Our previous article on What Every Multinational Company Should Know About … Managing Import Risks Under the New Trump Administration (Part I) identified the 12 main import-related risks (and opportunities) likely to arise in the new Trump administration. Part II laid out the likely roadmap to the international trade priorities of the Trump Administration in The Implications of President Trump’s “America First Trade Memorandum.” We now complete the series on “Managing Import Risks Under the New Trump Administration” with Part III, which provides practical advice regarding how to navigate these potential major changes in the international trade environment.
With potential tariff increases and USMCA renegotiations on the horizon, and with Customs already devoting considerable resources to blocking goods at the border that are the product of forced labor or human trafficking or that violate the Uyghur Forced Labor Prevention Act (UFLPA), we have put together a 12-step guide to preparing for and adapting to the rapidly shifting importing environment. It focuses on the following areas:
- Understanding your company’s importing patterns;
- Ensuring that your current import efforts comport with Customs requirements and are not leaving your organization at risk for detentions or penalties;
- Evaluating the status of your current USMCA compliance efforts;
- Risk planning for potential rapid changes in the tariff environment; and
- Ensuring your organization is preparing for the likely focus of the new administration on supply chain integrity.
Working through these factors should help most multinational companies with significant international supply chains address the three main risks as we move into the new administration: (1) risks relating to customs underpayments, (2) risks relating to potential tariff hikes, and (3) risks relating to supply chain integrity issues. Because these areas are interrelated, a holistic focus on all five areas listed above is likely to yield the best and most flexible posture to manage a changing international trade landscape.
Understand Your Importing Patterns
Step 1: Identify All Importing Avenues at Your Company. Managing import-related risks begins with a comprehensive understanding of your company’s importing activities. The first step, accordingly, is to get a good handle on your importing patterns by doing the following:
- Identify all importer-of-record (IOR) numbers associated with your company at all divisions and subsidiaries.
- Identify all customs brokers used by your organization over the last five years, and determine which ones are still active. Determine which types, which product lines, or which divisions each broker is handling.
- Pull, or have your customs broker pull, the Automated Commercial Environment (ACE) data with all your company’s identified IORs to gather the data needed to analyze import trends and the accuracy of information submitted to Customs at the time of entry.
- Collaborate with procurement teams to anticipate future orders, including for new products, suppliers, and sourcing regions under consideration.
- Document all touchpoints in your supply chain, including warehouses, distribution centers, and logistics providers. When paired with importing data, logistics data provides a clear picture of importing patterns, enabling better risk management and modeling.
Ensure Your Imports Are Being Handled with Reasonable Care
Step 2: Ensure Customs Compliance Is Robust. Customs compliance is always important. But in a high-tariff environment, the stakes for missteps are considerably greater, increasing potential penalties and interest for underpayments. For the same reason, the advantages of identifying tariff-saving opportunities are much greater. Some key areas to consider for ongoing customs compliance include:
- Ensure Your Company Maintains a Thorough Classification Index to Ensure Proper and Consistent Tariff Coding: Inaccurate classifications can result in incorrect duties or penalties, so confirm your company has procedures to correctly classify goods using the correct Harmonized Tariff Schedule (HTS) codes and maintains a regularly updated import classification index to reflect new products or changes in tariff codes.
- Ensure Your Company Maintains a Customs Manual for Consistent Procedures in Importing: Ensure your organization maintains a detailed customs compliance manual that outlines procedures for classification, valuation, origin determination, recordkeeping, interactions with brokers and Customs authorities, and other relevant matters that impact the accuracy of information reported to Customs. A clear, documented import process ensures consistency and reduces the risk of errors.
- Ensure Your Company Tracks and Attributes Assists Using a Consistent Methodology: Review and ensure there are procedures to track and properly report assists, royalties, or other costs that might affect the declared value of imported goods. Misreporting these costs could lead to underpayments of duties and penalties.
- Ensure Your Company Conducts Regular Post-Entry Audits to Identify Errors in Importation:Ensure there are procedures to regularly review entries after clearance to identify potential errors in valuation, origin declarations, classification, or other entry-specific items that impact how much duties are owed. Do not forget to include areas of tariff savings like duty drawbacks, post-summary corrections, or reconciliation filings to identify and address discrepancies.
- Ensure Your Company Maintains Procedures for Overseeing Customs Brokers and Freight Forwarders: Ensure there are written protocols that are consistently followed to ensure there is proper oversight of customs brokers and freight forwarders. Confirm that someone at the company is playing point on this coordination and also has been given ACE access to monitor communications to and from Customs.
- Ensure Your Company Maintains Procedures to Monitor Changing Regulations and Importing Requirements: It is important to stay informed about regulatory updates, especially in times when import-related requirements might quickly change. Use tools like ACE data to proactively adjust compliance practices to evolving rules.
Step 3: Address USMCA Compliance. As detailed in Part I, the USMCA is coming up on the deadline for a three-country review, to begin in 2026 (although it is likely that the process will begin earlier). Even in advance of that, we expect Customs to continue prioritizing its review of claims for USMCA preferential treatment, which has been a point of emphasis for CBP over the last few years. Thus, the starting point for USMCA risk planning is to ensure your organization is properly managing its current USMCA posture. Key areas to review include:
- Proper Certificates of Origin at Importation: Importers must have a valid certificate of origin to claim duty-free treatment in hand at the time of importation. Lack of documentation at the time of importation may result in denied preferences and cannot be remedied after the fact. This is one of the most common importing errors that we see (along with failure to track assists and misclassifications). Avoid this problem by ensuring certificates are available, complete, and maintained for at least five years. Collaborate with suppliers to provide accurate certificates before shipment.
- Compliance with Regional Content Requirements: Products like automobiles must meet specific regional value content thresholds. Conduct a detailed analysis of your supply chain to confirm sourcing meets required content levels.
- Proactively Engage with Suppliers: Communicate with suppliers to verify their understanding of regional content requirements and to confirm they are accurately reporting the same to your company. Work with them to resolve discrepancies and improve compliance practices.
- Proper Declaration of Country of Origin: Incorrect origin declarations may trigger penalties or loss of USMCA benefits; misclassifications can result in the application of the wrong USMCA classification requirements and also increase scrutiny from CBP. Validate claims of USMCA origin using clear supplier documentation and other supporting information. Ensure employees managing import declarations are trained on proper classification and country of origin rules, which often differ from the normal Customs substantial transformation rules, such as when the USMCA requires a tariff-shift analysis or product-specific requirements.
Step 4: Consider Conducting a Customs Audit. A comprehensive customs audit can be essential for identifying compliance gaps and mitigating risks in an increasingly complex trade environment. Regular audits ensure that your organization adheres to import regulations, minimizes the risk of penalties, and maximizes efficiency in import operations. A well-conducted compliance audit can identify inconsistencies in tariff classifications, valuation, or country-of-origin claims and can streamline processes to avoid unnecessary delays and errors in filings, verify that declared values include all dutiable costs, such as assists and royalties, and ensure your company is maintaining proper documentation. A customs audit also should evaluate the robustness of the importer’s procedures for identifying errors after entry and correcting them using post-entry corrections and protests against liquidation.
Evaluate Tariff-Related Risks
Step 5: Conduct a Comprehensive Risk Assessment. A thorough risk assessment is critical to navigating tariff challenges, geopolitical uncertainties, and supply chain vulnerabilities. This step ensures your business understands where risks lie and enables strategic mitigation measures. Key areas to assess include the following:
- Regional Risk: Analyze regions prone to instability, trade disputes, or changing trade agreements. Consider the impact of regional disruptions such as natural disasters or labor unrest.
- Political Risk: Evaluate the vulnerability of goods facing political headwinds, especially those from China, Canada, or Mexico.
- Product-Related Risk: Identify goods facing high tariff rates or subject to frequent trade policy changes, such as steel and aluminum. Evaluate whether certain products have complex classification issues or are affected by partner agency rules.
- USMCA Risk: Evaluate goods from Canada and Mexico that are subject to special rules such as content requirements for automotive goods and heightened rules of origin standards.
- Supply-Related Risk: Assess the concentration of suppliers in high-risk regions or for key products. Evaluate supplier compliance with trade regulations and their ability to adapt to policy changes.
Once the data is in place, begin to analyze risk factors. Create risk matrices for products, regions, and suppliers to quantify and prioritize exposures. Also use supply chain mapping to identify the sourcing of key goods, from raw materials to finished products, that the company may not be sourcing directly. Use all data sources to fully understand company sourcing, how goods work through the supply chain, and hidden sources of risk.
Step 6: Model Different Risk Scenarios. The next step is scenario planning. Risk scenario modeling equips your company to anticipate and navigate potential challenges by evaluating various “what if” situations. Risk scenario modeling will help provide visibility into which areas need immediate attention; can provide informed decision making for supplier diversification, tariff mitigation strategies, and contract negotiations; and enhances preparedness to manage disruptions and to maintain compliance while safeguarding profitability. Areas to consider include:
- Rising Tariffs on Specific Countries or Goods: Be aware of tariff increases on specific countries or goods such as electronics or steel. Watch for escalation of trade disputes affecting major trading partners like China, Mexico, or the EU.
- Adjustments to USMCA Provisions: Track changes to USMCA rules, such as stricter regional content requirements. Be prepared for renegotiations or withdrawal from agreements impacting duty-free access.
- Currency and Geo-Political Risks: Currency fluctuations impact the landed cost of goods. Consider the impact of inflationary pressures and potential currency movements on raw materials or finished goods, taking into account the currency used in contractual arrangements.
- Long-Term Supply Chain Disruptions: Consider likely increased scrutiny of imports due to UFLPA, forced labor and human trafficking, and other supply chain integrity measures. Evaluate potential long-term disruptions due to geopolitical instability, natural disasters, or pandemics as well as how your company would weather supplier shutdowns due to failure to meet trade or labor standards or for other reasons.
- Partner Agency Regulations: Customs acts as the gatekeeper regarding the import-related obligations imposed by several dozen other federal agencies such as the Food & Drug Administration and the Department of Transportation. Failure to meet the requirements of these partner agencies can lead to penalties or detentions of goods at the border. Evaluate whether your organization has identified all potentially applicable partner agency import-related requirements and has taken steps not only to meet these requirements but to document compliance, to allow for a quick response to any detention.
Next, move to modeling scenarios:
- Define Scenarios: Collaborate across Procurement, Compliance, and Finance to identify plausible high-impact scenarios such as rising tariffs on key imports, potential filing of antidumping or countervailing duty actions, or revisions to important USMCA preferences. Incorporate external data on policy trends, trade disputes, and economic forecasts.
- Quantify Impacts: Calculate financial exposure for each scenario, including additional duties, delays, or penalties. Assess operational impacts such as delays in sourcing or increased compliance burdens.
- Develop Response Plans: Create contingency strategies such as diversifying suppliers or renegotiating contracts. Identify alternative sourcing regions with favorable tariff structures, and model how flexibility in supply chains can minimize unexpected international trade developments.
Step 7: Model USMCA Changes. By thoroughly reviewing and modeling current compliance with USMCA, companies can mitigate risks from CBP enforcement. To risk plan for the future and the potential impact of USMCA renegotiations, USMCA modeling should cover the following areas:
- Assess Risk of Stricter Rules of Origin: Model scenarios where rules of origin might tighten such as requiring higher percentages of North American content for products like automobiles, machinery, or textiles. Evaluate likely risk points for increased regional content or special rules such as those affecting steel and aluminum. Evaluate whether your existing suppliers and manufacturing processes can meet potential increases in regional content thresholds or how supply chains could adapt.
- Anticipate Changes in Sector-Specific Provisions: Monitor developments in sectors like automotive, agriculture, and pharmaceuticals as well as steel, aluminum, and derivative products, which may see targeted updates. Evaluate whether stricter labor or environmental standards could alter sourcing costs and require supplier realignment.
- Conduct Supply Chain Reviews: Analyze your supply chain for dependencies on non-USMCA countries that are used as sources of parts and components for USMCA regional production. If rules of origin become more stringent, reliance on these sources might disqualify products from duty-free treatment, thereby increasing costs, so model areas where alternative or secondary suppliers would be prudent.
- Prepare for Cost Impact Modeling: Assess how potential changes could affect tariffs, transportation costs, and pricing. Consider consulting trade specialists to evaluate the financial implications of a shift in USMCA provisions.
Implement Tariff-Mitigation Strategies
Step 8: Implement Practical Commercial Strategies. To effectively navigate trade risks and disruptions, companies must adopt pragmatic commercial strategies. These steps aim to strengthen supply chains, ensure continuity, and reduce tariff exposure:
- Supplier Diversification: Identify and engage alternative suppliers across various regions to reduce dependency on high-risk countries. Assess supplier capabilities, including production capacity, quality standards, and compliance with trade and labor regulations.
- Secondary Sourcing: Establish relationships with secondary suppliers to facilitate rapid transitions if primary sources are disrupted. Prequalify secondary suppliers to ensure readiness for rapid transitions. Develop a database of approved suppliers for critical products to facilitate quick decision making during disruptions.
- Proactive Vetting: Use trade fairs, government networks, and supplier databases to vet potential partners. Conduct due diligence on potential suppliers, including labor standards, certifications, and production practices. Consider initiating qualification procedures and measures to ensure potential secondary or alternative suppliers can meet qualification standards.
- Safety Stock: Increase inventory for high-priority or tariff-sensitive goods to buffer against supply chain delays or sudden cost spikes. Balance inventory costs with the need for operational flexibility.
- Collaboration with Existing Suppliers: Engage in transparent discussions with current suppliers about risks and mitigation strategies. Encourage suppliers to diversify their sourcing of raw materials to prevent cascading disruptions.
Step 9: Review and Update Contracts. Supply chain contracts are pivotal in managing risks associated with tariff volatility and trade disruptions. Regularly revisiting and revising these agreements can provide the flexibility needed to adapt to evolving trade environments. Proactively addressing tariff risks in supply chain contracts reduces financial uncertainty, supports operational continuity, and strengthens relationships with suppliers by fostering transparency and preparedness. Consider the following steps:
- Avoid Over-reliance on Force Majeure or Commercial Impracticability Clauses: These legal defenses are often difficult to invoke and generally will not cover tariff-related disputes. Instead, create specific terms addressing trade policy risks, including tariff hikes or supply chain interruptions. Define clear terms to share or distribute the financial impact of tariff increases between the buyer and supplier.
- Renegotiate Supply Agreements with Built-in Flexibility for Tariff Increases: Consider implementing proactive contractual arrangements to share in potential increases in tariffs. Where possible, include provisions allowing adjustments for changes in tariff rates. Build in clauses enabling renegotiation or termination in cases of significant trade policy shifts.
- Incorporate Alternative Sourcing Requirements: Require suppliers to maintain backup production capabilities or secondary sources to mitigate disruptions. Consider incorporating these requirements into contractual arrangements and establishing penalties or incentives to ensure compliance with these requirements.
- Look for Contractual Leverage Points: Suppliers often will be reluctant to renegotiate contracts, particularly if it involves potential price increases or sharing of tariff-related risks. Look for contractual leverage points relating to contract renewals or potential expansion of purchasing patterns. Consider moving up contract renewals to combine term extensions with tariff-related risk sharing.
Look for Tariff-Saving Possibilities
Step 10: Maximize Duty Savings Opportunities. A well-structured strategy to minimize duty costs can significantly offset the financial burden of potentially increasing tariffs and improve overall cost efficiency in import operations. By leveraging available tools and programs, companies can enhance cash flow, lower landed costs, and reduce their tariff liabilities while ensuring compliance with Customs regulations. Key duty saving measures to consider using include:
- Customs Bonded Warehouses: Customs bonded warehouses allow importers to defer duties by storing imported goods until they are needed. This approach provides cash flow advantages, particularly for products that may be reexported without duty payment.
- Foreign Trade Zones (FTZs): FTZs allow companies to store, assemble, or process goods with deferred or reduced tariffs. Goods within FTZs can be reexported duty-free or entered into the U.S. market with reduced duties based on final product classification.
- Duty Drawback Programs: Duty drawback programs allow importers to recover up to 99% of duties paid on goods that are later exported. This is especially beneficial for businesses with significant reexport activities or defective goods returns.
- Temporary Importation Bonds (TIBs): TIBs allow the importation of goods temporarily without paying duties, provided the goods are reexported within a specified timeframe. TIBs are useful for items like trade show samples, prototypes, or tools of the trade.
- Free Trade Agreements (FTAs) and Special Trade Programs: FTAs, such as the USMCA, provide potential access to preferential duty rates. Importers should investigate eligibility for programs such as the Generalized System of Preferences (GSP) for duty-free treatment on qualifying imports.
- Apply Tariff Engineering: Importers can legally reduce tariffs by modifying supply chains or the manufacturing steps of products. Tariff engineering can include adjusting production processes to qualify goods under preferential trade agreements, shifting sourcing to countries with lower tariff rates, and implementing minor product changes that result in more favorable classifications. Ensure all changes comply with U.S. Customs and partner agency regulations.
Take Care of Your Supply Chain
Step 11: Identify Your Complete Supply Chain and Map It Out. Supply chain mapping is the process of documenting all suppliers and the flow of goods and products in a supply network. A clear picture of one’s supply chain allows importers to identify efficiency-enhancing opportunities and mitigate the risk of supply chain disruptions. It is possible to create a visual representation of your supply chain using diagrams or software tools, to easily identify connections and pressure points and ensure full knowledge of sub-suppliers, which often is the key compliance risk point for many multinational companies. Some best practices for supply chain mapping include:
- Define Your Product: Clearly identify the products you are mapping, as different products may have different supply chains.
- Identify Stakeholders: Identify all individuals, suppliers, and contractors who contribute to the production, storage, or distribution of your product.
- Understand Supplier Relationships: Get your first-tier suppliers involved in the mapping process and ask them to bring forward knowledge regarding second-tier and third-tier suppliers. Have each entity detail what they sell and what they buy next in the chain from others. As the map expands, you will get a better view of potential risks, bottlenecks, and dangers of relying on single suppliers or businesses with long lead times.
- Document the Flow of Materials and Information: Trace the movement of raw materials through each stage of production, including processing, transportation, and storage, while also documenting the flow of information between stakeholders.
- Evaluate Supplier Capabilities: Assess each supplier’s production capacity, quality control measures, and compliance with relevant regulations.
Step 12. Conduct a Supply Chain Integrity Check. Compliance with labor and transparency requirements is integral to tariff management. After mapping your supply chain, conducting integrity checks or audits of your suppliers can help your company stay abreast of new developments and comply with laws — especially in the areas of forced labor, human trafficking, modern slavery, and environmental regulations — thus avoiding potential fines or blockages of goods at the border.
- Risk Assessment: Once your supply chain map from Step 11 is complete, conduct evaluations of your suppliers and analyze potential risks at each stage of the supply chain, considering factors like geographical location, political instability, regulatory compliance, labor practices, cybersecurity, and financial stability.
- Update All Terms and Conditions: Make sure your contracts are up to date, and clearly define expectations of your suppliers regarding quality control, documentation responsibilities, labor practices, and environmental impact.
- Incorporate Third-party Audits to Verify Supplier Practices: Use third-party audits, including onsite audits, to help evaluate your suppliers and to assess their compliance with environmental and labor laws and the company’s standards regarding product quality, safety, ethical practices.
- Build and Maintain Supplier Relationships: Foster open communication with suppliers and encourage them to disclose any potential issues before they become significant issues. Offer to help address concerns and implement improvements proactively throughout the supply chain system.
- Continuous Monitoring: Implement systems and regularly monitor your suppliers’ performance and compliance. Evaluate your supply chain for new potential risks that might arise.
The issuance of President Trump’s “America First Trade Policy” underscores just how far ranging the potential changes to the international trade environment may be. The triple pressures of rising tariffs, likely changes to USMCA requirements, and an increasing focus on supply chain integrity underscore the need for importers to adopt a proactive, multifaceted approach to managing import-related risks. By focusing on risk assessment, supplier diversification, compliance audits, and duty savings, importers can not only weather upcoming challenges but also turn them into opportunities for operational resilience and competitive advantage. Under the Trump administration’s trade agenda, businesses should expect heightened scrutiny of imports and expanded enforcement of customs and labor practices. Preparing now ensures resilience and competitiveness in the face of uncertainty.