Posts Tagged ‘Non-Resident Importer’


 

How The Proposed Tariffs Affect You In The U.S.-China Trade War

China U.S. Trade War Proposed Tariffs

For the second time in July the U.S. government has placed additional tariffs on products exported from China and imported into the U.S.  If the proposed tariffs were actioned, there would be changes for both American and Canadian importers. How will the additional tariffs on Chinese manufactured goods affect trade between the United States and Canada?

The Proposed Tariffs Effect On Canadians

Canada is already in the midst of a trade war with the U.S.  Now Canada is unwittingly affected by the trade war between the U.S. and China because many items proposed for additional tariffs are manufactured in China, exported to Canada and then finally exported into the U.S.  The additional tariffs levied against Chinese goods are applicable to goods manufactured in China without regard to the previous country of export.

Canada has enjoyed a long standing trade partnership with the U.S.  Canadian companies often act as Non-Resident Importers; handling all of the import requirements including payment of duties and taxes. This has allowed Canadians to sell their goods to companies in the U.S. as seamlessly as a U.S. company. This allows Canadian exporters to expand their market beyond the Canadian border.

The third list of tariffs released on July 11th cover consumer goods such as furniture, seafood, automobile parts, televisions and video equipment, which we see our clients from Canada ship on a daily basis.

Even though the trade war is between the U.S. and China, other countries are affected because they, like the U.S., have their goods manufactured in China.

Many of the items on the proposed list such as furniture and seafood, which are normally duty free, will be dutiable at 10% if the proposed tariffs are actioned.

If you are a Canadian company who exports Chinese manufactured products into the U.S. you will need to consider how you will address the increase in cost of exporting to Americans.

The Proposed Tariffs Effect On Americans

Over 75% of the new tariffs target machinery for manufacturing goods, electrical equipment, televisions, recorders, bicycles, bicycle parts, and automobile parts: all merchandise which is in high demand with american consumers. With the U.S. being a consumer based economy, where the consumer is interested in paying the lowest price possible, this new legislation would have an adverse effect on the U.S. economy.

In short order, the increase in costs to bring goods into the U.S. will increase costs for producers, importers and ultimately the consumer. This is never a popular solution, however the U.S. has tried to entice China to come to the table to discuss revising their unfair trade practices.  

The additional tariffs were initiated to combat Chinese regulations that require companies wishing to do business in China partner with a chinese company and share the technology associated with their products leading to violations of both intellectual property rights and World Trade Organization (WTO) rules.

Some economists say that a more appropriate way to combat these unfair trade practices would be to band together with other countries and take their concerns to the WTO to initiate a lawsuit against China.

In the long run, if the two countries can come to a satisfactory solution to the root of the issue the U.S. will benefit greatly and the trade deficit will balance out.

The Proposed Tariffs Affect On U.S. Import Bonds

How will the increased duties affect your import bond? Bond limits are set based on duties, taxes and fees paid in a 12 month period. With the increased duties, higher bond limits may be required. In addition to the higher bond limits, the surety company may request financial documents and collateral to secure the bond.

Your Guide To The Proposed Tariffs

This is a retaliatory move by the U.S. to address concerns of intellectual property rights.

The United States Trade Representative (USTR) will be holding a hearing August 20th-23rd on the impact the proposed tariffs will have if imposed. In order to appear at the hearing, submission must be made before July 27th, which must include a summary of the expected testimony. Written comments can be submitted to the USTR from now until August 17th, 2018.

A decision on if the additional 10% tariff will be imposed or not is expected to be announced at the end of August, after the hearings.

This 10% will be in addition to the already imposed 25% tariff on $34 billion worth of goods from China that came into effect on July 6th, 2018. China retaliates with a reciprocal tariff increase on U.S. commodities imported into China.

How You Can Prepare For The Proposed Tariffs

As a business it is best for you to be proactive in your approach to the impending changes. Contacting a trade professionals for advice on how the proposed legislation could affect your company will provide you with the knowledge to make quick decisions when change inevitably comes.

This includes understanding;

  • What country has the most cost effective solution to source your materials from,
  • Determining your rate of duty if there were changes to the proposed tariffs or NAFTA,
  • Education to make yourself prepared for current practices and future changes, as well as,
  • Freight costs to get your products from your source to you.

All of these services are provided to you by our Trade Advisory experts in Canada and the U.S. Contact us to start a conversation with a Trade Advisor today.

 

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Video: Drop Shipping, Part 3 – Leveraging Free Trade Agreements and Non-Resident Importing

In the final video of a three part series, we take a look at the two major advantages of drop shipping – Free Trade Agreements and Non-Resident Importing. We also go over the benefits of each in the global marketplace.

Advantages of becoming a drop shipper:

Let’s now take a moment and discuss two compelling advantages in becoming a drop shipper.

  1. Free Trade Agreements
  2. Non-Resident Importer

1. Free Trade Agreements (FTA)

Free Trade Agreements or FTAs have proven to be one of the best ways to open the world market and increase trade. FTAs allow for preferential duty treatment to items that qualify from certain countries. The North American Free Trade Agreement (NAFTA) for example, consists of the United States, Canada and Mexico and makes up one of the largest trading blocs in the world.

The United States and Canada currently have over 20 Free Trade Agreements in place with various trading partners.

How can you benefit from Free Trade Agreements?

  • FTAs can significantly reduce your landed costs by eliminating duties and taxes. So, for example, if you source a product from a country with an FTA and pay no duties or taxes, you now own an advantage over your competition that sources from say, China. You also benefit by having more than one market to choose from which gives you more flexibility when sourcing products. In addition to the current FTAs in place, the United States and Canada also offer preferential duty treatment to lesser developed economies under the Generalized System of Preferences (U.S.) and the General Preferential Tariff Regime (Canada), adding hundreds of more sources for international trade. As previously stated, you are not limited to the company down the street.

2. Non-Resident Importer (NRI)

So now that you have sourced products and found clients to sell the goods to, how will you deal with Customs? The last thing you want is to lose a sale because your client has to deal with customs. The most effective method is to remove Customs from the equation, well at least in the eyes of your client.

How can you benefit from being a Non-Resident Importer?

By acting as the Importer of Record, you can meet all the Customs obligations and have the goods delivered to your client as if they came from right down the street. One of the benefits of NAFTA is that you can act as the importer even if you are not physically in the country you are importing to. Customs recognizes this as a Non-Resident Importer, or the NRI.

Let’s say that you reside in Canada and have sourced product from Singapore to be delivered to a client in the United States and you have purchased the goods under CIF (Cost, Insurance and Freight) Incoterms®. Since the seller is obligated to deliver the goods to the port of destination of your choice, you would simply coordinate with your customs broker to clear the goods on your behalf and since the U.S. has a free trade agreement with Singapore you also benefit from duty free treatment on the items.

 

Becoming a Non-Resident Importer and benefiting from free trade agreements is an efficient way to join the global marketplace and benefit from global commerce.

The Final Analysis on Drop Shipping

Remember, the world is your oyster. You just need to make sure you have the right customs broker in place.

Watch the rest of this series:

 

Related Blog Articles:

 

Has your business benefited from Free Trade Agreements? Do you have questions about being a Non Resident Importer? We welcome your comments below or email Ask Your Broker.

 

Drop Shipping, Part 3 – Leveraging Free Trade Agreements and Non-Resident Importing

gold-globe-600In our last blog posts, we discussed the benefits of drop shipping and the responsibilities and obligations of a buyer under the Incoterms®.

Advantages of becoming a drop shipper:

Let’s now take a moment and discuss two compelling advantages in becoming a drop shipper.

  1. Free Trade Agreements
  2. Non-Resident Importer

1. Free Trade Agreements (FTA)

Free Trade Agreements or FTAs have proven to be one of the best ways to open the world market and increase trade. FTAs allow for preferential duty treatment to items that qualify from certain countries. The North American Free Trade Agreement (NAFTA) for example, consists of the United States, Canada and Mexico and makes up one of the largest trading blocs in the world.

The United States and Canada currently have over 20 Free Trade Agreements in place with various trading partners.

How can you benefit from Free Trade Agreements?

  • FTAs can significantly reduce your landed costs by eliminating duties and taxes. So, for example, if you source a product from a country with an FTA and pay no duties or taxes, you now own an advantage over your competition that sources from say, China. You also benefit by having more than one market to choose from which gives you more flexibility when sourcing products. In addition to the current FTAs in place, the United States and Canada also offer preferential duty treatment to lesser developed economies under the Generalized System of Preferences (U.S.) and the General Preferential Tariff Regime (Canada), adding hundreds of more sources for international trade. As previously stated, you are not limited to the company down the street.

2. Non-Resident Importer (NRI)

So now that you have sourced products and found clients to sell the goods to, how will you deal with Customs? The last thing you want is to lose a sale because your client has to deal with customs. The most effective method is to remove Customs from the equation, well at least in the eyes of your client.

How can you benefit from being a Non-Resident Importer?

By acting as the Importer of Record, you can meet all the Customs obligations and have the goods delivered to your client as if they came from right down the street. One of the benefits of NAFTA is that you can act as the importer even if you are not physically in the country you are importing to. Customs recognizes this as a Non-Resident Importer, or the NRI.

Let’s say that you reside in Canada and have sourced product from Singapore to be delivered to a client in the United States and you have purchased the goods under CIF (Cost, Insurance and Freight) Incoterms®. Since the seller is obligated to deliver the goods to the port of destination of your choice, you would simply coordinate with your customs broker to clear the goods on your behalf and since the U.S. has a free trade agreement with Singapore you also benefit from duty free treatment on the items.

 

Becoming a Non-Resident Importer and benefiting from free trade agreements is an efficient way to join the global marketplace and benefit from global commerce.

The Final Analysis on Drop Shipping

Remember, the world is your oyster. You just need to make sure you have the right customs broker in place.

 

Has your business benefited from Free Trade Agreements? Do you have questions about being a Non Resident Importer? We welcome your comments below.

 

Related Blog Articles:

 

Related Videos:

Why Am I Losing Money When Shipping to Canada?

Frustrations arising from cross-border shipping to Canada are always showing up in  my Google Alerts.  Most are from online auction type sellers who really do not understand the customs clearance process. Some try to save the customer’s money by  placing a false value on the goods which can result in even more costs for false declaration and lengthier delays for the receiver in Canada. Some e-sellers  refuse to ship to Canada altogether as they feel it is too much hassle and have lost money in  the transaction or received bad feedback from buyers.

Have you been faced with this situation?

1. Why do my customers in Canada want me to ship USPS?

This could be because it is cheaper to do so.

2. When I ship via postal service why does my customer in Canada send me a message four weeks later informing me they did not receive the package and I should resend it?

It could be because there is no traceability and it might be lost or stolen.

3. When I ship using a small parcel courier why do they hold my package hostage until the customer pays all the customs charges? Often the customer refuses to pay and the parcel company ships the package back and charges me for it.

Using the small parcel courier now provides you with the ability to track your package, but does your customer in Canada know what to expect to pay in  extra customs charges when the goods are delivered? If they don’t they may feel the charges are too high and it is no longer worth buying the product.

4. When I ship using the “other” small parcel company, why do they bill me all kinds of customs charges but the customer still gets their package?

The small parcel courier is on a customs program called the Low Value Shipment Courier program (LVS), in which the courier is allowed to declare and deliver the package and then that small parcel company sends out a letter stating how much they owe in duty, taxes and brokerage. If the Canadian customer does not respond, the “other” small parcel courier’s service guide directs them to bill the charges back to the shipper for any unpaid customs charges.

“Regardless of any payment instructions to the contrary, the sender is ultimately responsible for payment of duties and taxes if payment is not received.”

5. Why is my business losing so much money when selling to Canadians?

See 2, 3, and 4 above.

Have you explored all your options when shipping and selling to customers in Canada?

Before you ship or sell your products to customers in Canada, do your homework and consider calling a Canadian customs broker who can assist you in:

  • understanding the complexities of the cross-border transaction
  • save you money in fees
  • avoid unnecessary hassles at the border and with angry Canadian customers
  • streamline your shipments for a speedy delivery and a less costly transaction

The Non-Resident Importer option may be one solution. Preparing your Canadian customer on what to expect and having a solution in place may be another. Contact us before you finalize your next sale, and we will work with you and your Canadian customer to help both of you make a smooth cross-border transaction.

Do you have further questions about shipping to Canada? Feel free to ask them in the comment section below.