IMPORT: The Shaky Supply Chain Jan. 26, 2020

Companies that import products need to understand the many risks that they face in their supply chain, in particular risks related to the ongoing "trade war" along with risks tied to issues in China. While many companies have started to take steps to mitigate their risks others continue to conduct business as usual turning a blind eye to the dangers they may face.

The trade war between the US and China is now nearing the two-year anniversary from when this "war" began. Starting in June of 2018, the U.S. began assessing 25% duties on certain products from China. Over the months since then new products have been added to the list and currently over 50% of all goods imported from China are subject to some level of punitive tariffs, ranging from 7.5% to 25%. These tariffs are in addition to the regular duty that applies to the imported products meaning that for some products the duty can total 40% or more.

Determining if these additional duties apply and if so at what percentage is quite a challenge, and importers must not only know if their products are on a China duty list (there are 4 lists at this time) the importer also must check to see if their product has an exclusion to the added tariff. Unfortunately the information needed to understand the tariffs comes from different government sources and figuring it all out is a real challenge.

We encourage every importer to exercise due diligence in determining the duties applicable to their products since Customs can impose significant penalties for the failure to ascertain and pay the correct duty amount.

Other factors are impacting the supply chain for products from China. The Lunar New Year celebration has begun and most Chinese businesses are closed for anywhere from one to three weeks. Over the past few years more and more Chinese factories are delayed in getting back up to normal production levels for one or two weeks after their employees return to work. For importers with tight time constraints this can cause serious issue. The risk of infection from the corona virus is causing travel restrictions within China and we expect these restrictions will further impact the production of products for export to the U.S. With all these variables in play it is difficult to predict how things will go in the coming weeks and months.

So what can importers do to protect their bottom line when facing all these issues? Speak with a professional to help you analyze your risks and to find ways to mitigate or eliminate those risks. We can help - contact us today - info@tradelogicintl.com.