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Be Prepared! Customs Maintenance

By Paul Vandevert, Principal, 
OCHIM Trade Law PLC.

Many years ago, shortly after I moved with my wife to Michigan and bought our first house, we woke up on New Year’s Day to nearly two feet of snow on the ground.  Just the year before, as part of the new homeowner experience, we had bought a snowblower.  As I bundled up and headed to the garage, I felt so proud of myself.  I was ready for this!  In 20 minutes, a half-hour tops, the driveway and the sidewalk would be cleared, and I’d be back in the house enjoying a cup of coffee.  That 20 minutes later and more, I was standing knee-deep in snow, loudly cursing the snowblower, which wouldn’t give me even a grumble no matter how hard I yanked the starter rope.  Reading from the owner’s manual, my wife admonished me that we should have emptied the gas tank at the end of winter last year and filled it with fresh gas at the beginning of winter this year.  That’s when I really learned that everything we use and often rely upon needs periodic upkeep and refreshing, whether it’s your car, teeth or snow blower.

Import and export operations are no different.  Things are always changing; they never remain the same.  The change can be incredibly minor such as the elimination or addition of statistical level tariff headings or really big, like the country of origin or the product itself.  The obligation to keep trade activities current falls equally on the business engaged in importing or exporting and their service providers — Customs brokers and freight forwarders, who very often are that business’s Customs or Export “department.”  The consequences of sticking with the status quo could mean waking up to a trade “blizzard” where duty costs are suddenly more than 10 times what they were just yesterday and in the panic and shock, no one seems to know what, if anything, can be done.

Focusing on imports, how sure are you that the HTS code being applied is the correct one for the goods actually being imported?  Is the country of origin being declared in the entry really the country of origin of the imports?  Has the importer changed its product so that the inputs aren’t the same ones they were importing a few years ago?  In just the past year, I have encountered examples of all of these scenarios. 

One importer was classifying an automotive sub-assembly from Mexico based on the tariff classification and country of origin of the motor from China that was just one component of the entire assembly.  This was because the importer talked about the assembly as a motor, and no one had looked at a drawing or a sample of the full sub-assembly in its condition at the time of importation.

Recently, another business that produces a major component for automotive powertrains completely redesigned and reengineered the primary product, changing it from a mechanical part to an electrical one.  While the imported inputs still have some mechanical functions and the end result in the vehicle is the same, the essential character of the parts is different.  That meant a different HTS code should have been applied.

These situations came to light because the importers were struck with the trade equivalent of two feet of snow in the driveway when U.S. tariffs were jacked up to 10% and 25% on steel, aluminum and a host of goods, particularly intermediate materials, from China.  And, while in the examples above, there was good news, it’s imperative to understand all information declared to Customs must be complete, accurate and fully supported by the facts and law.  Importers, exporters and their supporting service providers must be wary of suggested tactics that sound too good to be true, because they probably are.  But, unless the entire trade team gets together to conduct a thorough review of your trade operations, your trade compliance and cost-effectiveness remain at risk.

Paul Vandevert founded OCHIM Trade Law in 2018, after serving for more than 23 years as in-house trade counsel at Ford and GM.  OCHIM Trade Law’s mission is to apply Paul’s 30+ years of knowledge and experience in all aspects of international trade and Customs law to deliver practical, strategic solutions to importing and exporting firms of all sizes. He can be reached at 313-737-3675 or 

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