By Guest Blogger, Albert Wang, IGT Service
Note from eFulfillment Service: We invite our partners to write for our blog, introducing our audience to new ideas, tips, advice and different points of view. IGT Service has been a valuable resource for our colleagues and clients for many years.
What are the biggest changes coming up for 2020 in the customs arena?
China Trade War Tariffs – will tariffs be further reduced/removed?
Only stage one of the China-U.S. trade deal has been signed – so far, the US has agreed to cancel the tariffs originally planned for 12/15/19, and also has agreed to cut from 15% to 7.5% the tariffs imposed in September on USD120 billion of Chinese imports, while it will leave in place 25% tariffs on USD250 billion in imports. Everyone is now watching what will happen next in this trade deal saga.
What are the most common mistakes people make when trying to import into the US?
The most common mistake IGT sees is a failure to apply the proper country of origin markings on imported products and point-of-sale packaging. Country of origin markings must be permanent, legible, and conspicuous. Failure to do so could result in costly fines and/or rework fees if the cargo is inspected by USCBP and found to violate the country of origin markings requirement.
And the second error would be inconsistent information on shipping documents. All shipping documents (including air waybills, ocean bill of ladings, commercial invoices, packing lists) should have matching information throughout including commodity descriptions, shipper name/address, consignee name/address, etc. Failure to do so can result in triggering customs examinations/inspections and delay customs release processing.
How does using a customs broker, like IGT, help people save money?
By working with a customs broker such as ourselves, the importer can better educate and prepare themselves to meet all the import/customs requirements needed for a smooth import. Failing to do so can result in penalties with U.S. Customs and Border Patrol (USCBP) directly, unnecessary storage charges, rework fees, and even possibly result in customs seizure/re-export.
Even in the event that the importer runs into a customs related issue, having a customs broker on hand will help ensure that the issue is resolved as quickly as possible and avoid any costly downtime and lost sales. Customs brokers can also provide cost saving options such as annual continuous customs bonds and time saving options such as direct duty withdrawal setup with USCBP.
U.S. Customs requires that all import shipments valued at $2,500 and above are required to be backed by a customs bond when clearing through customs – this is a guarantee to the U.S. government that duties/taxes and any possible customs penalties will be paid if incurred. The two choices are either single entry bond (single use, per shipment) or annual customs bond (valid for a period of one year and will cover all bond transactions during this time). Annual (continuous) customs bonds are typically recommended for importers that are bringing in roughly more than 3-4 ocean shipments (or 6-7 air shipments) valued at over $2,500 commercial value each over the course of a year. If the importer is bringing in higher commercial value shipments, they may be able to benefit from an annual customs bond with even fewer shipments. With an annual bond in place, once the importer has shipped roughly more than 3-4 ocean shipments (or 6-7 air shipments), they will start saving money with subsequent shipments compared to single entry/ISF bonds.
Direct Duty Withdrawal
The importer must have a U.S. bank account and an application must be submitted to USCBP to request the ability to obtain the direct duty withdrawal option. If approved, USCBP will be able to deduct import duty due for any shipment directly from the importer’s account and avoid any situation where duty payment may hold up the release or clearance of shipment. This also helps many importers keep good accounting records of their duty payments, separate from all other accounting – important for auditing/reporting later. This is usually most beneficial for importers that are frequently bringing in shipments on a consistent basis. Importers that do not bring shipments in very often typically do not opt for this.
Albert Wang is the Sales Manager at IGT Service. IGT is a full service customs brokerage and shipping/logistics provider based in the Chicagoland area with over 20 years’ experience assisting clients with customized supply chain solutions to fit their specific needs.