A year after tariffs on more than 1,300 Chinese goods first sent importers reeling, the news supply chain managers everywhere have been dreading is finally here.
Last week's tariff increase from 10 percent to 25 percent, which went into effect May 10, gave organizations less than a week to plan for the ensuing shockwaves.
Although the future of many supply chains remains murky in light of this news, one thing is clear: the importance of a strong customs compliance program. By combining the right technology, people and processes, importers can help to minimize financial and operational impacts as they navigate a new reality for global trade.
The U.S. bombshell announcement comes after months of negotiations, including recent talks in China after which President Trump hinted the two sides were nearing a deal. As news of the latest move from Washington sends tremors through the economy, supply-chain managers are taking stock and assessing the tremendous impact to their bottom lines.
While shippers and downstream suppliers have largely absorbed the 10-percent tariff hike, an increase to 25 percent would have huge financial implications, while also likely requiring customers to share the economic burden. And beyond the U.S.-Chinese trade battle, news of $11bn in potential tariffs on European Union products is just the latest in a string of brewing trade tensions around the globe.
After breaking import records last year as they stockpiled inventory to beat impending tariffs, many businesses have delayed replenishment to avoid a potential tariff hike when goods reach land. Now, tariff increases are coming as businesses face diminishing inventory levels and strong consumer spending. The Global Port Tracker forecast a 6.9-percent year-over-year increase in April imports, with May expected to climb 2 percent from the previous year. This latest news will make cost efficiency more critical than ever, as the 2019 peak shipping season approaches.
No matter what the future holds for global trade, putting the right strategies in place now can help importers streamline operations, avoid regulatory fines and penalties, and reduce spending while still meeting customer expectations. Here’s where to start.
For importers steeling themselves for the latest turn in the tariff saga, preparing now can help them stay competitive later. Businesses that invest in a technology-enabled, compliant supply chain will be better positioned to handle whatever comes next.
Lori Fox is vice president of customs brokerage services for American Global Logistics, a provider of international supply chain and logistics services and technology.
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