Everglory

Tariffs on third annex from China jump from 10% to 25% on January 1, 2019

30Nov, 2018



We have covered in multiple posts the additional duties that have been placed on steel, aluminum and solar panels from countries around the world, as well as the three separate lists of goods only from China.

The first two lists were proposed and implemented with duty rates of 25%. The third list which contains far more consumer items than the first two, was implemented at a rate of 10%. Barring any changes between now and January 1st, the items on that list will move to a duty rate of 25%.

All our current indications from Customs and Border Protection have indicated a firm and unwavering policy position as below:

  • For shipments that are being entered at the first port of arrival (a seaport or airport), the date of arrival must be December 31st or earlier. Any vessel whose arrival in ACE is January 1st or later will be subject to the increased duties.
  • For shipments that are being moved in-bond to another port for entry, the IT must be arrived at the destination port on December 31st or earlier. Regardless of whether the vessel arrived before January 1st, CBP is interpreting arrival at the port of entry for purposes of assessing 25% duties.

Everglory will make every reasonable effort on behalf of our clients to meet their best interests. We will not be able to make any guarantees or warranties on favorable outcomes in the midst of steamship line backlogs and off loading timings, Customs policies and timings, the rush to meet the December 31st arrival and entry deadline and, lastly, the impact of holiday schedules.

At a time of the calendar year when shipments have usually peaked because holiday merchandise should already be on the water and ocean carriers observe a reduction in volumes, factories have advanced production and ships are full in a race to beat clock. This is causing cargo to be left behind at origin (“rolled”), spot rates to remain strong and air freight rates trending higher not just with traditional last minute holiday and e-Commerce shipments but also with tariff-increase-racing products as well.

We cannot stress enough that planning early and requesting space allocations now will protect cargo as it gets later in December and importers make critical decisions of whether or not to pay the added premium of moving certain goods by air to beat the deadline.

There have been discussions underway between the United States and China in hopes of reaching some kind of settlement before the President travels to the G20 meetings this week where he’ll meet face-to-face with President Xi of China. However, despite these negotiations, the US does not seem satisfied with what has been proposed.

Bloomberg even reported late last month a potential fourth list which would, essentially, include the rest of the HTS and land squarely on items like smartphones, footwear, sporting goods and apparel. This would be perhaps the most disastrous course of action, propelling an even greater surge in ocean cargo and triggering a race for the exits as importers look to relocate Chinese facilities or attempt to find, likely at high premium in the near term, alternate manufacturing in other Asian countries such as Vietnam, Bangladesh or Cambodia.

What does this mean for US importers? First, it means that financial considerations must be made for the additional duties. We are encouraging importers pay CBP directly using not only ACH, but Periodic Monthly Statement (PMS) which aggregates a month’s worth of duty payments into a single, bundled statement. Second, importers should be prepared to increase their continuous bonds which are written for 10% of the anticipated duties and taxes paid per annum – an insufficient bond or one that has reached its exposure ceiling means delays and added expense for single-transaction bonds that can be avoided by planning ahead and proactively. Finally, and most importantly, we encourage importers who are feeling the bite into sales and profitability from these trade actions to work through trade associations, locally or nationally, and to communicate with your elected representatives about the negative impact on jobs in their districts.

Everglory is here to help navigate the ever-changing currents of punitive trade actions. Contact us for more information and assistance.




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