Importers Starting to Make Long-Term Adjustments Amid Short-Term Unknowns, DHL Official Says
Companies are starting to feel their way into a long-range import plan while still coping with a number of unknowns in the near term, according to a DHL official speaking during a May 12 company webinar on U.S. tariff updates.
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"It's essentially becoming interesting how we're progressing from very short-term actions to mid-term and long-term actions," where discussions with customers have evolved from reactive actions such as pausing deliveries and front-loading to "more and more discussions about shifting in production, changing of supplier footprint, and even shifting of delivery modes," said Alejandro Palacios, DHL's senior vice president of customs for the Americas.
However, despite the shift among some companies to focus on mid-term and long-term responses to evolving U.S. trade policies, DHL is still receiving a fair number of questions from customers on tariff-related topics, according to Jeffrey McCauley, head of customs operations for DHL Global Forwarding for the U.S.
These questions include whether the trade agreement between the U.S., Canada and Mexico still applies, he said, even as the White House gave some companies a reprieve from stacking duties values (see 2504290026), particularly within the automotive sector. DHL has also fielded questions about whether transshipment can be used as a way of skirting higher tariffs -- to which DHL has said no because claiming another country as the country of origin would be "a violation of U.S. regulatory law," McCauley said.
Other issues that customers have raised are concerning refunds of Section 232 autos tariffs ("They are not refunds. They are offsets ... [acting as] credits that Customs would track and actually move your 232 duties against. It is only available on fully-assembled-in-the-U.S. autos and light trucks," McCauley said.) and the Office of the U.S. Trade Representative's Section 301 fees on docking vessels (see 2504220023).
The Section 301 docking fees "will apply only to steamship vessels that are actually calling port the first time, so it's not multiple callings having the surcharge each time," McCauley said. He added that a separate executive order charges the secretary of homeland security to develop a plan by Nov. 19 that would feature a 10% harbor maintenance fee at land ports of entry as part of a broader effort to bolster the U.S. shipbuilding sector.
DHL also has received a lot of questions and remarks on entry processing, including how to find the actual requirements of filing the entry and ensuring that the ordering of classifications is done properly, according to McCauley. The ordering of classifications is important as companies conduct internal audits, he said.
"I will give a big shout out to all of the entry processors that are actually working through this entire process. This is really something that has been a black swan event for the industry that I've been part of for 30 years," McCauley said.
He continued, "Oftentimes, you're adding classifications, changing classifications, introducing classifications based on information from clients' information overall, and getting this order down and complete is a challenge. I'm always amazed.
"On our side, a lot of times you'll see entry processors [and] managers actually discussing specific Chapter 99 numbers. ... There are very specific orders that are applied if you're actually in your audit process right now. It is something you should develop and start to consider as you move forward. We have not seen any enforcement action from U.S. Customs on the ordering. However, there is the potential that that could happen."
McCauley also laid out some of the trade actions that are still needed to address some of the finer points on implementation. On the arrangement that the U.S. and the U.K. reached last week (see 2505090006), "it appears to be a negotiation and framework that will be handled by the White House and the executive branch. The expectation is the details will take months to negotiate. I know the president is aggressive in trying to get it done in days or weeks. However, often [there] can be challenges with the details," McCauley said.
Some of the details that still need clarification pertain to steel tariff reductions and U.S. food imports into the U.K., he said.