In year two of the COVID-19 pandemic, the economic fallout of the rinse-and-repeat cycle of global shutdowns and subsequent reopenings amid vaccine rollouts and the emergence of the Delta and Omicron variants has reverberated throughout the entire global supply chain, with US importers squeezed between every link in the chain.
If foreign suppliers are still able to manufacture goods for export, the challenge remains actually moving that merchandise from foreign ports to the US in the face of shocking freight cost increases and unprecedented port congestion that few shippers can absorb. Those companies that are somehow managing the international transportation challenge must then contend with the container pileups at US ports of entry and continued trucking and labor shortages challenging inland movement.
The devastation to US companies from the overwhelming cost increases of just the transportation aspect of international trade is being compounded by the continuation, for the most part, of the Trump administration’s Section 301 tariffs on Chinese-made goods, higher duties on steel and aluminum sourced from most foreign countries (though recent reprieves were granted to EU countries), and the proliferation of trade enforcement escalations — e.g., “forced labor” detentions, surprise allegations by domestic producers of “evasion” of antidumping and countervailing duty orders, more intensive document requests, more frequent allegations of intellectual property violations, more rigorous enforcement of regulations from other government agencies like the Food and Drug Administration (FDA), Consumer Product Safety Commission (CPSC), Department of Agriculture, etc.
Importers that are the most diligent in their customs compliance processes and procedures are merely having to deal with the inconvenience of these interruptions to the facilitation of their shipments. Those that are careless, negligent, or worse, however, are likely to face more serious consequences, such as cargo seizures and possibly civil or even criminal penalties.
Various bills have already been either introduced or are being drafted in Congress that are either specifically directed at trade with China or more generally designed to further increase enforcement by US Customs and Border Protection. While the US Trade Representative is considering reinstating previous exclusions from the 25 percent tariffs on 549 products imported from China, there is no indication that such relief is being considered for the many thousands of other products still bearing these increased costs.
And while the Biden administration has announced that part of the recently enacted bipartisan infrastructure bill will be used to fund major improvements to ports of entry to relieve supply chain blockages, the effects of such initiatives will not be felt for some time. Strap yourselves in for another year of choppy waters for international traders.