Trump’s new U.S. customs rules could upend Canadian exports

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The guidance and implementing rules are still being developed, with key reforms targeted for completion within 180 days of the order, but companies need to prepare now.

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“It’s a readiness issue for most companies,” said Goncalves.

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Companies that act as IOR themselves, rather than relying on a U.S. buyer or related U.S. entity to do so, may face the greatest operational and cash-flow impact — particularly if they lack an established U.S. presence.

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Goncalves said companies should first determine who will serve as IOR on each shipment — the Canadian seller, a U.S. buyer or a related U.S. entity — before restructuring their supply chain. They should also assess bond needs and broker arrangements, determine whether they or their broker are CTPAT-validated (Customs Trade Partnership Against Terrorism), and ensure customs entries accurately reflect tariff classification, origin, and valuation.

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“Companies need to know who the importer of record is first … and then trust their data,” Goncalves said.

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Owens fears that the biggest practical consequence will be the potential loss of continuous bonds, which allow traders to send multiple shipments under one bond.

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The order directs DHS to require that foreign importers of record generally cannot rely on continuous bonds for formal entries unless CBP is satisfied that U.S. revenue is protected and the importer will follow customs rules. Foreign IORs must also be CTPAT-validated if CBP determines they are eligible, or use a CTPAT-validated, licensed customs broker to file customs entries.

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Amy Magnus, director of customs affairs and compliance for U.S. Customs broker A.N. Deringer, Inc., is less concerned about a shift away from continuous bonds. She does not believe that requiring a single-entry bond for every shipment would be workable for frequent importers, customs brokers, or surety firms.

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Again, further guidance should roll out later this year, but registering as an IOR, getting brokers and bonds — or simply increasing bond amounts — takes time.

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Magnus recommends that companies consult with lawyers — especially U.S. trade-savvy lawyers — and their brokers now, if they are not already doing so.

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“If (you) want to continue doing business in the United States … make sure your compliance is meeting these new demands,” she said.

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And when it comes to fines, the order delivers another punch: it directs DHS to set a penalty floor of at least 50 per cent of the assessed amount, except in exceptional circumstances related to national security, and to stop mitigating penalties for repeat offenders.

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“They are saying that they will not mitigate (fines) beyond 50 per cent,” Magnus warned. “So if you get a $1 million fine … you’re still looking at a lot of money.”

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Enforcement is already ramping up, experts say, so it’s important that exporters take the time to get organized and seek the appropriate help now.

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Magnus noted an increase in trade-fraud enforcement and pointed to a new Department of Justice–DHS resource guide that signals greater use of criminal as well as civil tools against trade fraud.

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“When the Department of Justice is involved with trade fraud enforcement,” she said, “it starts to take on a… different tone.”

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National Post

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