Imagine your business painstakingly expanding into international markets, only to see profits gradually eroded by complex tariff policies and persistent trade fraud. Does this scenario leave you feeling powerless, even reluctant to engage in global commerce?
The complexity of international trade exceeds most expectations, particularly in today's environment of constantly adjusting tariff policies. Companies must navigate compliance risks while remaining vigilant against various forms of trade fraud. Greg Husisian, partner and chair of the International Trade and National Security practice at Foley & Lardner LLP, recently provided critical insights into current trade and tariff challenges during an exclusive interview.
Combating Tariff Fraud: An Endless Game of Cat and Mouse
Tariff fraud remains a persistent issue in international trade, with some importers resorting to illegal methods to evade duties. Husisian emphasizes that identifying and preventing tariff fraud requires proactive strategies from U.S. Customs and Border Protection (CBP). The focus shouldn't be solely on detecting existing fraud but establishing effective prevention mechanisms to stop fraudulent activities at their source.
Common tariff fraud schemes include:
- False country-of-origin declarations: Misrepresenting goods as originating from low-tariff or duty-free countries
- Undervaluation: Deliberately understating merchandise value on customs declarations
- Misclassification: Assigning products to lower-duty tariff categories
- Document forgery: Fabricating certificates of origin, invoices, or other trade documents
Husisian stresses that importers must strengthen internal compliance programs to ensure all declarations are accurate while monitoring CBP policy developments closely.
Reciprocal Tariffs: The White House's New Trade Weapon?
The concept of "reciprocal tariffs" has gained prominence in U.S. trade policy discussions. This approach proposes matching other nations' tariff rates on U.S. exports with equivalent duties on their products entering America, theoretically creating pressure for more balanced trade terms.
Husisian notes that reciprocal tariffs require careful implementation. While potentially effective as negotiation leverage, improper use could trigger trade wars with global economic consequences. Businesses face increased uncertainty and should evaluate supply chain diversification strategies to reduce dependence on single markets.
Court of International Trade: The Legal Battleground of Tariff Wars
The U.S. Court of International Trade (CIT) has seen rising caseloads involving tariff disputes, particularly regarding the Trump administration's use of the International Emergency Economic Powers Act (IEEPA) to impose duties. These cases could significantly influence future trade policy depending on judicial interpretations of presidential authority under IEEPA.
Husisian explains that CIT rulings may compel policy adjustments if courts determine previous tariff actions exceeded statutory authority. Companies should monitor these developments while considering legal options to protect their commercial interests.
Transshipment Tariffs: Closing Trade Loopholes
Recent U.S. enforcement efforts target transshipment schemes where goods are rerouted through third countries to circumvent origin rules and avoid tariffs. Proposed measures include potential 40% duties on transshipped merchandise to deter such practices.
Husisian advises businesses to avoid transshipment arrangements entirely and conduct thorough supplier due diligence to verify authentic country-of-origin documentation.
U.S.-China Trade Relations: Temporary Truce or Lasting Peace?
The volatile U.S.-China trade relationship continues creating global economic uncertainty. While tariff suspensions have provided temporary relief, Husisian cautions that fundamental tensions remain unresolved. Companies should prepare contingency plans, including market diversification strategies to reduce bilateral trade exposure.
Corporate Strategies for Tariff Challenges
Husisian recommends several proactive measures for businesses navigating tariff complexities:
- Enhance compliance programs: Implement robust systems to ensure full regulatory adherence
- Diversify supply chains: Develop alternative sourcing and distribution channels
- Monitor policy developments: Track regulatory changes through official sources
- Seek expert guidance: Consult international trade specialists for tailored advice
- Engage industry groups: Participate in trade associations for collective insights
Global trade presents both challenges and opportunities. By understanding regulatory frameworks, mitigating risks, and adapting strategically, businesses can position themselves competitively despite tariff uncertainties. Rather than viewing tariffs as existential threats, companies can use these pressures to strengthen operational resilience and market adaptability.