Summary
In this episode of the Ecommerce Finance Podcast, Stephen Brown and Bryce Judy discuss the complexities of tariffs, particularly focusing on the de minimis rule and its implications for e-commerce businesses. They explore recent changes in tariff policies, the impact on dropshipping, and the importance of compliance and accurate classification in trade.
The conversation also covers duty drawbacks, customs processes, and best practices for importers navigating the evolving landscape of international trade.
Takeaways
- The de minimis rule allows low-value shipments to enter duty-free.
- Recent tariff changes significantly impact e-commerce sellers.
- Duty drawback allows importers to reclaim duties on exported goods.
- Accurate classification is crucial to avoid fines and delays.
- Customs value is determined by the retail value for formal entries.
- Tariff engineering can help reduce tariff costs legally.
- Working with customs experts can save money in the long run.
- Misclassification can lead to severe penalties for businesses.
- Ecommerce businesses must stay informed about tariff changes.
- Navigating customs processes requires careful documentation and strategy.
What We Cover:
- 00:00 Introduction to Tariffs and Tarifflo
- 02:50 Recent Changes in Tariff Regulations
- 05:32 Understanding De Minimis Rule Changes
- 08:01 Impact of Tariffs on E-commerce
- 11:01 Duty Drawbacks Explained
- 14:08 Key Components of Trade Compliance
- 16:41 Classification Process and Customs Procedures
- 19:06 Understanding Tariff Calculations
- 20:42 Best Practices for Managing Tariffs
- 23:07 Navigating Customs Disputes
- 25:50 Strategies for Tariff Mitigation
- 28:19 Country of Origin and Compliance
- 31:11 Conclusion and Future Considerations
Interview Links
- Tarifflo.com
- How It Works
- Bryce Judy on LinkedIn
Work with LedgerGurus
If you need help with your ecommerce accounting, reach out to us at LedgerGurus. We are an ecommerce-specialized accounting firm, and we can handle all your numbers so you can focus on growing your business.
Transcript
Kelley Birrell (00:00)
Quick preface on today’s episode. Since we recorded the episode with Bryce, there have been a number of changes. For example, he and Stephen are going to talk about the de minimis rule, and the enforcement has been delayed due to challenges from the Customs and Border Patrol, particularly the USPS.
There’s also talk of rolling out new tariffs in steel and aluminum. And while they are going to touch on a couple of current events, The bulk of this episode is talking about the mechanics of tariffs and things that don’t change as policies change.
So dive in, enjoy, and hopefully this will help you navigate the changing landscape.
Stephen Brown (00:31)
to the Ecommerce Finance Podcast. I’m your host, Stephen Brown, COO and co-founder at LedgerGurus. In this episode, I have Bryce Judy, the CEO and founder of Tarifflo with me to discuss tariffs.
Bryce, good to have you.
Bryce Judy (00:44)
Thanks for having me on. I’m excited to talk with you today.
Stephen Brown (00:48)
I want to thank Bryce before we get in. Bryce has bronchitis in probably one of the most epic tariff weeks in recent modern history. And we had to postpone this recording and here he is. So thank you for joining me despite having recovering from bronchitis.
Bryce Judy (01:04)
Yeah, I’m glad you had me on. Sorry, my voice is still like a little bit shaky, but it just started coming back yesterday. So, figured we should do this as soon as possible with all the changes
Stephen Brown (01:13)
Yeah, give us a little background on your history and specifically your experience around tariffs and maybe tell us a little bit about what you’re doing with your company, Tarifflo.
Bryce Judy (01:25)
Yeah, for sure. So this was a world that I had never planned on getting into. I got recruited out of college to work for KPMG. I was working in the trading customs division there. It was new when I started there. And my role specifically was I would contract with these companies and I would classify their items for tariffs and kind of manage that whole front of like the customs clearance process. And that’s where I got
first exposed to the side of the world that I didn’t even know existed, honestly. So as soon as I got exposed to this, I realized that there was a lot more that went into this process than I had previously understood. And that’s kind of where the idea for Tarifflo started. So just about a year ago, me and my co-founder started working on this. Basically, it’s just a platform to automate your tariff classifications so that you can get
Kind of that high level perspective of how much your duties are going to cost, where your codes are going to be to whatever markets that you’re shipping into.
Stephen Brown (02:23)
Awesome. Well, obviously this is a very timely topic and we’re going to talk about some of the recent changes, but we also want to talk about some of the things that won’t change. So we’re going to start talking about some of the changes. And if you want to skip over that, we are recording this on February 7th, so it’s going to be dropping in a few days. Who knows what’s going to change between now and the time we release the episode. But if you want to skip ahead, we are also going to spend a lot of time on just the logistics, the
intangibles of tariffs and what a ecommerce seller should be thinking about in regards to tariffs. But let’s talk about the big changes. Obviously, in the last President Trump was going to impose tariffs on Canada and Mexico of the tune of 25%. That got postponed for 30 days. We’ll see what happens. But there was a 10 % tariff.
on China that has stuck and there are threats of tariffs across sounds like almost everybody we’ll see it looks like he wants to get take care of those three first what else has changed Bryce
Bryce Judy (03:33)
Yeah, so actually I want to bring us back before Trump passed his executive orders, or this was really like the hot topic in the news. So actually before Trump even started talking or signing these documents, Customs and Border Protection and the Department of Treasury, sent out a notice of proposed rulemaking. So.
Basically, they sent out these 32, 201, and 301 exceptions. And this is the low value, de minimis shipping. any shipment coming in that’s under $800 in value, basically, anything that falls under these previous extra duties for China would not be exempt to like the duty free treatment that they were. And so this is something that’s been in kind of from two fronts.
Stephen Brown (04:00)
Yeah.
Bryce Judy (04:21)
Trump’s new executive order also kind of goes after this. But this is something that Customs is looking at doing more systematically as well. basically what this means is, you know, any of these low value shipments from China, you’ll have to pay duties on. And you’ll also need to provide the 10 digit HTS code to determine like the eligibility for shipping. So
That just adds a lot more process to the current process. And this is where it started with customs. Fast forward to the fourth, this extra 10 % went into effect on top of the imports to And I want to talk about what that means. So this is country of origin of China. So not just any shipment that comes from China directly, but let’s say you have
a shipment from Sweden and you’ve got four items in it, right? One of those items, if it’s country of origin in China was manufactured there. Even if it shipped through Sweden and put in a package with different items, because it’s included in that, it’s going to remove you from being able to file this as a duty-free shipment. So that entire shipment, even the items not manufactured in China are going to be dutyable.
And then on top of that, you’re going to have the extra duties that were put into place in 2018 for the shipment from China. On top of that, you’re to have the extra 10 % that got out of it. So this is a massive change. It’s probably going to affect around 80 % if Mexico and Canada follow suit. This is going to be about 80 % of these low value shipments that we’re seeing coming in across the borders.
Stephen Brown (05:57)
I’m glad you brought this up. I talked about this in our inaugural episode of the Ecommerce Finance Podcast, the de minimis rule changes, something that was in the works before the Trump administration. And just to reiterate what you said, this was an $800 limit that allowed you to bring in things duty free. And the most tangible application that we’ve seen was in Temu and Shein, right?
a lot of their stuff fell under the de minimis threshold, which allowed them to bring in really cheap crap, you know, without having to pay, without having to pay those duties and customs, thereby preserving that low price and making it really hard to compete. Now, just to clarify the executive order that Trump signed.
the threshold was specifically for products country of origin from China at this point. Is that correct?
Bryce Judy (06:52)
At this point, yes.
Stephen Brown (06:54)
But they’re
talking about doing it across everywhere, right? Lowering it getting rid of the de minimis threshold for all imports, if I’m not mistaken.
Bryce Judy (07:03)
Yeah,
so that’s definitely been talked about. then Mexico and Canada are the first ones that we would see impacted by this with the executive orders that would go into effect next month on the 4th. But those were delayed.
Stephen Brown (07:16)
One of the things that I thought about for ecommerce, I talked about and I’ll just reiterate on this episode is it’s kind of a double-edged sword. If you are somebody that’s been dropshipping, this is going to be really bad. So if you’ve been dropshipping product from China or you’ve been dropshipping from other regions, could, this disadvantage could go away. If you have been competing against dropshippers,
it’s probably a positive thing because they will no longer have that economic advantage over your products. So you think that’s a fair assessment, Bryce?
Bryce Judy (07:54)
Definitely, yeah, is gonna impact ecommerce, especially dropshippers, in a big way.
Stephen Brown (08:01)
Yeah. So I’m glad you brought up the de minimis rule because this is something that I have been watching and telling people to keep their eyes on. there are a number of people that do this, especially China based sellers. Amazon Haul I think is going to have to overhaul Haul because they were basically trying to compete with Temu and Shein using this de minimis exception. What else? Anything other changes that we should talk about before we get into the fundamentals of.
tariffs.
Bryce Judy (08:29)
Yeah, I guess just the biggest thing with this is first off, you’re not allowed to do this like type 86 entry. So this really fast entry and you’re to have to follow either an informal or a formal entry, which adds a lot of paperwork. So there’s the time aspect of that. There’s going to be a lot more information required for each shipment to get it cleared. There’s going to be merchandise processing fees.
That’s going to add a minimum of a couple of dollars on top of your shipping costs. Right. So all of these things are playing into that. then kind of like the icing on the cake or like the last thing there is the duty drawback for these items is not going to be allowed. So duty drawback is basically you’re shipping something into the U S but it’s not going to end up being here in the end. So you’re either having it as part of something else or you’re shipping it out of the country for whatever reason.
You can file and get those duties back, but the shipments from China are not going to be eligible for duty drawback. However, because this is exposing more items that aren’t country of origin of China to be dutyable, it does mean more products are going to be eligible for duty drop. So companies that haven’t really thought about that. This is definitely something to think about moving forward. And I get this duty money back.
if I’m shipping this out to other countries eventually.
Stephen Brown (09:58)
So help me understand duty drawbacks. if I hear you right, if you’re moving product through the United States to another country, you have the ability to say, hey, I shouldn’t have to pay the duties on this. Is it like a refund process? How does that work?
Bryce Judy (10:14)
Yeah, so it’s a refund process. You can get back 99 % of what you paid on duties for importing it. So like, let’s say you’re importing, you know, a $5,000 machinery part, and that part is going to go in as part of like an x-ray machine that you’re shipping to Germany. So you’re going to pay the duties upfront for that part as it’s coming into the US. And then, you make it into this finished good, you ship it out.
Stephen Brown (10:33)
Hmm.
Bryce Judy (10:41)
You file your paperwork with the government and you can get that money back. Let’s say it was 10 % of $5,000. You can get that $50 back when you ship it out. Well, I guess it would be 1 % less than that. But that’s kind of the concept behind duty drawback. And this is going to impact a lot of these shipments from China.
Stephen Brown (11:01)
Gotcha.
So the duty drawbacks is something that sellers should be aware of because as these get applied to these new shipments, they really should be considering that as part of their process.
Bryce Judy (11:14)
Yeah, for sure. Especially if they’re shipping a lot of goods together, like they’re doing a high volume of shipments and some of those goods are country of origin of China and the rest of them aren’t from China. let’s say you’re shipping a lot from Germany or you’re shipping from all over and a lot of them are low value shipments, but you have mixed in the mix with these packages, some items from China.
That’s going to expose a lot more of your items to duties. You’re shipping them out of the US eventually, you can get that back. So that’s something that people should be aware of and considering kind of the impact on their supply chain and on their cost per good as they’re looking to move forward and do these duty mitigation strategies.
Stephen Brown (11:58)
Do you have a sense for how big the imports that were using the de minimis exemption are? percentage of imports? Do you have any idea how big that is?
Bryce Judy (12:11)
So it looks like it’s about a billion shipments per year that have been falling under the de minimis exception.
Stephen Brown (12:18)
Whoa, that’s a lot.
Bryce Judy (12:20)
So it’s a lot of items.
Stephen Brown (12:51)
let’s talk a little bit. I want to walk through the key components of trade compliance. Let’s not go too deep and lose people, but Talk me through what it means to bring a product into the United States and what processes are involved, specifically as it applies to tariffs.
Bryce Judy (13:13)
Yeah, for sure. So I guess to start out, you need your classification for the items. So Let’s say you have a manufacturing sheet of this product that you’re manufacturing. Let’s go with like a surgical instrument, like an endoscope. So you have all the technical specifications, what it’s going to be used for, what it’s made of, all these things that are part of the manufacturing sheet. So based on that,
you need to go through and look through the harmonized tariff schedule for the United States. And that’s basically just a massive list of codes that apply to different types of items. So once you classify that, it’s going to be a 10 digit code that goes along with that item. Then that will give you your duty rate. It will outline any free trade agreements, preferential trade agreements with reduced duty rates. And that will kind of give you a sense for how much you’re going to be paying
order as this is clearing through customs. So I think that’s kind of the first step that you should look at when you’re sourcing something, when you’re looking at shipping things in, is should we be sourcing from this country for this item? Should we be sourcing from elsewhere that has free trade agreements? That’s kind of the first step in my opinion.
Stephen Brown (14:29)
So if people are thinking about moving their supply chain, that would be a really smart thing to consider is, you know, what is the treatment based on different countries? Who determines that classification? Is it the importer or is that, like, how does that not get abused?
Bryce Judy (14:45)
Yeah. So traditionally there are a couple of ways that you can get your code and really it’s different throughout the industry. So you can have a customs broker do it. And that’s really like the safest bet is to have somebody that’s a licensed professional go through and classify these items. You can have, You can classify it yourself. And actually the importer of record is the one for an accurate classification. So.
You can do it yourself. You can ask your manufacturer for it. And this is kind of an interesting issue. And this is why Tarifflo exists to automate the process through these documents, looking at precedent rulings, getting you your most accurate HTS code. Because there’s only about a 70 % accuracy rate currently for goods coming in using the correct tariff codes. So there’s about 30 % of the
trillions of dollars worth of goods coming in that are either over-dutyed or under-dutyed. If they’re being under-dutied, you’re subject to fines and shipping delays if you get audited. If you’re overpaying, then that’s money that you could be saving by being more accurate. So it’s an interesting problem for a lot of these importers.
Stephen Brown (15:59)
I want to ask you a quick definition. What is the difference between a duty and a tariff?
Bryce Judy (16:05)
That is a good question.
So, tariff is added on duty is what you pay is kind of how I see it. You you have a 3 % tariff and then you’re that money that you’re actually paying is your duty.
Stephen Brown (16:17)
Okay. When, so you go through the classification process, your product gets shipped, you know, with the HTS codes applied to them. And most people are have multiple products. So they probably have multiple HTS codes in a shipment potentially. What is the process that Customs and Border Patrol goes through in processing those imports?
Bryce Judy (16:41)
Yeah, so it depends on what type of entry this is. So you have formal entries, you have informal entries, and then you’ve got these type 86 entries, which all of those have different processes for clearance. So the type 86 is these de minimis shipments that we’re looking at, right? And that’s very streamlined, very fast, no scrutiny. Basically, file, it goes through with minimal to no documentation.
The next is the informal entry. Basically you file your information. It requires more information than a type 86 entry. valued under $2,500, it’s really not that complex of a process to get it filed in. There’s no real back and forth with customs. You’re going to file these and it comes through.
Formal entries, that gets a little bit more technical. You have to file more documents with that. You you need your commercial invoice. You need your entry summary, which includes, you know, your bond information, your manufacturer information, your importer information. And then this gets filed to customs. And then you’ll get information back from them, you know, as your shipment, if it’s cleared, if it’s delayed, if they need more information.
So that’s kind of the general process for those three different types of entries that we see across the border.
Stephen Brown (18:01)
in addition to LedgerGurus, I own a small Italian organic skin care company. We’ve learned a little bit about import issues. There was a change in regulation that affected us.
We had to handle that. so we’ve been getting deeper into the process. One of the things we’re learning around about is bonds, right? So the bonds is what are used to pay the fees, right? When, when a product comes in, here’s something that I want to clarify. done some research, but I’d love for you to clarify this. What value is used to calculate.
the tariff, is it the manufacturing concept I came across was customs value. What is customs value?
Bryce Judy (18:43)
Yeah, so for the US, if you’re doing an informal entry, it’s the manufacturing cost. If you’re doing a formal entry, it’s the retail value.
Stephen Brown (18:54)
Hmm really so you have to specify your retail value of the product which you’re gonna get tariffed
Bryce Judy (18:56)
Yes.
Yeah, that’s right. yeah, that’s pretty much how it works.
Stephen Brown (19:06)
All right, let’s just go over this one more time because that’s a big difference, right? If your cost of goods sold is like 20%, so informal, if I heard you right, that only works up to about, what’d you say, $2,500 of import value?
Bryce Judy (19:12)
is a big difference.
That’s right.
Stephen Brown (19:25)
but anything over that, which is going to be the case for most of the larger sellers that we work with, they apply that against the retail value of the product.
wow, that’s a huge hit.
Bryce Judy (19:39)
there’s something to make sure that we’re understanding correctly here. So the retail value, there’s this program called First Sale, right? So the retail value, if you can trace back to the first time it was sold from a manufacturer to a distributor, you can use that first cost, that first price that was set. So let’s say you’re a couple steps down the supply chain when you’re buying and importing this in, you don’t have to use the retail value that you paid for the items
you might be able to, if you can get like a document trail, go down to the original manufacturer and figure out how much it was sold in that first sale.
Stephen Brown (20:15)
Okay. Let me make sure I clarify this because I think, terminology is really important here. Retail value is the retail price that you would pay the manufacturer, especially if you can exclude all the middlemen for the product. So it’s not the price you’re selling the product. It’s the price you’re paying to. Okay. We would probably call that in the accounting world, the manufacturing
buy price or something like that.
So just to clarify again, tariffs in the US are calculated off of the cost, the original manufacturing costs, the, did you say insurance? And then, and freight. that’s the, sometimes I’ve seen it from research called the customs value. Is that correct?
Bryce Judy (20:52)
Insurance, yeah, and freight.
Stephen Brown (21:00)
So then you apply whatever that tariff rate is for that product onto that cost. And that gets paid out of the bond. every country is different, right? So if you are selling in multiple geographies, not only do you have to handle, we’re talking very specifically around US sellers, but a lot of US sellers will sell into the UK, they’ll sell into Australia, Canada,
going to be different tariff procedures and calculations in each country. And as the US is going to, for lack of a better word, a trade war, we’re probably going to see a lot of changes in terms of importing product into those countries as well.
Bryce Judy (21:44)
That’s right. And really the hard thing here is each country has their own regulations, they have their own sites, they have their own classification processes. There’s no real centralized location for this stuff. And so it becomes like a massive headache for anyone that’s doing cross-border shipping, especially to multiple markets.
Stephen Brown (22:04)
Let me ask you question around compliance. What is to prevent somebody from putting in a false cost of manufacturing in an effort to try and reduce what they’re going to be tariffed?
Bryce Judy (22:19)
Yeah, this is something that you here talked about actually quite a bit in the background is, people working out deals with their manufacturers and they’re paying, a design fee to their manufacturer so that they can lower their unit costs item and, have a lower cost that’s getting taxed or getting dutied to the border. So there are a lot of different strategies that people will try to do, which are,
Stephen Brown (22:30)
Hmm.
Bryce Judy (22:41)
not legal or not something that you should be doing necessarily, there are more common practices than you would think.
Stephen Brown (22:48)
how does customs prevent that abuse and what are the risks associated? how would they identify somebody who’s doing what you said, like said, hey, I’m going to pay you a big number in design consulting or whatever, and then you’re going to lower my invoice for the unit costs. How would customs catch that?
Bryce Judy (23:08)
That’s the thing. it’s a tough thing to trace, right? But if you do get caught for something like that, let’s say that you were, mean, Ford Motor Company over in 2024, so just last year, they had intentionally misclassified one of their cargo vans that they were shipping across the border. basically what they did is it was a six-seat van and they removed two seats from the back. And so they imported it as a four-seat
car. And then they went and installed those seats in once it was across the border. And they’re saying, look, like it’s only four seats, like we didn’t do whatever. They ended up with like a $365 million fine in back payments. it’s definitely like exposes you to a lot of risk. you have a 5 % for negligence up to 100 % of the domestic value of the goods that you can face in fines for,
misclassifying goods or intentionally trying to, go around these regulations.
Stephen Brown (24:07)
Kind of like taxes. we talk to customers about taxes. We specifically support sales tax. And it’s one of those things where you can try and cheat, but if you get caught, you’re going to be in a world of hurt. Okay. so you’ve talked a little bit about some best practices for managing compliance and tariff classifications. Sounds like probably the best thing to do would be work with an expert.
or manufacturers oftentimes already know what their products HTS codes are. that probably the best two things to look at is talk to your manufacturer or work with a customs expert?
Bryce Judy (24:42)
Yeah, I think definitely the latter the two, working with an expert is going to be a lot better than just going off of what your manufacturer says. A lot of times they don’t actually know they’re just throwing out a number. They’re using the general classification. It’s a lot better to bring that in-house, do your own classifications, get an expert or use Tarifflo and, you know, get those actual correct, get some precedent behind it, get some court rulings that support that.
Because if you are to be audited, it’s great to have that backing for it. And as well, we were working with a company just a couple of weeks ago. We were just running through a couple of items for them, showing them how our system worked. And one of the items, they’re like, this HTS code is different than what we’re using. And they looked, and it was very specific to their item, classified it. And they’re like, yeah, we’re overpaying by 10%.
in duties for this one thing, which is about $15,000 for them per year. So just like a quick fix for them. They’re saving $15,000 per year now. And so it’s definitely worth it in the grand scheme of things to do it right the first time. Make sure these as correct as possible.
Stephen Brown (25:50)
Let me ask you a question around what happens, like let’s say you get in a dispute with customs and border protection and they said, you classified it wrong. You’re like, no, I did it right. Like how would you handle those disputes?
Bryce Judy (26:04)
Yeah. So if it’s about a classification issue, right. they’re going to request for more information. So what we used to do at KPMG is for each classification we would write, we would write a rationale. And basically that rationale is it would cite, section notes, your chapter notes, your explanatory notes, your, court or previous like CBP rulings. And it basically builds up like a precedent for, the classification that you used.
In case you’re audited, you can send that to them. And then they have at least that you performed reasonable care in making that classification. If they decide to assign you and say that it’s something different, then that’s all right. You won’t get that 5 % fine to 100 % fine. And you can just switch over to the new one. So that’s kind of how we used to handle that process there.
Stephen Brown (26:53)
Okay, so if you have good intent and you get in a dispute and you lose, you’re not going to pay the penalties, but you’re going to have to be prepared to back up why you assigned a classification the way it was.
Bryce Judy (27:05)
Exactly.
Stephen Brown (27:07)
so we talked a little bit about this, but people are scrambling. They’re like, what do I do? What do I do? And What would you recommend to somebody who’s importing product about how to approach tariffs in a way that is not going to get you into trouble? Like, is there any best practices or are we just like, it is what it is. You’re going to have to figure it out.
Bryce Judy (27:30)
Yeah, I would say be very intentional with your tariff strategy. If you decide to go the route of doing tariff engineering as your manufacturing goods and tariff engineering is basically you’re changing the design of the goods to be manufactured so they’re able to be shipped in legally as a lower tariff or a free tariff item. So if you’re going through and you’re trying to do things like that to change your HTS codes, that you’re doing it legally,
that it’s very intentional in the manufacturing process, that these goods are manufactured in a way that they’re gonna be able to be imported in that way. I think intentionality, if you’re looking at doing tariff mitigation strategies. first off, and then second off is definitely, get someone that’s an expert or get access to the data that has all of this in a unified place. It’s so…
kind of disjointed and for each company, you you have different SKUs, you have, these updates happening constantly and being able to understand that for your business from a high level perspective, will just give you so much more control and knowledge of how to go about and navigate these changes for your business specifically. So I think, yeah, number one, being intentional. Number two is being able to see it from this high level perspective.
And then number three, where you need help, where you have questions, definitely get an expert, get someone that’s a licensed broker, get someone that is experienced in this area to help you navigate these changes. Because it’s a lot cheaper to pay someone upfront than it is to pay it back in issues in the future.
Stephen Brown (29:03)
Let me ask you a question that’s probably going to be related to this if somebody’s thinking about switching their supply chain. What determines country of origin?
Bryce Judy (29:12)
Yeah, so country of origin generally, and there are certain free trade agreements that provide exclusions for certain goods and whatever. that gets pretty like in the weeds. generally, you’re looking at the item where it was originally manufactured unless there was a tariff shift. So, for example, you have an O-ring that was manufactured in China. That O-ring is going to be a part of, you know, we were talking about medical instruments.
it’s going to be a part of an endoscope that will be shipped into the U.S. So originally it’s this O-ring. It gets shipped into Mexico. The country of origin will be China. And then it gets put as part of a finished good. So the tariff code will shift to this new product, right? But at that point, it’s no longer a country of origin from China. It’s going to be a country of origin from Mexico. So that’s the general rule of where it was manufactured.
But unless there was a tariff code shift, and then it’s going to change.
Stephen Brown (30:12)
So what’s to prevent a company from saying, I’m just going to, there’s one piece that I’m going to slap on this. So I’m going to import everything. going to do most of the manufacturing in China, then I’m going to put it in Vietnam has been a common thing that you’ve seen over the last few years. I’m going to move that to Vietnam and then they’re going to do some final assembly and then country of origin is now Vietnam. What’s to prevent that from happening as a way to circumvent country of origin China.
Bryce Judy (30:43)
Yeah, so there are specific rules for each country that we have like trade agreements with, you know, there are certain things in place to try to prevent that from happening like for certain goods, but for a lot of goods that that’s totally allowed, you know, it’s all shipped in from somewhere else. It’s actually manufactured into the finished goods in Vietnam and it can be shipped in from Vietnam at that new tariff code. yeah, that would be allowed something like trans shipping where you’re just
you know, stopping at the port in Vietnam and then saying it’s from Vietnam, you know, that that would be illegal. Yeah.
Stephen Brown (31:14)
That’s where you’re gonna get into trouble.
And I think the big challenge, and it’d be fair to say, proceed with caution because Trump has said tariff is his favorite word in the English language. And he’s potentially looking at increasing tariffs across the globe. And obviously I would assume if they see this misbehavior, they’re gonna go after it. So you gotta be careful about…
changing up your supply chain only to have, as what we’ve learned recently, tariffs can happen very quickly. moving supply chain does not. So, proceed with caution is probably the best advice, right?
Bryce Judy (31:53)
Yeah, I think so. It’s definitely going to be a bumpy road over the next couple of years in this space. know, proceeding with caution, kind of looking at trying to project where things are going to go. That’s a, a big challenge because as we know from the last couple of weeks, things can change in the matter of hours.
Stephen Brown (32:12)
Gotcha. Well, this has been awesome, Bryce. If somebody wanted to connect with you, what’s the best way to do that?
Bryce Judy (32:17)
Yeah, you can connect with me over LinkedIn. It’s just Bryce Judy or send me an email. It’s Bryce.Judy at Tarifflo.com
Stephen Brown (32:25)
Awesome. Well, thanks for joining us and thanks for especially coming off of bronchitis. This has been super informative and hopefully helpful to those that are navigating this very nasty process.
Bryce Judy (32:37)
Awesome, thank you so much Stephen.