Lack of Details on Reciprocal Tariffs Fueling Uncertainty, Flexport Experts Say

“There’s two things that are unclear. One is whether or not these rates, these new reciprocal rates on Canada and Mexico, will include USMCA-qualifying goods or not. And there's also a question about whether or not this 35% is going to be a reciprocal rate,” said John Stampfer, senior manager of customs for Flexport.

The bulk of the Flexport webinar was an update on recent changes related to reciprocal tariffs and the various proposed and existing Section 232 tariffs. Also discussed was the context underpinning Congress’ lack of involvement in recent tariff actions.

However, the issues raised during the question-and-answer period at the end of the webinar reflected how the trade community feels like it is grappling with uncertainties.

“We know that, currently, goods that do qualify are not subject to all the tariffs. But with the new rates, the 35% for Canada and the 30% for Mexico, it's unclear as to whether or not on August 1, these new rates will or will not apply to USMCA-qualifying goods,” Stampfer said.

On whether there is a difference in the tariff rate on goods from Vietnam that have Chinese inputs versus the ones that don’t, Stampfer answered: “This idea [is] around transshipping and what transshipping means. Nothing official has been published on this. There's a lot a lot of speculation on what this is actually going to mean, but a lot of people are saying that this could potentially be related to Chinese inputs, Chinese content that is being shipped to Vietnam, further manufactured and then exported to the U.S. again. It's all speculation, right now, hopefully we have information ahead of the Aug. 1 deadline.”

On this issue, Angela Lewis, Flexport’s head of customs, said: “I think when we look at the word transshipment, we don't necessarily think it actually is about the vessel and the way the vessel moves. It's probably about the content of the goods.”

She continued, “We do see, for example, in pharmaceuticals, it's actually dealing more with India. But a lot of that raw material is coming from China and then going to a third country, and maybe even incorrectly taking on that country of origin. And so we assume that's what they're trying to avoid here. But [we are] waiting for more information and more clarity. This is definitely new language that we have not seen before.”

One other uncertainty is whether the Aug. 1 tariffs, if they go into effect, will be based on the bill of lading date or the entry date.

To that uncertainty, Stampfer replied: “We have seen in the past that, in addition to that import and entered for consumption stipulation, [there is] also an export requirement. We have not seen that as of yet. It is possible that we could see something in an executive order or a Federal Register notice, but we have not seen anything regarding that yet. So it's uncertain right now as to whether or not there will be an export stipulation in addition to that entered for consumption.”

Said Lewis: “My best guess is there won't be an export stipulation. But, you know, with everything else, we wait to see [it] in the official language and how it's read, and then we interpret from there. But I would base it off the entry arrival date and not an export date.”

Another question dealt with potential tariff stacking. Flexport experts were uncertain whether the proposed tariff increases for Canada and Mexico were an increase from the current 25% International Emergency Economic Powers Act rate or if they would be stacked onto that IEEPA rate. They were also unsure whether reciprocal tariff exemptions could continue on new Section 232 investigations and tariffs.

Stampfer also said the trade community “will need to wait and see” how the Trump administration will handle reciprocal tariffs for countries, such as India, that didn't receive a letter ahead of the Aug. 1 deadline.