Navigating Section 301 Tariffs and Optimizing Duty Recovery for a U.S. Importer
Client Background
Our client, a mid-sized U.S.-based importer, faced significant challenges due to the imposition of Section 301 tariffs on goods sourced from China. The company struggled to manage the increased costs and sought assistance in reducing its tariff burden while maintaining compliance with U.S. trade regulations.
Challenges
Tariff Impact: The client incurred significant financial strain from the 25% Section 301 tariffs on their imported goods.
Duty Drawback Program: The company had limited knowledge of the duty drawback program and its potential benefits.
Tariff Engineering: There was an opportunity to reclassify products under a different HTS code, but there was a lack of expertise in assessing feasibility.
Compliance Concerns: The client must ensure all solutions fully comply with U.S. Customs and Border Protection (CBP) regulations.
Solutions Provided
1. Comprehensive Tariff Strategy Development
- We analyzed the client’s import data to identify products affected by Section 301 tariffs and associated costs.
- Recommended using bonded warehouses and Foreign Trade Zones (FTZs) to defer or eliminate duty payments.
2. Duty Drawback Program Implementation
- Conducted a feasibility assessment for recovering duties on exported products.
- Provided training on the documentation requirements for filing drawback claims, ensuring compliance with U.S. Customs regulations.
- Collaborated with the client’s customs broker to prepare and submit drawback claims.
3. Ongoing Compliance Support
- Developed a compliance manual tailored to the client’s operations, outlining best practices for recordkeeping, tariff classification, and drawback claims.
- Delivered training sessions for key staff on compliance with CBP regulations and updates on Section 301 tariff exclusions.
Results
Improved cash flow: The client deferred duty payments by using FTZ and bonded warehouse until the products were sold or used for production.
Duty savings:Recovered duties paid on goods imported from overseas, which were later used on products exported through the duty drawback program within the first six months.
Operational Efficiency: The client established a streamlined compliance program, reducing errors and ensuring smooth interactions with CBP.
Risk Mitigation: With our ongoing compliance support, the client confidently navigated regulatory requirements and avoided penalties.
If your business faces similar challenges in U.S. import and export compliance, contact us today to discuss how we can deliver tailored solutions to meet your needs.
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