Canada and the US appear to be headed to a place of some tension when it comes to international trade. With a proposed tariff of 25% on Canadian goods looming on the horizon and some indications suggesting their implementation could happen at any point in the coming months, importing into the US from Canada could very easily become more complex very quickly. 

If you are importing goods from Canada into the US, then you’d be right in worrying that the next few months seem dire, but we encourage you not to despair - you have options and precautions you can take, and you have the intrepid team at PCB ready to get you through it. This is an opportunity to make sure your importing business is as lean and efficient as it can be, and there are many programs, services, and pivots available that can help with that process while mitigating the worse effects of these proposed tariffs. If you put a few of the following tactics we detail in this post to work, you may just find that you are not quite as badly off as you thought you were going to be. 

Bear in mind that these are light touches on incredibly complicated subjects, and you are always encouraged to get in contact with our Trade Advisory Team for assistance bespoke to your business.

Proceed With Caution, Particularly on Pricing

The greatest challenge with the potential increase in tariffs is the uncertainty surrounding it. With some importers racing to the borders and others staunch in their belief that this won’t actually happen, there is an air of not knowing what exactly you should do to best prepare for what’s coming. While it’s a fair position to wait and see, a proactive approach is almost always going to be the best path forward, and keeping your eyes open and your head on a swivel is likely to be the way to get through relatively unscathed. 

The most obvious outcome of these new tariffs is a dramatic change in the price of certain products, products that potentially you have been purchasing for years. If you are a Canadian exporter, it is time to reckon with the fact that 25% of your margin may have just been swallowed by the stroke of a pen and that you are going to need to work to counteract these new costs. 

Additionally, it is time to double-check everything related to your imports, including tariff classifications. Now is the time to ensure that you are buttoned down and operating in the most efficient way possible. It’s also time to start working with a trade expert if you aren’t already. 

In the coming days and months, check your suppliers, valuations, classifications, and costs for your goods in light of these new tariffs. If there is one good thing that comes out of these new taxes, let it be that you are confident and prepared for anything with efficient and effective imports. 

Set-Up An ACH Account

If you make payments to US Customs and Border Protection, then consider this a reminder to set up a CBP Automated Clearinghouse (ACH) Account. Imports from Canada have, up to this point, benefited from free or minor duties and taxes, but those days could be behind us, and the great challenge is going to be finding cost savings in other places. One of those places is through a registration with an ACH. 

If this is the first you’ve heard of this program, you may wonder what the difference between ACH and EFT is, and the answer is that ACH is, essentially, a specific type of electronic funds transfer maintained by CBP. It allows you to manage your payments and gives you greater control over your financial transactions with Customs. Perhaps more importantly for our purposes, however, it removes the need for disbursement fees from your broker- which are likely to increase dramatically in step with the new tariffs. As a result, registration with an ACH could potentially save you a significant amount of money month over month. 

Even if the tariffs ultimately do not materialize, this is a service worth pursuing, and PCB is here to help you get through the registration process while also providing the documents you’re going to need to put it to effective use. Do not wait - there is already a delay in processing applications, so now is the time to get your business’s registration on the list.

(It’s also worth noting for Canadian readers that since ACH is run by CBP, the closest analog to an ACH payment in Canada is through the CBSA Assessment and Revenue Management (CARM) system.)

Check Your Surety Bond Value

Perhaps one of the more under-considered elements of this tariff increase is that for many importers, your bond is suddenly going to be insufficient for the new realities of importing into the US. If you have been maintaining the minimum amount on your bonds, there is a very real chance that you will need to increase your surety amount, and it may not be as simple as just asking for it. From needing additional collateral or letters of credit - depending on your financial situation and how much additional coverage you are going to need, this could take a long time to process. 

One of the small blessings is that, at the very least, this increased bond requirement shouldn’t affect your current imports too much, as CBP typically isn’t going to stop your goods from crossing just because you have an insufficient bond in place. However, once the letters indicating that you are importing above your bond amount start arriving after the fact, it could be too late to get what you need in place before incurring negative repercussions up to and including penalties. 

Shore Up Your Shipping Terms

Like valuation and pricing, there has never been a better opportunity to reassess your Incoterms® and get into the details about who is responsible for what in your buyer/seller relationships. 

Throughout this moment of potential importing consternation, our goal is to find ways to mitigate the additional costs incurred by these new tariffs, and one of the key ways that could happen is to understand that the financial stakes of these relationships have been somewhat increased by these new tariffs. Redefining, renegotiating, or applying a different Incoterm® could be a fantastic way to ensure that your business is operating as efficiently as possible in this new trade environment. 

For assistance navigating the world of Incoterms®, be sure to get in touch with our Trade Advisory Team today or visit the PCB Learning Center for more information on this system. 

Look Into Additional Services

Finally, if you aren’t already, now is the time to begin taking advantage of some of the many services we offer here at PCB. Even beyond the ones we’ve mentioned, we have a host of experts and thought leaders in their field ready to get your business through this challenging time. Some of the services we can offer include: 

Valuation

With this service, we ensure that your goods are valued correctly before they cross, which could be a vital first step to making sure that you are not overpaying when you arrive at Customs. This service will set your imports up for success at a time when it has never been more important. 

Duty Drawback Services

An often-forgotten feature of US Customs is the Duty Drawback program. There are some cases where duties you have paid on goods can be reclaimed, providing a form of free trade in a time when it is an enviable status to have. 

Tariff Relief

Perhaps the most straightforward of our services, Tariff Relief examines your imports for opportunities to reduce or, in some cases, even avoid tariffs entirely. Often referred to as ‘tariff optimization,’ it makes sure that you are only paying what you absolutely must when your goods arrive at Customs.

Supply Chain Audits

With a 25% increase on the table, you need to find ways to save money in other places, and one of the key routes forward is by making your supply chain more efficient. Our Supply Chain Audit service examines your logistics plan with an eye toward increasing efficiency, identifying challenges, and providing recommendations from industry experts.