2021 Customs Compliance Takeaways

At Laufer, we take every opportunity to immerse ourselves in the world of global trade to stay informed and ahead of the latest changes and market updates. This allows us to alert our customers to what’s coming and enable them to prepare their supply chains. 

As we approach the end of the year, National Director of Business Development, CHB, Ashley Coxey put together some top takeaways in crucial categories from the recent import compliance events and seminars she attended as a representative of Laufer Group: 

HTS amendments and revisions coming in 2022 

There are approximately 350 classification changes coming to the US Harmonized Tariff Schedule in 2022. Changes to HTS codes are often in response to environmental, market, or legal issues. The International Trade Commission (ITC) is required to continuously review the HTS and make recommended changes. 

Notable changes to particular commodities include tobacco, e-cigarettes, vaping devices, 3D printers, LED light sources & luminaires, smartphones, unmanned aircraft (drones), the addition/creation of several new headings & subheadings to address dual use items, and some modernization of the Harmonized Schedule to account for environmental changes – solar energy, hybrid vehicles, electronic waste, etc. 

We recommend the following best practices for evaluating and adopting new HTS codes: 

  • Identify the impact to your company: Are any of your product HTS codes going to change? Do you have any binding rulings on file that will become outdated? Who needs to be notified of the HTS changes? Who will update your database and any templates with the new HTS #s? 
  • Always review the section & chapter notes to determine if any of the additional legal notes will impact your classifications 
  • Work with your Customs Broker to determine appropriate new classifications and identify products which may require a ruling request to cover nuances with new HTS codes 

CBP Enforcement, Audits – PGAs, WROs, COO, Valuation 

Currently, enforcement is truly the name of the game for CBP! There has been a huge push in recent months, even despite Covid disruptions, to continue audits on entries and importers. 

CBP has seven published Priority Trade Initiatives (PTIs), considered to be ‘high risk issues’: 

  1. Antidumping and Countervailing Duties (ADD & CVD) 
  2. Trade Agreements and Preferential Duty Treatment 
  3. Intellectual Property Rights 
  4. Import Safety 
  5. Agriculture and Quota 
  6. Textiles/Wearing Apparel 
  7. Revenue 

These seven areas are key drivers for CBP requests for information, reviews, exams, and audits. They have also led to themes emerging during CBP conducted RASAs (Risk Analysis & Survey Assessment); many recent RASAs have been focused in three areas - forced labor and Section 301 & 232 duties. 

Although not listed as a PTI, Forced Labor, as a global human rights issue, has been an extremely hot topic for CBP. We have seen the implementation and enforcement of several key WROs (Withhold Release Orders), with widespread impact on the US trade and import community. Additional discussions and legislation continue to swirl within Congress and the US Government overall, so this conversation is certainly not going away, and importers should expect more scrutiny and enforcement in the future. 

Import valuation and country of origin are also being closely monitored to spot potential evasion of Section 301 duties. CBP is utilizing data from ACE to identify trends that are giving them red flags, triggering the deployment of RASAs, and CF 28s, or worse – one apparel importer was just sentenced to 12 months in jail for duty evasion on garments 

In addition to the laundry list mentioned above, many Participating Government Agencies (PGAs) are now requiring more stringent data message sets in ACE than ever before and squeezing importers with additional requirements. One specific area of focus within FDA is FSVP (Foreign Supplier Verification Program), and importers have been getting hit with audits and fines for lack of compliance. 

Section 301 Exclusions 

Importers across the US are still heavily impacted by Section 301 tariffs. Although some exclusions were extended through May 31, 2022, that list is only 81 exclusions of what was previously thousands.  

The USTR opened their portal from Oct 12- Dec 1 to allow for comments to be submitted regarding the possible reinstatement of expired exclusions. Those comments are currently under review. 

This review is happening simultaneously with ‘The China Package’ being circulated in Congress. This bill outlines next steps for Section 301 exclusions, along with MTB/GSP, and other topics. The House and the Senate have slightly different versions, and the details will need to be agreed (and voted) upon before any action can take place. 

Although there is talk of exclusions coming back, there is no talk of the tariffs going away overall. So, US importers impacted by Section 301 tariffs should continue to factor those added costs into their bottom line or explore other supply chain options. 

This time of year, is the perfect time to reflect on the challenges of the past and to prepare for the year ahead. To ensure sure you are ready download our 2022 Import Customs Compliance Guide. If you still have questions, please reach out to Ashley Coxey, National Director of Business Development, Customs Brokerage or your local Laufer Customs Brokerage expert.