Brokers Concerned About Financial Liabilities Under Proposed Trump Tariff

Similar concerns arose when Trump had sought to levy tariffs against Mexico over five years ago (see 1906050049).

According to Trump's post, Trump vowed to issue an executive order on the tariff on Jan. 20, the presidential inauguration day.

“No one can be prepared adequately for an action such as this, especially if it takes place immediately on January 20. There is no playbook for such an extreme action involving trade with our largest trading partners and at the very least, this will be chaotic for all of us,” said Amy Magnus, director of customs affairs for A.N. Deringer.

“As brokers, we will do our best to serve the needs of our clients, but brokers are not banks. If large amounts of duties are suddenly owed, importers will have to be prepared to pay cash in advance or, as we are advising our clients, get an ACH account with CBP to pay CBP duties directly in the event all your formerly free of duty goods become subject to a 25% duty rate,” Magnus told International Trade Today.

Pete Mento, commercial director of customs and international at DSV, told ITT that his concern is how his clients will react to bond stacking.

“If there’s suddenly a requirement for a new bond and the collateral that they'll have to put up to that bond, it can become a real cash burden for our clients,” Mento said. “That bond isn't closed out until all the injuries liquidate. That could take quite some time. So, it puts our customers in a difficult position where these importers have to lay out a significant amount of cash. You can imagine 25% tariffs on all the imports out of Mexico, or 10% at this point. Who knows where it will go with China as the days drag on?”

In addition to potential challenges with bond stacking, some members of the trade questioned whether CBP would be able to program tariff-related information into ACE.

While Mento said ACE has been able to take on punitive additional tariffs, the additions would come at a time when CBP leadership roles may be changing, and resources might not be immediately available to complete the task, according to another broker. Customs brokers also base their systems on what CBP needs, and so changes to ACE might burden brokers to modify their reporting systems as well.

Amid the immediate impact that the proposed tariffs might have, brokers also expressed two longer-term concerns.

One was about how corporations would respond long-term to market uncertainties in the U.S. This includes a concern over whether the volume of U.S. imports would actually decline under the tariffs. If this were to happen, that could translate into decreased shipments and fees that brokers charge on a per shipment basis.

“Executives are concerned about the high levels of uncertainty surrounding the USMCA, and we may see key projects in Mexico canceled or delayed during Q1 2025,” Diego Rodriguez, a market analyst for Florida-based Latin America Market Intelligence Research, told ITT. “The best example is Honda’s chief operating officer, Shinji Aoyama, warning earlier this month that if the U.S. were to impose permanent tariffs on vehicles imported from Mexico, they would have to think about shifting production elsewhere.”

Another concern is whether countries would levy their own retaliatory tariffs against the U.S.

“I certainly hope our closest neighbors do not decide to retaliate by placing similar duties on U.S. exports. We are entering a very unusual chapter in trading history and no one can truly know the overall impact to all of us if this goes through as threatened,” Magnus said.