Bypassing Trumps Trade War - How to get creative with your Harmonization codes

Bypassing Trump’s Trade War: How to get creative with your Harmonization Codes

Trump’s Trade War means higher import tariffs on specific Harmonization codes

On the 8th of March, with­out prop­er notice to his allies, Trump released 2 pres­i­den­tial procla­ma­tions that increased the tar­iff on all imports of steel and alu­minum into the USA, except­ing Mex­i­co and Cana­da, by 25% and 10% respec­tive­ly. In response to this, on the 18th of May, the Euro­pean Union con­tact­ed the World Trade Orga­ni­za­tion (WTO) to inform them that the EU would be rais­ing tar­iffs on a vari­ety of goods com­ing from the USA.

Trump also went after Chi­na “Unit­ed States is tak­ing action to con­front Chi­na over its state-led, mar­ket-dis­tort­ing forced tech­nol­o­gy trans­fers, intel­lec­tu­al prop­er­ty prac­tices, and cyber intru­sions of U.S. com­mer­cial net­works.” The USA imposed a 25% tar­iff on 50bn worth of goods: mak­ing an exten­sive list of tar­get­ed har­mo­niza­tion codes from Chi­na. Chi­na retal­i­at­ed with its own list: rais­ing tar­iffs on 128 US exports into Chi­na worth about 3bn. After that, Trump is now threat­en­ing a sec­ond list “in light of China’s unfair retal­i­a­tion”: rais­ing tar­iffs on 100bn worth of goods.

And that’s how this glob­al trade war start­ed.

Finding the Loop Holes

Trade wars have been going on for most of human his­to­ry, and clever busi­ness­es have been find­ing ways around them for just as long.

Take the exam­ple of the Ford Tran­sit Con­nect. Ford is an Amer­i­can com­pa­ny but they made this par­tic­u­lar truck in Turkey. To get around the import tar­iffs placed on car­go vans, Ford would import its vans into the US with seats in the back which let them clas­si­fy them as pas­sen­ger vans and so pay a much low­er tar­iff. Once States-side Ford would then take the seats out and sell them as car­go vans.

The Ford Transit Connect is an excellent example of finding a loop hole to go around a higher tariff

The trade wars of today are no excep­tion. So how can you get cre­ative with your Har­mo­niza­tion codes to avoid the new tar­iffs?

First, you need to find out which of your prod­ucts are affect­ed when import­ing into Chi­na from the USA, into the USA from Chi­na, and into the EU from the USA.

Then make an excel sheet using the World Trade Organization’s Tar­iff Down­load Facil­i­ty.

Select Chi­na, EU, and the USA for your reporters. Then, select the Har­mo­niza­tion code pre­fix that applies to you. Down­load the Excel file. Now open it and edit it to high­light the har­mo­niza­tion codes affect­ed by the trade war as list­ed in the nation­al tar­iff lists pub­lished respec­tive­ly by Chi­na, the EU, and the USA.

This is an example of the excel document produced by the WTO program

Final­ly, look care­ful­ly at high­light­ed har­mo­niza­tion codes and mark down the near­est non-high­light­ed adja­cent codes. These Har­mo­niza­tion num­bers rep­re­sent the clos­ets relat­ed har­mo­niza­tion cat­e­go­ry with­out a tar­iff that you could poten­tial­ly reclas­si­fy your prod­uct under. Depend­ing on the actu­al prod­uct you can now make a case with the par­tic­u­lar nation­al cus­toms office to reclas­si­fy your prod­uct under the har­mo­niza­tion code with the less­er tar­iff. You may have to slight­ly adapt the pack­ag­ing or the prod­uct itself to help it fit bet­ter in this cat­e­go­ry.

If you are import­ing Chem­i­cals or plas­tics into the EU from the US and you are a bit lost as what to do and how to adapt to the new tar­iff land­scape then get in con­tact with us. With CAPLINQ’s order ful­fill­ment ser­vices, we help you get cre­ative with your Har­mo­niza­tion codes to find the right loop­holes and the new prod­uct cat­e­gories for your imports. Get in touch with us if you have an urgent ques­tion!

About Chris Perabo

Chris is an energetic and enthusiastic engineer and entrepreneur. He is always interested in taking highly technical subjects and distilling these to their essence so that even the layman can understand. He loves to get into the technical details of an issue and then understand how it can be useful for specific customers and applications. Chris is currently the Director of Business Development at CAPLINQ.

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