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New Tariffs Spawn Consulting Risks for Customs Brokers

As many of you know, on August 23, 2018, 25% duties were imposed on Chinese goods identified on List 2 of the Section 301 sanction list. The newly implemented tariffs have caused many in the import industry to act fast and think later. Importers are beginning to accept the fact that the new tariffs are here to stay. The question for importers now is: how do they adapt to incur as little financial burden as possible?

Many importers are turning to their customs brokers for creative solutions on the best way to navigate these tariffs. While this new demand for solutions to the tariffs is good news for customs attorneys, some importers aren’t willing to pay for legal advice and thus turn to their customs broker for solutions. The net result is an increased demand for customs consulting services, which some have coined “tariff engineering.” It’s an opportunity to provide new services to an existing client, but not without a cost. Consulting an importer is not the same as classifying goods and filing an entry. To manage consulting liability, many customs brokers have carved out separate entities strictly to deal with consulting services alone.

When consulting clients on the best way to navigate the Section 301 tariffs, think first and proceed responsibly. Take time to review your terms and conditions and make sure those terms are agreed to by your importing customer. It’s also good practice to document all written exchanges. With these additional tariffs, dollar amounts can be very high. Consulting importers for a fee is generally considered outside the scope of normal brokerage services and should be discussed with your IB&M representative - you have options. Consulting coverage can be added to your existing E&O Policy by endorsement or written as a separate policy. Now is a great time to make sure you have the proper coverage in place before it’s too late.