Trade wars active response checklist

Ten steps to guide your company through the new trade landscape
Trade wars active response checklist

Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by STTAS, a UPS Company, UPS Trade Management Services, Inc., or United Parcel Service of America, Inc. © 2018 STTAS, a UPS Company. All rights reserved. This document is for informational purposes only. It does not constitute legal or
business advice. Do not rely on this information without performing your own research and consulting with your own legal counsel. Your use of this information is at your own risk. In no event will STTAS, a UPS Company, UPS Trade Management Services, Inc., or UPS be liable to any person or entity for any damages under any theory of law for any errors in this information.
Changing duty rates are sending many companies
scrambling
International trade tensions are rising, as are tariffs on a growing list of products. Your
CEO is likely asking, “How will these tariffs impact our company’s bottom line?” and
“What do we do to mitigate their effects?” You want to answer those questions and
more, but you may not know where to start.
We can help.
At STTAS, a UPS company, we’ve put together a ten-step checklist to help you assess,
anticipate, and mitigate the new increased duties for goods coming into the US and
around the globe.
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Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly
authorized by STTAS, a UPS Company, UPS Trade Management Services, Inc., or United Parcel Service of America, Inc. © 2018
STTAS, a UPS Company. All rights reserved. This document is for informational purposes only. It does not constitute legal or business
advice. Do not rely on this information without performing your own research and consulting with your own legal counsel. Your use of
this information is at your own risk. In no event will STTAS, a UPS Company, UPS Trade Management Services, Inc., or UPS be liable
to any person or entity for any damages under any theory of law for any errors in this information.
The world is shifting paradigms
in tariffs and trade relations.
You can wait and see what
happens, or you can proactively
build a strategy that capitalizes
on the new normal ahead of
your competition.
We’re here to help you turn this
challenge into an opportunity for
growth.
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The first critical step is figuring out how big of an effect these changes will have on your
company. Unfortunately, this is unlikely a one-and-done process, but will need to be
repeated with each new wave of tariffs. You may also need to work with your suppliers to
see if their prices are changing. The goal is to determine which of your products are
impacted, how much their costs will change, and the overall effect on your bottom line.
One of our customers was fairly certain that the first wave of section 301 tariffs wouldn’t
have a substantial effect until she completed a more thorough evaluation. “We grossly
underestimated,” she said, “the effect is millions more than we initially thought.” Even
though it was bad news, she won’t be blindsided and can enlist the help of her team to
develop response strategies.
1. Assess the impact of changed tariffs
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2. Verify your product classifications
How are your products being classified? It may be worth having your classifications
reviewed by specialists to help ensure they’re completely accurate. You don’t want to pay
increased tariffs on products that should be classified as something else.
As an analogy, consider how you handle different physical illnesses. A minor cold could
be treated at a local pharmacy clinic, but when you have a serious problem, you need an
experienced specialist doctor. At STTAS, we’re classification specialists, and we’ll assist
you with an in-depth analysis that will help ensure your products are classified correctly
– so you don’t pay duties you don’t need to pay.
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Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by STTAS, a UPS Company, UPS Trade Management
Services, Inc., or United Parcel Service of America, Inc. © 2018 STTAS, a UPS Company. All rights reserved. This document is for informational purposes only. It does not constitute legal or business
advice. Do not rely on this information without performing your own research and consulting with your own legal counsel. Your use of this information is at your own risk. In no event will STTAS, a UPS
Company, UPS Trade Management Services, Inc., or UPS be liable to any person or entity for any damages under any theory of law for any errors in this information.
3. Validate product origin, work content, and
valuation
A product’s country of origin seems like a fairly simple piece of information, but it can
actually be quite complicated. Determining what percentage of a product’s value was
added, or where it changed product classification is important for many of the new tariffs
because they depend on the country of origin. We can help make sure the country of
origin is correct to see if higher tariffs may or may not apply.
In addition to country of origin, the valuation of your product is another factor that may
have a large impact. Sometimes there can be additional factors that influence the value
of products. Does the First Sale rule apply? Are Assists involved and handled correctly?
We’ll walk through the valuation process to help make sure it’s correct.
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4. Ensure the finance side of importing is in
order
If your duty payments are increasing, then there’s several financial factors that you may
need to consider. First, make sure you have sufficient coverage on your customs bond.
Also, if you don’t have recurring payments via ACH set up with Customs, look into that
as well. UPS Customs Brokerage can help you get set up with ACH payments to customs,
and UPS Capital can help you with customs bonds.
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Foreign Trade Zones (FTZs) and bonded transport are tools that allow you to bring
products into the US and either export them or use them to manufacture another
product before officially importing to avoid paying the higher duty rate in a lawful
manner. For example, if you bring products into the US, store them in an FTZ, and then
export them to Canada, then you may not have to pay any duty on that product. FTZs
and bonded transport often cost extra because of the additional security, administration,
and work that goes into them, but they can reduce your costs overall if it means avoiding
higher duty.
5. Consider FTZs and bonded warehouses
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6. Investigate duty drawback
If you export products, then you may qualify for duty drawback – the refunding of duties
and fees paid on imported goods after they’re exported. Whether the new tariffs will
qualify for drawback is still an evolving situation*, but we can guide you through that
process and look at your overall trade for potential duty refunds through drawback.
Because the rules for drawback recently changed, qualification for drawback is now
broader than before. That means you may be able to bring significant savings to your
bottom line. Even if your company doesn’t import or export, we can work with your
customers and suppliers to get the drawback for which your products may qualify.
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*As of July 6, 2018, Section 301 duties are eligible for drawback, whereas
Section 232 Steel & Aluminum additional duties are not eligible to drawback.

Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by STTAS, a UPS Company, UPS Trade Management
Services, Inc., or United Parcel Service of America, Inc. © 2018 STTAS, a UPS Company. All rights reserved. This document is for informational purposes only. It does not constitute legal or business
advice. Do not rely on this information without performing your own research and consulting with your own legal counsel. Your use of this information is at your own risk. In no event will STTAS, a UPS
Company, UPS Trade Management Services, Inc., or UPS be liable to any person or entity for any damages under any theory of law for any errors in this information.
7. Evaluate domestic suppliers and free trade
agreements
If the price of some of your products suddenly increased 25% or more, is a domestic
supplier suddenly cheaper? What about Mexico, Canada, or other countries where the US
has preferential or free trade agreements in place? Previous cost-benefit analyses made
years ago in determining your current supply base should be reopened and updated.
Cost savings may be as simple as sending a purchase order to an alternate supplier.
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8. Explore filing a request for exclusions
Some companies are able to avoid some of the new tariffs through an exemption
process. Earning an exemption is possible, although the first indications suggest that
more companies are being refused than accepted. It’s important to approach the process
with all your homework complete and paperwork in order. We can help you through the
process, and based on what we’re seeing with other clients, advise you on how to
proceed.
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You should work with your product development group and closely examine what you’re
importing that falls under the higher tariffs. Could you bring in the components and
manufacture the product in-house? If the product is a component, could you import the
finished product instead? If moving up or down the product’s lifecycle gets you to a tariff
code that has a lower duty, it may make sense to change what you’re importing.
9. Examine tariff reengineering opportunities
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10. Start rearranging your supply chain
After implementing what mitigation strategies you can, you may still face large increases
in duties from the changed tariffs. These increased costs may justify rearranging your
supply chain. You may want to ship products directly to export countries and avoid
importing them into distribution centers located in high tariff countries. More difficult
changes include changing your supplier base to a domestic or alternate country, or even
moving production in-house.
These plans require significant research and hard work to develop, but they can pay off
by giving you a competitive edge in the new trade landscape. STTAS and UPS can guide
you through best practices that can help you achieve your goals in cost reduction,
customer satisfaction, and growth.
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Trade wars active response checklist
1. Assess the impact of changed tariffs
2. Verify your product classifications
3. Validate the rules of origin and work
content regulations
4. Ensure the finance side of importing
is in order
5. Consider FTZs and bonded
warehouses
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6. Investigate Duty Drawback
7. Evaluate domestic suppliers
and free trade agreements
8. Explore filing a request for
exclusions
9. Examine tariff reengineering
opportunities
10.Start rearranging your
supply chain

There’s a lot of work to do…
…and most companies don’t have the
luxury of waiting until the dust settles
to react.
From tariffs and tweets, to Beijing and
Brexit, we can help you turn the changing
landscape to an opportunity for growth.
Let’s begin. BUSDEV@STTAS.com
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Trade wars active response checklist

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