This interdependence ensures that import and export businesses remain essential for countries to meet their resource requirements efficiently.
Secondly, consumer demand for a diverse range of products sustains the demand for import and export businesses. As globalization continues to blur geographical boundaries, consumers expect access to a wide array of goods and services from around the world. Import and export businesses enable the movement of consumer goods, ranging from clothing and electronics to exotic foods and luxury items. Additionally, technological advancements and increased connectivity have fueled the rise of e-commerce, further boosting the demand for import and export activities as consumers increasingly purchase products from international vendors.
Lastly, geopolitical factors and regional specialization contribute to the perpetuity of import and export businesses. Geopolitical dynamics, such as trade agreements, tariffs, and political stability, significantly impact global trade patterns. Countries often engage in regional specialization, focusing on producing goods and services in which they have a comparative advantage. This necessitates cross-border trade to ensure access to a comprehensive range of products. Import and export businesses play a crucial role in navigating these complexities, coordinating logistics, and mitigating risks associated with international trade.
In conclusion, import and export businesses will always remain in demand due to resource disparities, consumer demand for diverse products, and geopolitical factors. These factors underline the inherent interdependence among nations and the necessity to engage in cross-border trade. While the specifics of import and export operations may evolve over time, the core demand for facilitating the movement of goods and services across borders is likely to persist as an integral component of the global economy.
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Duty drawback refers to a customs program that provides financial benefits to import and export businesses. It allows companies to recover or obtain a refund on the duties and taxes paid on imported goods that are subsequently exported. Here are three reasons why duty drawback can help import and export businesses financially:
Cost savings and improved competitiveness: Duty drawback provides import and export businesses with a means to reduce their overall costs and improve their competitiveness in the global market. By recovering or obtaining refunds on the duties and taxes paid on imported goods that are later exported, companies can significantly reduce their financial burden. This can result in lower production costs, allowing businesses to offer competitive prices for their exported goods. Additionally, the cost savings from duty drawback can be reinvested in other areas of the business, such as research and development or marketing, further enhancing the company’s competitive advantage.
Cash flow optimization: Import and export businesses often face challenges related to cash flow management. Paying duties and taxes on imported goods can tie up a significant amount of capital, which can impact a company’s liquidity and ability to invest in other areas of the business. Duty drawback helps alleviate this issue by providing businesses with a mechanism to reclaim those duties and taxes. By recovering the funds, companies can optimize their cash flow, allowing them to allocate resources more effectively and seize new business opportunities.
Compliance and risk management: International trade involves complex customs regulations and compliance requirements. Non-compliance can result in penalties, delays, or even loss of goods. Duty drawback programs incentivize businesses to adhere to these regulations by providing financial benefits. To qualify for duty drawback, companies must maintain accurate records and demonstrate compliance with customs procedures. This encourages import and export businesses to establish robust internal control systems, improving overall risk management. By effectively managing compliance and mitigating risks, companies can avoid penalties and disruptions to their operations, safeguarding their financial stability.
In conclusion, duty drawback offers import and export businesses several financial benefits. It helps reduce costs, optimize cash flow, and encourages compliance and risk management. By leveraging duty drawback programs, businesses can enhance their financial position, gain a competitive edge, and improve their overall profitability in the global marketplace.
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Duty drawback can be a complicated process for import and export businesses, and navigating it successfully requires a combination of expertise, technology, and attention to detail. Here are some of the best ways to navigate duty drawback, and why a company like Duty Calc can be a valuable resource for businesses:
In summary, Duty Calc is a good resource for import and export businesses because it provides software solutions and expert guidance to help businesses navigate the complex duty drawback process. By leveraging technology and expertise, businesses can streamline their duty drawback operations and maximize their returns.
International Trade With Russia
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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.
Importing Wholesale Products
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China provides more than 20% of total U.S. imports year after year making them the largest U.S trading partner. Although there have been shaky relations between the two countries the trend shows little deviation over time. There is no sign that business will slow down and because of that, new wholesale importers should think about a few things before they do business with China.
First, you need to think about whether or not the products you are importing are marketable here in the U.S. For example, what makes the product you are importing from China unique? What are the product’s benefits and economical properties? Does the product you are importing from China have sustainability? Try to stay away from things like electronics, baby items, digestible items, things that are complex, inherently dangerous, and products with a patent or trademark.
Secondly, you need to think about profitability. Make sure you run your financials and strategize before making any payments to China. What is your landed cost per unit? What does your import from China sell for in the U.S.? What is your profit margin and return on investment? If you do not think about these things and “know your numbers” your business will fail. Prepare before you purchase.
Lastly, ask yourself if the products you are importing will be able to sell. Know your target market demographics. Know where your imports will sell best. Know why your imports will be successful. Make sure your imports from China are competitive. If you have any hesitation with any of these things you need to re-evaluate what you are importing.
Importing wholesale products from China is a smart way to make good money if you do it right. It is easy to overlook the small things and doing so can really hurt a business. Take these things into consideration and really think about all the financial details before giving yourself the green light.
Biden Administration & China
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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.
Foreign Goods Safe? Risky?
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The coronavirus has caused a lot of uncertainty this year across the globe. What is safe? Who is safe? What can we do? What can’t we do? So many questions. So little answers. Because of the uncertainty, consumers are questioning their every move including where they choose to buy from and which goods they choose to buy. CNBC reported that in April the market research firm, Kantar, surveyed 45,000 people across 17 counties. In the study, they found that a third of global consumers are now worried that products imported from outside countries is a safety risk. Countries perceived China and the U.S. as high risk with 47% of them saying that they were far less in favor of buying American and Chinese products. An executive from Kanter also said that people were beginning to favor locally-produced goods even though the price point was higher.
The question is, is there really a risk in foreign goods? According to the CDC and the British government, the risk is low. The CDC says that the virus can survive for a short period of time on some surfaces but is mostly spread via respiratory droplets. It is unlikely that consumers contract the virus from international mail, products, or packaging. Similarly, the British government says that the risk of contraction from imported food and packaging from affected countries is low. They justify their position by arguing that their laws require all exporters to follow the proper controls during the packing and shipping process to ensure good hygiene is met. So, if you are concerned about the safety of foreign goods the CDC and the British government claim that you are safe. The best way to avoid the virus is to wear a mask, limit your time around others, and stay 6 feet away from everybody. For more information on the import and export business, stay updated here on our monthly blog.
Import and Export Company Guide
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Venable LLP is a law firm headquartered in our nation’s capital and one that ranked 64th in the 2017 AmLaw 100 survey. They recently hosted a webinar geared towards assisting companies that are involved in international trade and how they can navigate around the global coronavirus pandemic. Today we will be going over a few important topics that they discussed to help importers and exporters during this economic slowdown. Venable attorneys suggested looking back at how the import and export industry handled both the Great Recession and 9/11. Understanding how companies dealt with both economic slowdowns can provide valuable insight in terms of responding to the COVID-19 recession. Look to our country’s history to help us get through struggles that we face today. Venable attorneys also suggested monitoring for any regulatory changes that may ease certain restrictions on import clearance, or provide relief by means of tariff payment deferrals, and consider whether the stimulus package may benefit business operations, among other changes, according to Lexology. Venable attorneys collectively advise import and export companies to reach out to local, state, and/or national government contacts and stakeholders in order to stay up to date and be open to any developing opportunities. For example, there have been various changes made to the CARES Act, specifically targeted towards small businesses, financial services, air carriers, and related workers. With these changes come opportunities for subcontracting to support the government in providing services to help contain the epidemic. Although the coronavirus pandemic has caused an economic slowdown there are still ways that importers and exporters can capitalize on opportunities. Look at our history, monitor for changes, and take advantage of every new opportunity that will come your way. For more information on the import and export industry, stay updated here on our monthly blog.
Software Service
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The Section 301 trade war has been a long and unpredictable process. Some new tariffs are already being enforced while some are still to come depending on what the U.S. and China agree upon. Though there has not been a final agreement between the two countries, do not wait to file for the available drawback on Section 301 duties. Dutycalc has been a valuable resource to clients as their services have helped claim 99% of Section 301 duties from China thus far.
The three services Dutycalc offers are a full service drawback, a process & file only service, and the software service. Out of these three services, Dutycalc has seen that the software service has been one of the greatest successes. The software service, Drawback.NET, allows clients to easily generate claims on their own. The software allows for hands on filing and complete operational control on a personal/company PC. If you do not need or want help filing, the software system is your best option. It is user friendly and has been used throughout the country by various Fortune 500 companies. This software system has seen nothing but success as not a single Dutycalc client has failed a Customs audit.
The software service is great for anyone filing for drawback on their own but what makes the Dutycalc brand even more valuable to our clients is the partnership. The software system is designed to allow you, our clients, to do everything drawback related on your own. However, if a question arises with the system or if there is a question regarding updated news on the Section 301 trade war, our representatives are only one phone call or email away. Our staff at Dutycalc understands that questions and problems will arise during the ongoing battle between the U.S and China. Because of this, every client who ever purchased any one of our services is promised access to expert knowledge from the Dutycalc staff. Simply reach out and we will gladly assist you.
Work with Dutycalc if you are looking for great services and an even better partnership. Give us a call or visit our website for more information.
Update Section 301
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The trade war between the U.S. and China continues to impact economies on both sides. Tariffs have caused the U.S. stock market to plummet as the changes have led to a disruption in supply chain for major companies like Amazon, Facebook, and Apple. In China, analysts have reported that economic growth has slowed to its lowest in ten years. Sure, investors and shareowners are worried, but the two countries are making progress towards repairing the trade relationship.
It has been confirmed that on December 1, 2018 the U.S. and China reached an agreement to delay an increase on list three products. The increase of 10% to 25% on U.S. products was originally set to begin on January 1st. However, according to the White House, there will be a 90-day extension. If no agreement is made within those 90 days, rates will then rise to 25%.
In addition, China has agreed to, “purchase a not yet agreed upon, but very substantial amount of agricultural, energy, industrial and other product from the United States to reduce the trade imbalance” (Crowell Moring). This agreement from China may be a policy change or may be left up to private sector entities. The commitment has not yet been confirmed.
Lastly, during the December 1st meeting China also agreed to reduce the tariffs on U.S. automobile exports down from 40%.
There is still a significant gap between what the U.S. is seeking and what China is willing to offer, but these minor changes and progressions seem to hint at a solution. What happens within the next 90 days will give us an idea of what might happen in the near future.
For more information on the Section 301 tariffs and updates on the U.S. – China trade war, check back in to the DutyCalc blog.
