Customs Brokers Say Compliance on New Mexican Tariffs Not Possible by June 10

With ACE not ready, customs bond insufficiency issues, and importers unable to take on financial responsibility for tariffs on Mexican imports, the customs brokers who work at the California-Mexico border asked CBP and the Office of the U.S. Trade Representative to delay implementation of 5 percent tariffs past June 10. The Pacific Coast Council of Customs Brokers and Freight Forwarders Associations sent a letter June 5 saying that its members are alarmed "that it will be impossible to comply, as the mechanisms for compliance are not available between now and June 10th."

While the California customs brokers did not take a position on the wisdom of the action, the National Customs Brokers & Forwarders Association of America sent a letter to House Speaker Nancy Pelosi June 5 asking her to stop the tariffs.

NCBFAA President Amy Magnus wrote, "Mexico just recently became our largest trading partner -- a close ally with whom we just completed negotiations for a revitalized trade agreement to further cement this longstanding relationship. The volume of trade between our countries is immense -- from avocados to automobiles and auto parts to flat screen televisions to beverages to crude oil, the list goes on and on. ... We know first-hand just how devastating these tariffs will be up and down the supply chain."

She continued, "Congress cannot allow this to happen. To levy tariffs on one of our closest allies under the International Emergency Economic Powers Act (IEEPA) is a clear abuse of statutory authority. The IEEPA is a tool meant for imposing economic sanctions on America’s enemies and adversaries in the face of 'unusual and extraordinary threats,' not as a bludgeon against valued trading partners."

The PCC letter said they're not sure importers could even comply by July 1, when tariffs are supposed to jump to 10 percent. They said that smaller brokers do not have the cash on hand to advance the duties owed by clients, and gave an example in which a small broker that facilitates just one moderate-value shipment a day would owe $5 million for the remainder of June. "Every minimum continuous bond filed by the customs broker on behalf of an importer, will now be insufficient in this first month of June. Reviewing financials to raise the limits takes weeks," they wrote.

Many of these importers never had to pay duties before, because of NAFTA, and the brokers note that their clients don't have banking transfers set up so that they could wire the money to the federal government themselves. They noted that CBP has said it will take 15 business days to process those banking transfer requests.

The California customs brokers also said, "We understand that ACE will not be ready to 'go live' by Monday [June 10]."

"Without commenting on the policies of the Administration, we ask USTR, DHS and CBP, and of course the President, to postpone any new import duties on product from Mexico, until CBP can develop the procedures by which importers and brokers can reasonably pay them," the California letter said.

A CBP spokesperson told International Trade Today that “CBP is working through the details to make sure we’re ready to execute.” The New York Times said in a report that even without an official proclamation, CBP is working on ACE, and are readying technical guidance for importers. The Times said a CBP official said the administration is still deciding whether any industries will be exempted from the tariffs, and whether there will be a tariff exclusion process.

Also on June 5, the American Apparel and Footwear Association and the National Council of Textile Organizations sent a joint letter to the president noting that while they "often have divergent approaches to trade policy" they agree that tariffs on Mexico are a blunder that will kill American jobs. In fact, the textile industry in Mexico -- which uses American cotton, yarn and fabric -- creates opportunities that keeps Mexicans from coming to the U.S. for work, they wrote.

Email ITTNews@warren-news.com for a copy of the Pacific Coast letter.