Global Trade U.S. Tariffs

Question 1

1. Which businesses are most impacted by the Trump tariffs?

Answer

Businesses that import goods from overseas, especially from China, will feel the greatest impact. If your business regularly buys products from foreign suppliers that are imported into the U.S., these tariffs may increase your costs. This applies to goods that are imported as part of a production or manufacturing process and only sold at a later stage, and goods that are bought and sold directly to end customers.

Question 2

2. Are there legitimate ways for businesses to avoid paying these tariffs?

Answer

Yes, but legitimately avoiding tariffs usually involves changing your supply chain. For instance, you could source products from countries that aren’t subject to tariffs or buy similar goods manufactured in the US or other exempt locations. However, if the goods are acquired from overseas from a country subject to tariffs and not eligible for any exemptions, you will not be able to avoid paying them upon import.

Question 3

3. Can businesses legally reduce the tariffs they are required to pay?

Answer

In certain situations, businesses can reduce tariffs by applying for tariff exclusions, using Free Trade Agreements, or adjusting the way products are packaged or classified.

The most impactful way to reduce the tariffs you pay is by reducing the value of the shipment. Tariffs are calculated by applying a percentage to the value of the goods. In the case of eCommerce, if the goods have already been sold, then the law says you must use the selling price. However, if you can import the goods prior to a sale – for example, by using a local fulfilment warehouse in the USA, or by importing your goods in bulk using a “B2B” import methods – you can use the cost price of goods and significantly reduce tariffs payable.

Question 4

4. What is the practical process for paying these tariffs when importing goods?

Answer

Tariffs are typically paid at the U.S. border. Usually, your shipping carrier or customs broker pays these fees on your behalf and then bills you directly. This means you don’t handle the payment yourself at the border - it's part of the import paperwork managed by your logistics provider. It is vital that you check with your provider to ensure they will facilitate this for you, and the additional costs involved.

Question 5

5. Have any specific countries, industries, or product categories been exempted from the Trump tariffs?

Answer

Yes, certain products, industries, or countries might have exemptions or exclusions. These exemptions change periodically based on trade negotiations, so it's important to check regularly if your products might qualify for exemptions.

Question 6

6. Does the US de minimis rule for imports still apply despite the new tariffs?

Answer

Yes, the US de minimis rule, which allows shipments valued at $800 or less to enter tariff-free, still applies for imports from all countries other than China. However, keep an eye on updates because rules can change with ongoing trade policy decisions.

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Question 7

7. How does U.S. Customs determine the country of origin and the correct tariff rate for imported goods?

Answer

U.S. Customs looks at documentation provided by your supplier, including commercial invoices and packing lists. These documents state where goods were made and their value. Customs uses this information to apply the appropriate tariff.

Question 8

8. Are eCommerce businesses responsible for tariffs on products shipped directly to customers from overseas suppliers?

Answer

Usually, yes. If you're the importer of record (meaning you arrange for the goods to enter the U.S. market), you'll typically bear responsibility for tariffs - even if the products ship directly from your overseas supplier to your customers.

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Question 9

9. How do the Trump tariffs affect pricing and competitiveness for eCommerce sellers in the U.S. market?

Answer

Tariffs increase the cost of imported goods, meaning you'll likely have higher expenses. You may have to raise your prices, which can affect your competitiveness. Alternatively, absorbing the costs could reduce your profit margins, so careful pricing strategies are essential.

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Question 10

10. What documentation should eCommerce sellers maintain to demonstrate compliance with tariff regulations?

Answer

Always keep clear records of invoices, shipping documents, customs declarations, and proof of payments for at least five years. Having organised documentation can help you demonstrate compliance during audits or inspections.

Question 11

11. If goods are returned to an overseas supplier, can eCommerce sellers recover tariffs already paid?

Answer

In some cases, yes. If imported goods are returned or exported without being sold or altered, you might qualify for a drawback or refund on tariffs. This requires specific paperwork and processes, so consulting a customs professional is advisable.

Question 12

12. If I stop selling into U.S. states because of the tariffs, what happens with my sales tax obligations?

Answer

If you no longer intend to sell into a state where you currently have sales tax obligations (known as "nexus"), you may be able to stop filing tax returns there. However, each state has its own specific rules.

As long as you continue to make sales in that state, you must collect sales tax and file tax returns. Even if you stop making sales entirely, you must continue filing returns (known as "nil returns") as long as your sales tax registration remains active. Failing to submit these nil returns can result in penalties.

To fully stop filing returns, you must formally apply to deregister or deactivate your sales tax registration. The procedure for deregistration varies significantly from state to state - some states processd deregistrations quickly, while others may take several months. During this time, you might still be required to submit nil returns until the deregistration is confirmed.

Global Trade U.S. Tariffs

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