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Mar 07, 2025

Companies often need help in dealing with tariffs

The Trump administration’s enthusiastic embrace of tariffs has generated a lot of philosophical, political and economic debate, but tariffs themselves aren’t abstract concepts. Those who must pay them

The Trump administration’s enthusiastic embrace of tariffs has generated a lot of philosophical, political and economic debate, but tariffs themselves aren’t abstract concepts.

Those who must pay them typically seek assistance from customs brokers, entities that help companies manage the ins and outs of what can be a complex process.

These firms or individuals are likely to be a lot busier in the coming months.

Cindy Allen, CEO and founder of Trade Force Multiplier, has more than 35 years of experience working as a customs broker and freight forward compliance professional in international trade, with most of those years in Detroit. She’s now based in Memphis.

Allen told the Free Press that during a conference this week she explained to the attendees that the initial two years of Donald Trump’s first presidential term saw about a 300% increase in regulatory revisions and actions in this space, which was comparable to the previous 20 years. She said she suspects that might be surpassed in a six-week span this time.

First, some clarity. Although tariffs target goods coming from another country, “surprise, it’s not the foreign companies, it’s not the foreign country, it’s the U.S. importer who pays the duty to customs,” Allen said.

When a Free Press reporter initially reached out to U.S. Customs and Border Protection to ask about that process and whether it could be observed, he was directed to a government website and told that it’s automated.

That’s true, but there’s more to it, according to Allen.

U.S. Customs and Border Protection collects the duties, and it has data requirements to facilitate that as well as the necessary security screening.

But Allen said, “It’s generally the customs brokerage industry who actually does that work.”

Here’s how she explained that process:

The broker takes the information from the foreign shippers and the U.S. companies that serve as importers and engage in a classification process that involves about 18,000 possible numbers. An aluminum product from China, for instance, would get a specific classification and duty rate. The number would also determine whether additional duties are required.

A customs broker sends that information to customs via the automated commercial environment, or the ACE system, which can automatically get information to agents at the border in the case of potential “bad guys” who might need a closer look.

Information also goes to the trade side to make sure the correct duty is being paid and that the products involved don't face import restrictions. The payments themselves can be collected daily or monthly, similar to a credit card bill.

Allen also explained that there’s generally a personal exemption of up to $800 in place for individuals bringing goods across the border. She noted, for instance, that someone trying to bring a $5,000 antique chair over from Montreal would, however, face a tariff.

Allen noted that most companies involved in international trade strive to do the right things because they don’t want their goods seized at the border. Although there might be bad actors as in any industry, they’d represent a “very, very small fraction,” she said.

Kevin Ketels, an associate professor of global supply chain management at Wayne State University’s Mike Ilitch School of Business, said the checks on the system can mean potentially large fines that can stretch into the tens or hundreds of thousands of dollars, as well as civil and criminal penalties.

He said the process is something of an honor system, but with checks.

“You’re going to do the filing, and we’ll trust that everyone’s doing things correctly, but if you get caught breaking the law or misleading, then you could get into a lot of trouble,” he said.

Still, the size of some recently announced tariffs, 25% on goods from Canada and Mexico, for instance (the auto industry on Wednesday was granted a 30-day reprieve), would prompt companies to explore their options, everything from engineering changes to shipping the products from other countries, he said.

“These tariffs are so extreme that companies will look for every possible option for avoiding the tariffs,” he said.

Ben Bidwell, director of North America customs and compliance at C.H. Robinson, a major transportation and logistics company, pointed to a global customer survey where shippers identified tariff and trade policy changes as the top risk to their supply chains this year. It also highlighted their interest in finding cost savings.

“Considering this, we’ve been helping shippers identify a range of strategies to help lower or defer their duties and other costs, including utilizing foreign trade zones, entry consolidation programs, paying CBP directly, and diversifying suppliers, to name a few," he said.

Bidwell noted that the company offers a sourcing analysis tool to track trends and provide a comparison to the rest of the U.S. market importing the same or similar commodities so clients can identify alternative sourcing strategies and potential savings.

The company, which also serves as customs brokers, processes more than 1.4 million customs transactions per year.

Contact Eric D. Lawrence: [email protected]. Become a subscriber. Submit a letter to the editor at freep.com/letters.