Customs Brokers Must Confront New Reality of Fast-Evolving Tariffs

And brokers should expect that breakneck speed to continue, at least for now, a former CBP official says.

"I think people have to get into the mindset of, this is reality now. It's going to be very, very chaotic. And instead of getting super frustrated with that, we have to accept it as the new norm and build in ways to deal with that," John Leonard, former deputy executive assistant commissioner at CBP's Office of Trade, told International Trade Today.

President Donald Trump followed through with his executive orders Tuesday, March 4, to place a 25% duty on goods from Canada and Mexico and a 10% duty on Canadian energy products (see 2503030007. But the hours later, Commerce Secretary Howard Lutnick hinted at a possible rollback for USMCA goods (see 2503040035). Yet Lutnick had just days before said the tariffs might be reduced prior to implementation, which didn't happen.

And the tariffs were indeed rolled back, but first the White House declared the exemption would be for autos (see 2503050034), then for all USMCA goods from Mexico (see 2503060027), then for all USMCA-qualifying goods from Canada and Mexico (see 2503060041). The White House said the exemptions would last until April 2, though the signed executive orders had no end date.

"I think it is safe to say we are all overwhelmed right now. The normal pace of change is one or two regulatory changes a month (which is much more than 10 years ago!), but now we are seeing changes that are completely fluid and changing every day," said Cindy Allen, CEO and managing director of consultancy firm Trade Force Multiplier, in an email.

Fielding questions from reporters, Trump defended his whirlwind of trade actions this week.

"There'll always be changes and adjustments," Trump said during a March 7 press conference in the Oval Office. "I could have, for instance, told the American car companies, no, I'm not going to give you anything. ... It's just a little bit of a one-month reprieve. They're very happy about what's happening. They won't have to go across borders -- and you see the zigzag, and you have a fender made in Canada, you have something else made in Mexico. We don't want that. We want it made here, but there'll always be some modifications."

Part of the challenge for brokers with this week's trade activity is that they are more accustomed to longer implementation periods, such as the longer period to implement NAFTA in 1993, according to Leonard. That persisted even during Trump's first term and his implementation of tariffs in 2018.

"The cadence of how things were decided and implemented was much slower," Leonard said.

He continued, "That was the way things were, but it's different now."

Related to that challenge is getting the required information from CBP to customs brokers in a timely fashion.

During the ACE bi-weekly trade call held March 6, prior to the issuance of the executive orders on the USMCA exemption, CBP fielded multiple questions from brokers seeking guidance on how to submit entry summaries. Questions ranged from when CBP would provide additional information or guidance on energy-related products from Canada that are subject to Harmonized Tariff Schedule subheading 9903.01.13 to when Customs plans to update systems that would enable proper entry filing.

Callers stressed the need for CBP to provide timely updates because, as one caller noted, callers may need to relay to vendors what additional information is needed on their invoices. The caller was seeking information on how importers should break out values for steel and aluminum.

Other brokers had questions about how products like biofuels, peat moss and wood pallets from Canada would be classified.

When asked these questions, CBP staff directed callers to closely monitor WhiteHouse.gov, CSMS and the Federal Register for notices. CBP staff on the call also directed callers to email their questions to the agency.

According to Lenny Feldman, trade attorney with Sandler Travis, CBP has its hands tied, as the agency is also often digesting the tariff changes at the same time as the trade community. CBP also needs time to present the correct information instead of rushing to give the wrong information and wrong answer, Feldman said.

"Once CBP knows the answers to the questions themselves, then at that point, they are in a great position to provide that guidance to the trade community," Feldman told ITT. "But this is happening so quickly that CBP needs some time to make sure that they are interpreting the executive orders appropriately, because my understanding is they're not involved in drafting those."

Leonard echoed Feldman's remarks: "CBP can't get ahead of the White House. They can't say, oh, we're going to put out all these detailed instructions. They don't even know what they are because the White House hasn't come out with it yet. So it's step by step. They have to wait for the direction of the president."

CBP has to wait for something in writing, whether it's an executive order or a Federal Register notice, and then it can react and create policy and direction, Leonard continued.

Yet that waiting period can be frustrating, Leonard acknowledged. "It's frustrating for the brokers because they have shipments waiting and clients asking questions, and they want all these detailed instructions right away, but CBP can't do that because they have to wait to get the instructions. So it is frustrating, and I get it, but that's the world we're in now," he said.

To get acclimated to this seemingly new normal, Leonard recommended that companies develop instructions or standard operating procedures that better enable them to pivot under various time frames, including shorter ones like 24 hours or 48 hours.

"That's just reality now. So, it's a matter of adjusting to this new way of doing business. Whereas before, as I mentioned, it was a much longer timeline for preparation for changes, both operational and systemic. Right now, it's a little different," Leonard said.