Today the news is all about NAFTA as developments come in on the progress of reaching a pivotal new deal between Canada, the U.S. and Mexico. Such swift changes in trade regulations are leaving many cross-border businesses scratching their heads navigating the complexity and determining the impacts on their products and services.
So, just how can you determine the impacts of changing tariffs on your products and services?
We put this question to the experts in this month’s live #TradeElite Twitter chat and got an outstanding response over the course of the hour – including: insights into the impacts of new tariffs, sources for staying up to date on the latest developments, and steps to take to ensure your contingency plan can protect your business.
Highlights of the chat are below, and you can scroll through the #TradeElite hashtag to follow the entire chat.
Moderator:
Igor Chigrin, CITP (@winglobal_igor) Export & Import Consultant, Win Global Partners – Helping Local Businesses Become #Global by providing them with information, tools, training and coaching they need to start or expand their export and import business – Richmond Hill, ON
Panelists:
Audrey Ross (@TresAudrey) Logistics & Customs Specialist at Orchard International Inc., based in Toronto, ON
Doug Bruhnke (@DougBruhnke) Founder & CEO of Global Chamber (@GlobalChamber), based in Phoenix, Arizona
Darryl Anderson (@DarrylWavepoint) Manager of Marine, Multimodal Transport & Logistics Real Estate at Wave Point Consulting, based in Victoria, BC
Cheryl Berklich (@cherylberklich) Purchasing, Materials Management, Logistis & Recovery at TAL Group, based in the Greater Detroit Area, Michigan
What are the real impacts of today’s rapidly changing trade regulations and customs environment on cross-border businesses?
A1. Not everyone agrees that will be impacts. #tariffs have been used in the past to affect the behavior, so it’s been more of a hammer – which right now it’s being perceived more like Mjolnir (Thor’s Hammer) big and bad. #tradeelite
— Seas On Fire (@cherylberklich) August 23, 2018
#TradeElite Q1 A1. There will be both short terms impacts and the possibility of longer term trade deterioration. For example, some shippers were accelerating deliveries to avoid tariffs and container lines are watching closing to realign service if demand drops.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A1 #TradeElite Frustration, confusion and even embarrassment by US companies. Most agree changes need to be made. Putting exporters, importers and consumers in the crosshairs is disappointing.
— Doug Bruhnke (@DougBruhnke) August 23, 2018
A1. The biggest impact is the overall market uncertainty. Uncertainty causes people to make impulsive fear based decisions – OR – withhold investments / plans as they deem the risk to be too high in this climate. #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
#TradeElite Q1 A1 Many of the US tariffs are entered upon goods that are relatively low values/ higher density in their nature. High value / low density goods may not be impacted as much.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A1 #TradeElite Business planning for exporters and importers beyond a few months is a lot tougher. And everyone is ALREADY busy… this adds more to the plate.
— Doug Bruhnke (@DougBruhnke) August 23, 2018
How do you stay up to speed with customs regulations and tariff changes? Where can you find the up-to-date information other than Google?
A2. I set Google Alerts to monitor changes, follow @JOC_Updates aside from good tweet content they have super photos (imprvs) my Twitter stream! U could subscribe to their website also. Follow @CBP https://t.co/h2YkLZNjVr
— Seas On Fire (@cherylberklich) August 23, 2018
A2 #TradeElite Definitely use more than google 😉 Smart folks have outside support like Dan Ujczo @danujczo and Melissa Procor @MillerProctor . In addition… https://t.co/sFDyAZiE1E
— Doug Bruhnke (@DougBruhnke) August 23, 2018
A2. Honestly – Twitter. I have loads of connections on here that work in or around government in global trade & are sharing the press releases / links to gov’t websites as they come out. Look to the #TradeElite – they are up-to-date!
— audrey ross (@tresAudrey) August 23, 2018
A2 #TradeElite Country-supported groups like @OfficialMIDA @JETROUSA @tradegovuk et al are good resources, along with @GlobalChamber , and in addition…
— Doug Bruhnke (@DougBruhnke) August 23, 2018
A2 #TradeElite strong freight forwarders can be extremely valuable, really leverage your contacts at @UPS , @EXPD_Official etc. #tariffs #TradeWar
— Doug Bruhnke (@DougBruhnke) August 23, 2018
#TradeElite Freight forwarders, especially those focusing on only one to two markets, May need to prepare themselves as they tend to be more vulnerable to political changes. Doug I agree that larger forwarders may be extremely valuable.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
In the EU at least they work based on volumes and relying on customs providers in itself can be a compliance risk #TradeElite
— Anna Jerzewska (@AnnaJerzewska) August 23, 2018
Any U.S. Government resources that keep track of tariffs and sanctions?
This guy: @tradelawyer . John provided the link to the additional $200 billion tariff proposal on China origin goods under – Docket USTR-2018-0026 the hour it was released. US Gov’t is doing press releases from USTR ( office of US Trade Representative) #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
Absolutely… US Commercial service has a link for initial research.
— Doug Bruhnke (@DougBruhnke) August 23, 2018
Is today’s cross-border business environment too complex for small and micro-businesses to get involved? What resources are out there for these groups other than those we just discussed?
A3. In my POV / experience it’s not that complex; but lots of moving parts. Getting help from https://t.co/M80EAE1Swa if you’re not an expert is critical & if it’s in the budget getting outside support, like @DougBruhnke suggested. #TradeElite https://t.co/GPsglTuqci
— Seas On Fire (@cherylberklich) August 23, 2018
#TradeElite Q3 A1 @FITTNews , @ExportDevCanada and provincial ministries of small business. The @BoardofTrade Trade Accelerator and other similar programs are excellent.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A3 #TradeElite This question makes me sad 🙁 Despite best efforts by government to screw everything up, NO… SME’s can handle exporting and importing, with a few key resources and determination!! Over 85% of business opportunity is outside #Canada and the US… it’s worth it!!
— Doug Bruhnke (@DougBruhnke) August 23, 2018
We agree! Businesses of any size and shape CAN do it – you just need to invest in the right people and #training. Get the know how and you can #goglobal! #TradeElite
— FITT (@FITTNews) August 23, 2018
A3. No more complicated than b4. You always had to figure out H.S. Code / Customs Duties / Taxes / Import Regulations / Currency Fluctuations / INCOterms – now you just have to dbl check that H.S. Code doesn’t have added Tariffs. (Hire a @FITTNews CITP!) #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
If your supply chain is impacted, what are your next steps? Find new suppliers? Adapt products/services? Strategy impacts?
#TradeElite Q4. A1 What shippers should not do:Don’t try and reclassify to a new harmonized tariff code that’s not on the list. Shipper should not break the law when attempting to avoid tariffs.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A4. If supply chain is impacted, tap into your professional network to explore new suppliers. Industry associations can be great sources of info in these cases too. #TradeElite
— Jeffrey Shepherd (@JeffMShepherd) August 23, 2018
#TradeElite Q4 A4 What shippers can do (short term): Accelerating deliveries to avoid tariffs was a strategy worth pursuing. Some evidence that shippers have been using this tactic. There is a need to determine whether shippers have the necessary storage and logistics capacity
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A4. We are agile as we have built relationships with a variety of partners in diff markets & can adjust for new projects. That US Origin palette is now being made in Cda. Sponges in China, being moved to Taiwan. SME’s need to think ‘agility’ #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
#TradeElite Q4 A4 What shippers can do (Longer-term): Supply chain contingency planning & sensitivity analysis. Identify inefficiencies & negotiate contracts
Shippers could look at sourcing product from alternative countries. Maybe you can switch the volume to that other country.— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A4.1 It’s not a necessity 2 resource, lack of human resources have hit my suppliers much harder v. #tariffs or #customs regs chgs.
In my POV it’s affected leadtime & some portion of the cost structure.
Companies always need 2 b managing risk no matter the reason. #TradeElite https://t.co/yFWNNqqKcm
— Seas On Fire (@cherylberklich) August 23, 2018
A3 A4 #TradeElite SMEs need to know that there’s a big, wide and deep world out here of really smart people. They may not be able to hire them, but tapping into them right now could make a whole lot of sense!! #tariffs #TradeWars #export
— Doug Bruhnke (@DougBruhnke) August 23, 2018
Inspired to learn more about #customs #compliance? We have a workshop for that! Keep your business running efficiently by recording, filing and storing everything you need to maintain efficient day-to-day operations. Start today! https://t.co/KkL5WK0MuY #TradeElite #training pic.twitter.com/B8ACy1iOt3
— FITT (@FITTNews) August 23, 2018
What do you need to think of in terms of communicating and preparing your customers for any impacts due to changing customs/tariffs?
#TradeElite Q5 A5. It really depends on what line of business you are in. If you are in the B2B segment of the market early communications with clients is essential because they will ask. If B2C first determine how much of the cost you will absorb.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A5 #tradeelite Transparency is important now. Let them know way ahead of time what could happen down the road with price. Don’t surprise them. #tariffs #tradewars
— Doug Bruhnke (@DougBruhnke) August 23, 2018
A5. From a B2B perspective, In terms of the effect of #tariffs, it’s one of the costs of doing business. The expectation is the supplier needs manage thru it like any other risk & no pass on the risk to the whole supply chain unless the effect is significant. #tradeElite https://t.co/L9k0aeDwBa
— Seas On Fire (@cherylberklich) August 23, 2018
The issue is that the world via WTO / FTA’s had been trending to lowered tariffs. High Tariffs discourage business (not eliminate the possibility, but is does discourage biz). Then new US admin comes in & now we are in a trade war… #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
Should you have a contingency plan to address possible future tariffs/customs changes? What does that look like?
#TradeElite Q6. A6. Supply chain contingency planning should sensitivity analysis. Determine if price impacts of tariffs can be offset by decreases in logistics cost. Factor, in relationships with suppliers and service providers.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
#TradeElite Q6. A. 6 Consider the impact of possible longer lead times for new suppliers overseas, amount of impact on working capital and supply chain finance solutions and the need to secure new and different logistics arrangements.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
#TradeElite Shippers seeking to reduce exposure to the tariffs could look into compliant ways you may be able to reduce the customs value on which duties are paid.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A6 #TradeElite This is tough stuff but necessary work. Get your team together and brainstorm options. You can’t be ready for every scenario, but the earlier you think about it, the more options you’ll have. #tariffs #TradeWar
— Doug Bruhnke (@DougBruhnke) August 23, 2018
A6. You def want to be aware of the global market, but it’s hard to plan for – surprise we’re putting 25% (TWENTY-FIVE) percent tariff on goods that were almost at 0% duties. Onshore your manufacturing in 4 months to avoid tariffs. Hard to prepare for this! #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
A6.#TradeElite in my POV, this is part of any good risk mitigation strategy. Offsets are one strategy – but it really depends on the industry. In my world today (one of my friends said in the middle of crisis) “u have to be fluid because flexible is too rigid!”
— Seas On Fire (@cherylberklich) August 23, 2018
Are we witnessing a “new normal” in terms of trade policy, regulations changes or will things settle down in the not-so-distant future?
#TradeElite Q.7 A.7 Uncertainty is a fact of life for international business. Being educated on how to address a wide spectrum of problems & opportunities means that companies don’t have to rely on either the “old normal” or “new normal”.
— Darryl Anderson (@DarrylWavepoint) August 23, 2018
A7. I would like to see people return to courteous fair trade in the very near future. This is being driven by greed & by people who are insulated from uncertainty & who gain by stifling competition. We need leadership that thinks big picture. #TradeElite
— audrey ross (@tresAudrey) August 23, 2018
A7 #TradeElite YES this is a new normal at least for the next year. So buckle up ladies and gents, and be ahead of the curve and not a laggard. What doesn’t kill us makes us stronger? #tarrifs #tradewars
— Doug Bruhnke (@DougBruhnke) August 23, 2018
Read the rest of the chat and join future discussions by following the #TradeElite hashtag. And stay tuned for the next #TradeElite chat, coming up Thursday, September 20 at 2:30-3:30PM ET, and if you haven’t yet, join us on Twitter at @FITTNews.
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