How Importers Can Stay Ahead of Tariff Disruptions

Resources Mentioned

CSMS (Cargo Systems Messaging Service)

https://www.cbp.gov/trade/automated/cargo-systems-messaging-service

NCBFAA (National Customs Brokers & Forwarders Association of America) https://www.ncbfaa.org/

Sandler, Travis & Rosenberg (Trade law firm) 

https://www.strtrade.com/

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Transcript

Aaron: Welcome back to an emergency episode of the B2B Uncut podcast sponsored by OroCommerce.

Why is it an emergency? Well, let's see. We're recording this on Thursday, April 10th. This is a couple of days after Liberation Day. So I'll let you all who are listening do the math on why this is an emergency podcast.

We're doing something we've never done before. One, an emergency podcast. Two, bringing back a guest who we just had on the podcast, Jack Moberger from Doc Unlock, who was previously on mere weeks ago to talk about B2B trade tariffs.

The company that he is at, Doc Unlock, does AI-powered digitization for customs brokers and freight forwarders. And we sort of touched lightly on the issue and topic of tariffs, because there was already, I think, some churn—some froth—in the market back even a few weeks ago about this very topic.

I think that if you were to play the little flashback sound from a '60s sitcom with the harp, and we were to go back, you said—I'm going to quote you here and hopefully we can cut in the audio from the last episode—but you said: every time a major tariff policy changes or a new trade restriction comes into play, it sends shockwaves through the brokerage and freight forwarding world. And that's what we're seeing now.

You said brokers suddenly become the most in-demand people in the room.

Jack: True. Fact check: absolutely true—and very happy to be here again.

Aaron, I'm actually just coming off of the last day of the NCDFAA annual conference, which… could not have been at a—well, it depends who you ask. If you ask the customs brokers that were there, they would have said that may be the busiest possible time that could have been.

But I think everyone was very excited to be there. This is the National Association of Customs Brokers and Freight Forwarders. Of course, basically every single person impacted most by these rules when they change.

So yeah, coming off some great discussions this week, and we definitely got some insight into what's going on these days.

Aaron: If you have a really good grasp on the context and a really good grasp on the timeline, skip ahead—we’ll put the timestamp for the “what do you need to do” section. Because there is some real actionable intelligence coming from Jack on this podcast.

So take it away. Walk us through the context of what’s going on, the timeline, and then what we do about it.

Jack: Yeah, absolutely. Thanks, Aaron.

So yeah, I want to start by just helping folks orient themselves in the information space because it’s very hectic, it’s very volatile. It’s also stressful—financially—for a lot of folks. And there’s just a lot going on out there. It’s hard to disambiguate what the real insight is.

First: the news. It’s an okay place to hear that something is happening. It is a terrible place to understand what is happening.

And I just want to kind of hierarchy-rank a couple of sources for you.

So: the headline will tell you something’s coming. You should generally be looking out for news when you hear that something is about to happen. But you're not going to get any clarity until two other things happen. And generally, over the last month, this is how it’s played out:

• First, the headline comes out.
• Then there’s an executive order.

So whether it’s reciprocal tariffs—quote-unquote “Liberation Day”—whether it’s the steel and aluminum stuff, or the auto parts stuff, it starts with an executive order.

Then you'll have a couple of folks who are sort of qualified to pontificate, who can help you maybe get a sense for what’s coming. There are really only two sources for that.

One is the NCBFAA. You can follow them on LinkedIn. There are tons of folks within that organization in leadership. This is the group that associates and lobbies for the customs brokers and freight forwarders. They are very high context, and they put out announcements all the time.

The second group is the trade attorneys of the world. The best known is Sandler, Travis & Rosenberg. They also publish quite a bit of content. And when something happens, they’ll usually have a post soon after on how folks could potentially interpret it, or what may be coming.

Even then, though, these folks are very reticent to speculate. The only true source of what’s going to happen on customs enforcement is... customs.

And they actually have a notification system—it’s called CSMS. You can sign up for it and start getting emails. Some of them are very technical in nature and talk mostly about HS codes, how certain goods should be classified, or how codes should be applied to them.

But when big announcements happen—so on Liberation Day, for example—you’ve got a sort of announcement, some charts, people talking in front of an audience... but there are lots of questions after that.

Jack: Those questions are generally answered only by the CSMS notification that comes out with Customs’ true instructions. Until that comes out, your broker, your forwarder—almost anyone—is unlikely to have a certain answer. And oftentimes, waiting is really the only thing they can do too.

So having the space to keep executing while they wait is very helpful. Things are moving super quickly out there right now. There are tons of “experts.” You know, many people will claim to know what’s going on. But if they're not a licensed customs broker, if they're not a U.S. Customs and Border Protection employee, or a trade attorney—I would definitely stay away.

Aaron: Perfect advice. And just for those listening, we’ll put some of the acronyms you mentioned into the show notes, because you went through them pretty quickly.

So—the NCBFAA is the U.S. organization representing customs brokers, freight forwarders, non-vessel operating carriers, and so on. We also talked about Sandler, Travis & Rosenberg as a representative example of international trade attorneys. We’ll link to them too. And finally, CSMS—that's the Cargo Systems Messaging Service operated by CBP (Customs and Border Protection).

So we’ll make sure all those links are in the show notes in case the acronyms flew by. Sorry to interrupt—please continue.

Jack: No worries. Yeah, things are moving fast these days.

So in that light, let’s go through a bit of a review of just what’s happened between the beginning of April and now. We'll start in late March, when the 232 tariffs for steel and aluminum came online. This was really the first time we had insight into how those tariffs were going to apply to goods from many different nations.

The reason I bring it up is because it really complicated things for anyone trying to clear entry. Most of what you buy might have some metal component in it. And those metal components are what you would call a steel or aluminum derivative.

So if there's steel or aluminum in a product, then what was previously classified one way needs to be broken out. The metal content needs to be declared, and now there’s a duty that has to be paid. Because of that, it got much slower to process entries. A lot of folks probably noticed that brokers were starting to move much more slowly at that time.

Then, very quickly after that, we had the executive order on country-specific tariffs—also known as Liberation Day, or reciprocal tariffs. That happened on April 2nd. But it didn’t actually go live on that day.

So for a few days, everyone was waiting for a Customs email, which came later. That told folks how to actually apply the tariffs. And then you had 4,000–6,000 different software platforms out there, as well as Customs themselves, all needing to implement the codes to allow people to actually process those tariffs.

Jack: What drives the hectic nature on the implementation front is that—right now, at least—there are very short timelines between the announcement and the implementation. And this puts a ton of providers across the entire public–private partnership in a crunch.

Then on April 3rd, we had a 25% tariff on imported automobiles. This adds even less clarity to the situation with all these country-specific tariffs, because the steel and aluminum in the automobile tariffs can be applied across lots of different nations.

The Customs and Border Protection program started collecting tariffs on April 5th. Then on April 9th, the Chinese retaliated. And that same day, we saw an announcement clarifying that the reciprocal tariffs would be paused for 90 days and reduced to 10% for all countries while negotiations take place. Meanwhile, the goods coming from China were bumped to 125% of the cost of the good.

Since then, there’s been a lot of pushback. Tons of people are running around like chickens with their heads cut off. And we didn’t even get guidance on how to implement any of these reciprocal tariffs until April 10th from Customs.

So the reason I’m walking through this timeline is, one, it probably gives you a sense for why things feel so hectic right now. Two, it might give you a sense for the biggest factors that could impact you from a tariff perspective.

But I also wanted to help folks understand the stages:

• The news that something is coming (which, again, is the worst source).
• The executive order (which may provide some direction, but rarely clarity or definitive answers).
• And then finally, the Customs notification saying these things can be enforced—and how. Usually, there’s a short window while everyone scrambles to implement it.

Aaron: That’s fantastic. And yeah, this isn’t a news podcast. It’s not intended to be a news podcast. We’re recording this—like I said—on April 10th. So this is the day after the 90-day hiatus on the reciprocal tariffs was announced.

I’m making air quotes with my fingers here, because they weren’t really “reciprocal” as far as I can tell.

But we’ve got all these stories—like Apple airlifting 600 tons of iPhones to beat the tariffs. We’re not going to talk about the market—that’s a whole separate conversation—but just understand that, as we’re recording this, the situation is fluid and still unfolding.

So by the time you hear this, who knows what’s going to happen. But hopefully, by the end of this episode, you’ll at least understand how to approach and untangle future developments—and also make sense of what’s already happened.

The past is prologue, as someone once said.

So, continue please.

Jack: Yeah, absolutely. So the biggest, most important topic—there are sort of two categories: What can you do to help?

Jack: Importers, manufacturers, distributors, customs brokers, exporters, the people driving the trucks—and customs—we're all kind of on the same team here. And we can help each other quite a bit.

The second part is: how can you avoid pain and save yourself at least some of what you’re seeing on tariffs?

Now again, I’ll say—you want to talk to your customs broker, you want to talk to your trade attorney, and you want to get very, very authorized professionals in each of these areas. Don’t take any of this as blanket advice.

But first, I want to start with something that’s become urgent for a lot of folks very quickly. When tariffs increase, importers are responsible for funding a portion of their tariffs with Customs in the form of a bond. It’s called a surety bond.

So some portion of the goods you import—there’s going to be debt with Customs that basically says, “I can’t afford to pay the duties on these goods.” When your import tariffs go up, you’ll have an increased responsibility to Customs to make sure that bond is funded.

I was looking at a chart two days ago, and the number of non-compliant surety bonds had risen by amounts you wouldn’t believe. It’s putting a lot of importers and brokers in a bad place. Because your goods will not clear. If you have a non-compliant bond, you’ll get stuck at the border and you’ll have major issues.

Aaron: So don’t bankrupt yourself.

Jack: That’s a good idea.

The second thing is: don’t bankrupt your broker.

So you want to get with CBP and turn on your ACH tariff payments. For a lot of people who’ve been used to not paying tariffs—or paying only small amounts because they operate in a border city or work in a port importing things from places with few duties—that really isn’t the case anymore.

If your customs broker has been paying tariffs on your behalf, they are almost certainly under financial stress. And from a cash flow perspective, it becomes unsustainable if they keep doing this for too many clients.

Make sure you’ve got ACH payments set up. You’re going to pay them anyway—so now, instead of paying them through the broker, you just pay them directly to Customs and Border Protection.

Also, you do not want to pay unnecessary tariffs.

One easy win here—and again, talk to someone about this—but a lot of the most common advice right now is to itemize your invoices for your imports.

As your manufacturers send things to you, don’t declare goods as a single line item with the total cost. You want the cost of goods separated out from other non-dutiable charges—like shipping, insurance, and any extras.

Jack: Folks who’ve been in the habit of not having to itemize before—you could cost yourself a lot in duties you otherwise wouldn’t need to pay. But if you don’t have a record of what those items are on the invoice, then your broker won’t be able to help. And I’m hearing this is causing a lot of consternation right now.

Next, you want to engage drawback advisors. Drawback is something that pops up every time tariffs pop up. It means reclaiming tariffs that you’ve paid on three categories of goods:

1. Merchandise that went unused – It was imported into the U.S. and then either immediately exported or destroyed because it didn’t meet a quality standard. Basically, it was completely unused.
2. Manufacturing – If you bring something into the country, use it as an input to something else, and then export that final good, you can claw back the tariffs on what you imported once you export.
3. Rejected goods – If goods are completely removed from the process early on—say, at the border—you decide you can’t take delivery, and they’re either destroyed or returned. Again, you can recover tariffs on those.

This isn’t something folks usually think about unless they’re used to paying tariffs. But you can recover significant costs this way. There are drawback specialists across the country who can help, and often your customs broker will offer that service too.

Finally—and probably most importantly in terms of not getting yourself in trouble—I’ve seen a lot of chatter in customs broker Reddit communities and Slack chats around the world. What I’m seeing is: importers are asking brokers to do things that aren’t so great.

Like:
“Hey, does this really need to be classified as this?”
“Could this be classified as something else instead?”

There is exactly one category of person who can classify these goods: a licensed customs broker. There are really strict rules. And right now, enforcement is going to be extreme.

You absolutely want to make sure your goods are classified properly. It’s a bigger deal when there are tariffs involved. Having someone take a second look is a good idea. There are legal things you can do to reduce tariff costs—but do not try to fudge the classification. It will land you in a majorly bad place.

Aaron: Fantastic advice. And I guess one thing that popped into my mind while you were speaking—when you gave the advice about setting up ACH to pay CBP directly instead of relying on your broker—if you’ve been doing that, also tell your broker you’re doing that.

So CBP isn’t getting double paid. That seems like a good thing to avoid.

Jack: Yeah, yeah, this is something you would set up through your broker, and you’ll definitely want to coordinate it so that it’s coming exclusively from you. But for sure, the bigger issue is the sort of cash flow crunch that you could put an important partner into if they were to have to front a duty and end up with a fee—or be put in a challenging position.

Aaron: I want to ask you a hypothetical question that was posed to me by someone yesterday, which is: if I’m a U.S. company but I have overseas operations, can I have my overseas division ship product to me directly in the U.S.? Is that imported, in the technical sense? Because it’s being transferred intra-company within a U.S. corporate entity?

My gut feeling was, yeah, it’s crossing the water in some way, and it’s going through a port of entry—so yeah, you’re probably going to get assessed something on it. But I’m curious.

We have many customers who are very international, and they own lots of subsidiaries in different countries. Almost anyone listening probably is at least somewhat connected to a scenario like this. What is the liability in a situation like that? Is that a way to avoid tariffs?

Jack: It is not. Anytime you’re bringing goods into the country, you’re paying duty on the value of those goods. Now, because you're importing wholesale or you're importing for a manufacturing process, it’s not the retail price—it’s the internal supply chain cost or the cost of materials.

And oftentimes in that case, the really important answer to that question is yes, you do have to pay tariffs on the way in. But, per our earlier advice about drawback—if it’s part of a manufacturing process or it’s something to be removed from the country later—you can recover the tariffs you pay on those goods.

Aaron: Exactly. And that goes back to your earlier advice—about consulting one of the many specialists, or using your broker to connect you with one of those specialists who can help you do that.

This was really educational, Jack. I very much appreciate your flexibility. For anyone listening, this was extremely spur of the moment. I had no notes, no prep—just everything in Jack’s head, because you live and breathe this world.

And I know you’ve spent an enormous amount of time, probably this past week, surrounded by people in this industry grappling with this exact problem. So I really appreciate the educational value of the content you’ve just delivered to our audience.

Please remember to subscribe to the B2B Uncut podcast. Hopefully we don’t have to do another one of these in the near future—but it does seem possible. You may be on again, because things keep changing. We might have to deep dive on another related topic soon.

Jack: Appreciate it so much. Thanks very much, Aaron. I’ll definitely be back anytime you need us.

Aaron: Fantastic. Thank you.