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 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.
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!
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