Following the Sept. 22 anti-stockpiling rule announcement, enforcement began almost immediately with the US Department of Commerce (DOC) and Customs and Border Protection (CBP) blocking more than 20 importers from entering covered products. The pace has continued. By mid-October, our checks indicated that every week roughly a dozen importers were being blocked, or 30 to 50 in total.

This approach is stricter than traditional CBP enforcement. Instead of relying mainly on physical inspections, the DOC tracks covered products by tariff code and importer of record (IOR). When it sees volumes rise substantially, it can stop imports, and the importer then has to appeal to be reinstated. To avoid detection, an importer would have to do something clearly illegal, such as declaring a different tariff code. Licensed customs brokers have little reason to go along with stockpiling, because a broker that facilitates this can have its license reviewed.

The DOC is also going after ways to get around the minimum import price (MIP), and is developing new rules to make sure the arm’s-length first-sale rule works as intended. The concern is structures in which an entity buys at the MIP and then resells below it. Companies that knowingly route a sale through an affiliated entity this way would be treated as violating the proclamation, and the DOC is building tools to see who is selling below the MIP. Commerce also recognizes the risk of circumvention after importation, including bundling and post-sale rebates. We continue to expect aggressive enforcement.

The next catalyst for US manufacturers is the tariff rebate/onshoring program, which is expected shortly.

Source link