Tariff Talk

Importing has evolved; who we import from, where we import from, and what we import have changed dramatically over recent decades. Factors such as forced labor concerns, significant regulatory differences across supply chains, and tariffs have added complexity to finding the best value for the dollar.

As our world has grown, have U.S. import regulations kept pace with evolving requirements and enforcement tools? An executive order issued last week challenges the status quo, stating that “customs reform is long overdue.” Much of the order seeks to increase enforcement of existing regulations related to forced labor, misclassification, undervaluation, and illegal transshipment through renewed efforts and, likely, new enforcement tools. Under particular scrutiny are loopholes in regulatory requirements and tariff avoidance practices, which the order identifies as often being associated with foreign importers of record and low-value goods (informal entries).

In general, foreign importers will be excluded from informal entries and surpass U.S. importers on updated bond requirements and increased transparency into business ownership, anticipated import volumes, as well as business affiliate disclosures and “any other data that CBP deems necessary.”

The imported product itself will also face new reporting requirements. New data elements, likely required at the time of ISF filing, will include part or model numbers and key specifications integral to classification (weight, material, power output, etc.). Valuation, particularly for intercompany transactions, and country-of-origin declarations are also expected to face more frequent scrutiny.

Increased scrutiny will be placed on importers, with the potential for higher penalties that will now carry increased minimum thresholds. Importers, along with their customs brokers, will be evaluated through a good-standing registry that considers import and payment history, disclosures, penalties, and responsiveness to CBP inquiries, assigning participants into risk-based tiers.