As CBP Scrutinizes Import Compliance, Role of Customs Broker Elevated, Experts Say

Companies grappling with all the changes in U.S. trade remedies, as well as the uncertainties underpinning the changes, need experts or customs brokers who can help them build an import compliance regimen so they can avoid potential penalties down the road, according to Andrew Siciliano, partner in trade and customs for KPMG.

“The rules are really complicated. And if you’re not really paying attention, if you’re not hiring an adviser or know someone or someone that has someone in your company that knows the rules, you could get something wrong," Siciliano said on a May 1 webinar.

“Putting a compliance structure around trade and customs is going to be critical, because if you get something wrong, there’s a five-year look back, right? So, those tariffs can add up. We are helping a lot of companies not only be strategic and plan, but also [to] put a defense around a lot of what they’re doing to make sure it’s being done properly.”

Because of the heightened role of trade compliance, customs is being moved from the operational back office to a more visible function that is involved in risk assessments and risk monitoring, he continued.

“This clearly is not a back office function anymore. We’re seeing companies take their import managers and elevating them to directors and chief trade officers,” Siciliano said. “Having someone in charge of trade for the organization is key. You need someone involved in those strategy discussions at a senior level.”

Cindy Allen, CEO of Trade Force Multiplier, echoed Siciliano's remarks when providing a trade update to members of the Los Angeles Customs Brokers and Freight Forwarders Association on an April 30 webinar.

Given that companies may feel lost with all these changes and the heightened pace of these changes, customs brokers may not only be responsible for filing customs entries but also guiding company leaders through the nuances of trade policy and tariff regulations, Allen said. It's during this time that customs brokers need to assert their worth, she said.

“There comes a point in time where you have gone beyond the fee that your client pays you for service,” Allen said. “Helping them understand what entry you’re doing is helping them [through] how all of these different actions are going to affect their business. You’re going into a consulting service area, so just be cognizant of that, and I implore you to understand that we have to know the value as customs brokers of what we bring to the table.”

To illustrate how complex customs regulations have grown, Allen pointed to Chapter 99 of the tariff schedule, which used to be only “a handful of pages” but now has grown to about 685 pages because of the “complexity of all of these tariff numbers, because of the complexity of the information and how it’s being applied. That chapter has just exploded,” Allen said.

As the trade uses more technological tools, such as artificial intelligence, customs brokers should be aware that CBP also is using enhanced AI tools as well to help the agency enforce the trade remedies, Allen said.

“CBP internally is looking at how they can provide enforcement to be in line with the administration’s goals. The agency wants to be on the right side with the administration. That means they want to be and show that they’re very enforcement-oriented. They’re going to protect U.S. industries and U.S. businesses by making sure they are enforcing trade laws, [and that] fraud and or other nefarious activity is not happening,” Allen said. As CBP uses AI to enhance enforcement efforts, “your clients should probably look at services that you can provide to them to help them determine what their risk and liability is, and [it’s a] great opportunity for you too.”

For their part, companies should use technology not only to maintain compliance with classification and valuation, but also to test and review data, KPMG's Siciliano said, which may help ensure import compliance.

Allen also stressed that companies have access to “a good ABI system to help you ensure you are paying the right amount of duty.”

As the trade works on implementing complicated customs-related actions, such as the Section 232 tariffs on steel and aluminum derivatives, it will also be watching how President Donald Trump and his Cabinet will carry out the reciprocal tariffs once the 90-day reprieve ends on July 8, as well as whether Trump will look at implementing tariff measures under Section 338 or Section 122, Allen said.

With what's gone on so far in Trump’s second term, it appears that some of the trade remedies have been worked on between his two terms, so that Trump has been able to issue the trade-related executive orders weeks after assuming office, Allen said.

This differs greatly from what has been done historically, Allen said. Previously, the president would set the policy direction, and then the Cabinet members would work with the staff of the various agencies to implement the details, according to Allen.

“The rules of the agencies have significantly changed. They are implementers. They are not necessarily helping to advise how, when, what is being sent out by the administration. So that puts the agencies in a little bit of a bind, because now they have direction. They have these executive orders, [but] they may or may not have had advance notification that the executive order was going to come out. They aren’t getting a lot of time, from what we're hearing, to actually implement policy, to actually write out the instructions for the trade, because they understand we need details. They need details, too.”

What also has been distinctive since the start of Trump’s second term is that Congress hasn’t said much about the tariff actions, which may be because the Republican-led chambers and Trump “seem to be pretty much in lockstep,” Allen said.

As a result of the White House’s dominance in determining trade policy and Congress’ silence, what also has changed is the CEOs of companies now reaching out to Cabinet members instead of members of Congress to lobby on issues, according to Allen. This change also translates into lobbyists and trade associations having less input overall, since Congress has not been as involved in setting trade policy and congressional members are the ones who have been historically been lobbied.

“This is quite a different environment, and I think everyone’s trying to make their way on how to navigate this. And for our clients, especially the importers, they really are at their wit’s end, because they have what is a diminished voice in a rapidly changing environment that's affecting their businesses, and it's our job to kind of help them understand that,” Allen said.