Navigating Tariff Challenges: Urging companies to take decisive steps
Rewritten Article:
Navigating Tariff Complexities: A Guide for Agile Businesses
Yo, here's the lowdown from Andrew Siciliano, partner and head of U.S. and global trade and customs practices at KPMG. Remember, this is his own opinion.
Tariffs are the hot new trend in U.S. tax and trade policy, causing a massive puzzle for any business dabbling in international commerce. Since Jan, President Trump's moves have slapped new tariffs on imports from our three biggest trading pals - Canada, Mexico, and China. Announcements on 25% tariffs on aluminum, steel, vehicles, meds, and silicon chips have created chaos. And if that ain't enough, more tariffs could be on the horizon, making it impossible for businesses to protect themselves, their customers, or plan for the future.
Now, solving this tariff puzzle ain't a walk in the park. It requires data to understand the impact quickly and the flexibility to adapt to changing policies, tweak business strategies, and protect the bottom line.
These are the four crucial pieces of the puzzle that smart businesses should snatch together to build resilience, strengthen operations, and stay competitive in this maddening tax and trade landscape:
1. Smart Use of Trade Data: Employ tech to scrutinize trade flows, spot weaknesses, and model financial impacts. Accurate data and access to the right tools ensure smarter, quicker decisions.
2. Upgrade Trade Operations: Get a bird's eye view of processes, personnel, and systems to improve compliance and reduce tariff exposure. Think about incorporating flexibility into contracts, like price adjustments or tariff-sharing agreements, to protect your bottom line. A smart approach can streamline operations and prepare businesses for the future.
3. Diversify Supply Chains: Minimize risks by sourcing from alternative suppliers in countries with lower tariffs. Diversification boosts resilience and ensures continuity. Give your existing suppliers a piece of your mind to discuss tariff impacts, too.
4. RoI Analysis: Investigate duty mitigation and recovery programs like:
- First Sale for Export: Use a lower dutiable value in transactions with more than two parties to significantly reduce overall duty costs.
- Foreign Trade Zones: Take advantage of goods and parts within FTZs being outside the customs territory, allowing them to be left untaxed until entering U.S. commerce.
- Duty Drawback: Explore duty drawback programs, which can recover up to near-full tariffs, but please note, certain tariffs are excluded.
- Valuation Unbundling: Remove non-dutiable costs from the declared value of goods, which is often overlooked but beneficial when goods are duty-free.
- Operational Transfer Pricing: Coordinate with the transfer pricing team to ensure values in related party transactions comply with tax and customs requirements.
- Tariff Exclusions: If available, request tariff waivers based on economic and business justifications. These can offer significant relief from tariff loads.
Though tariffs and changing trade policies may seem overwhelming, starting the puzzle-solving journey begins with preparation, innovation, and agility. Every policy shift, supply chain disruption, or regulation adds complexity but gives an opportunity. By proactively embracing these changes, businesses can better prepare for the uncertainty of the current trade environment and set themselves up for long-term success.
- To mitigate the financial impact of tariffs, businesses should proactively analyze their trade operations using technology, such as scrutinizing trade flows and modeling potential financial impacts.
- A smart approach to addressing tariff complexities includes upgrading trade operations by gaining a comprehensive view of processes, personnel, and systems to ensure compliance and reduce tariff exposure.
- To strengthen their operations and maintain continuity, businesses might consider diversifying their supply chains by sourcing from alternative suppliers in countries with lower tariffs.
- Analyzing the return on investment (RoI) of various duty mitigation and recovery programs, such as First Sale for Export, Foreign Trade Zones, Duty Drawback, Valuation Unbundling, Operational Transfer Pricing, Tariff Exclusions, can help businesses significantly reduce overall tariff costs.
- In the face of constantly changing tariff policies, sports teams and companies must be prepared to adapt their trading strategies and valuations proactively.
- The vulnerabilities posed by tariffs and trade policy uncertainty can be reduced through a proactive, agile approach, allowing businesses to prepare for the complexities of the current trade environment and set themselves up for long-term success.
