Technical Problems Mount Across Trade Industry After CBP Pulls Back From Communication

A senior compliance manager in the automotive industry, who did not wish their or their company's identity to be revealed, said that the software she and others use to file entries on goods coming from FTZs doesn't work with the new tariffs, "because the different software companies have not been able to program their systems properly with all of the changes." Their company is already weeks behind on filing Type 06 entries, a problem which they said is faced by many other members of the National Association of Foreign-Trade Zones. This backlog means that companies "can't be compliant no matter how hard we are trying," the manager said.

The individual, who recently left the company in question, said that it was "still bringing stuff out of FTZs" despite being out of compliance; they left their position in part due to fear of losing their license because of the compliance issues, though they said a CBP official told them that would never happen. They added that CBP is "well aware" both that software is not working and that companies are unable to maintain compliance.

The entry problems are relatively widespread among FTZs, and aren't exclusively happening in the automotive industry, said Jenae Ciecko, CEO of Copper Hill, a software provider that recently launched an FTZ offering. As the largest FTZ managed services provider in the space in the U.S., "we've absolutely heard that this is happening. And it isn't limited to the automotive industry," she said.

The problem, Ciecko said, is that software developers are dealing with an unprecedented pace of change while facing constraints on their ability to quickly develop the software, such as existing software architectures that must be updated. "It's a big overhaul." Developers "are trying to utilize workarounds to support their customers pending true structural updates."

Melissa Irmen, director of advocacy and strategic relations at the NAFTZ said that she has heard from NAFTZ members about technical problems like this in the industry, but that the individuals affected are often not willing to talk because they do not want to highlight that their companies are out of compliance. She said that members of the NAFTZ have reported challenges keeping up with "the stacking, and later the not stacking, changes" of tariff rates, particularly since the tariffs "are being implemented so quickly without much notice for preparation."

Amy Magnus, director of customs affairs and compliance at Deringer, said that the problems extended beyond just FTZ entries. Brokers now have to put in the Harmonized Tariff Schedule codes of all the applicable tariffs in "a certain, very specific order" and if a broker puts in a wrong number, the system will not flag or reject the mistake, Magnus said. She said that working with ACE and the new tariffs is "a struggle every step of the way ... and sometimes you don't even know whether it's your system or CBP's system" that isn't working.

Sam Powell, president of software company Advanced Transportation Systems, Inc., said that his clients have faced rejection messages reading "TRFF ADJSTMNT HTS OR EXCLSN MISSING" when they have attempted to input entries. The broker is then "unable to figure out which 9903 is missing or incorrect," he said, and have to resolve the issues "by a series of trials and errors." When the importers contact their ABI representative to attempt to resolve the issue, they are told to contact the Center of Excellence and Expertise, or CEE, which can take "well over 20 days to answer, which causes them to be late in their filings," he said.

The brokers don't have time to wait for CEE's response, Powell said, "considering the entry must be paid within 10 days from release." The volume of codes that needs to be inputted because of the number of stacking tariffs creates a problem for importers, he said, a problem which will only increase "when they start doing Reconciliation on many of these files."

"There's an overall issue with the ACE system in general [which] is that after you hit so many tariff numbers, and I think it's three, they no longer validate the duty amount being sent," said Craig Seelig, a product manager for Customs and government compliance at software company WiseTech Global. "They will validate that you're missing a tariff number, but they don't tell you what it is, and you could be sending that. So once you get the right combination of tariff numbers, if your duty amount is off for some reason, they're also not validating that. So you know, that's caused some consternation with the trade [industry] as well."

Should the courts ultimately strike down the Trump administration's tariffs through the International Emergency Economic Powers Act, the confusion might not end for importers: "It's going to complicate matters" because of the potential refund process, Seelig said. "The technical part of no longer" entering HTS codes for entries will be easy, he said. "The question of a refund process, if available, that'll be the complication."

A CBP spokesperson said in response to our request for comment: "Any claim that ACE is not working properly is false. Since January 20th, CBP has successfully implemented tariffs guided by 21 presidential actions and has collected $37.9 billion in tariff revenue between January 20th and April 30th."

CBP also insisted that "there are no known issues with the ACE system" regarding the ability to file Type 06 entries and that there have been "no reports" from the trade industry regarding this issue. CBP said that "we suspect, but cannot confirm," that these problems may be an issue with the importing software.

Fany Flores-Pastor, senior director of product management at logistics software company Descartes, said that software companies are doing the best that they can to push out rapid updates to software to ensure that it works with the "last-minute" policy updates from the White House. After sweeping changes, software developers are dependent on technical updates from CBP: "Everything comes through CSMS messages," she said. "Until we get that, we cannot make changes" to the software.

Flores-Pastor said that a new release from Descartes will address many of the current problems but that it is difficult to keep up: "We have been trying to get all the changes on the entry side, [but] we cannot automate everything. They have added so many HTS numbers per line" to the entry system.

Compounding the problem is that CBP has pulled back from the Trade Support Network, a group established to incorporate trade industry expertise in the creation of ACE. "We no longer have the ability to talk to CBP when it comes to technical changes," said Flores-Pastor, who is on the TSN Executive Committee. Previously, CBP would consult with trade industry members through the TSN before rolling out major policy changes to avoid technical problems.

Trade lawyer Shannon Fura said that the TSN was "critical, because you have people from all walks of life within trade" and these viewpoints and perspectives allowed CBP to craft policy effectively. Without this engagement, Fura said, CBP is going to "hit fits and starts, or hiccups, in trying to roll out anything."

"Last year we gained a lot of momentum," Flores-Pastor said. "CBP was talking to us prior to release of policy. Then they would review it and make changes before" release. This process, which Irmen called "informed compliance," has been supplanted by an enforcement-oriented approach. She said that "from a trade perspective, there has been a shift from a mentality of equal working partners between CBP and the trade industry to more like almost a presumption that there is wrongdoing going on. "There is a frustration around that," she said.

In its review of all current trade policies, the Trump administration ceased contact with the TSN. "The TSN received notice on Jan 28, 2025, that CBP's participation in TSN meetings and activities was canceled until further notice," said Irmen, who is a member of the TSN Executive Committee.

The CBP spokesperson said that "while the Trade Support Network is on pause," the agency continues "robust engagement" with the trade industry, including through "regular CSMS messaging to ensure that stakeholders are aware of any changes." Additionally, the spokesperson added that "CBP’s Client Services Division maintains a large team of Client Representatives who provide direct ACE technical support to the trade community."

CBP has also canceled its biweekly ACE calls, which was another forum for users to bring up technical challenges, saying in a CSMS message that "the ACE Support Biweekly Trade Call has been discontinued until further notice."

A CBP spokesperson said that CBP is "refocusing" the biweekly ACE call "back to technical ACE-related questions" for software developers and that it expects "to restart calls in the coming months."

But Irmen said that, "in order to do the technical details properly," the trade community sometimes needs to "talk through the policy and the process to make the software work." She said that while CBP might have "felt uncomfortable making what they felt were policy decisions on the fly on a phone call" during the ACE calls, it is ultimately a necessary part of the process. "We have outstanding questions specific to FTZs that still haven't been answered," she said.

Fura said that CBP was "shooting themselves in the foot" by reducing engagement with the trade industry. At the agency's recent Trade and Cargo Security Summit, she said that "there was very little discussion of partnership" between the trade industry and the government. She said that the trade industry wants "to help [CBP] meet their objectives" and both benefit from a more symbiotic relationship. She made clear, however, that she does not blame CBP for the situation: "They're trying to balance what's being given by the administration, and they're also trying to balance what they know needs to be done from the trade side."

She said CBP is being told what to do by the Trump administration, which is not "bringing CBP to the table" to understand "the nuances of what they're being asked to do or what their systems are being asked to do."

These technical problems are coming as FTZs are already being "significantly affected by the administration," Fura said. The Trump administration has put a limitation into its Executive Orders as to how merchandise has to be identified when it goes into an FTZ, she said, referencing the requirement to declare privileged foreign status for goods subject to tariffs under the orders. Fura said that this is "really a shame," because FTZs support the kind of domestic manufacturing that the Trump administration wants to create: "the administration is not realizing that these are creative and actually can support the administration's agenda."

The impact of these policies is being felt in the FTZ community: "Foreign-trade zone applications are down. Way down," FTZ consultant ISCM said in its FTZ online magazine. It said that staff losses at the Foreign-Trade Zones Board and the loss of the [non-privileged foreign] status option "appear to be taking their toll."

While the rapid changes have already "created a lot of havoc," Fura predicted that the situation will "become even worse over the next couple of months" because the changes have not all come into effect yet. "All of this has just occurred within a four-month period, and so the systems haven't even had a chance to vet this yet," she said. Companies will be filing post-summary corrections to account for the policy flip-flops and "that's going to put a huge burden" on companies, brokers and Customs "to try to process those in a timely fashion," she said.