Over the last few years the US administration have overhauled their import trade, taxes have been applied on goods arriving from Mexico and Canada and, in 2018 the US authorities introduced Import tariffs for certain goods manufactured in China.
There was an initial tax of 10%, which was due to increase to 25% in January. This was extended as trade talks between the US and China continued, but, the latest news is that the 25% tax will be implemented on the 1st June 2019 to all new imports under the current list of goods. So far Printed Books have not been affected but those of you who print stationary items may be aware of the issue as some items were included on the list on the third revision.
It is now understood that Printed Books and other printed matter under chapter 49 are to be considered to be included on the list of items that the Import Tax will be charged. The consultation period is expected to take place in June, so we would not expect any changes to be implemented until July.
25% tax makes a significant difference to the cost of the goods, and there are many articles online discussing the reasoning and the implications of the policy if you want to look at it further. Many industries are very concerned about the implications.
The situation is very fluid and may change with little notice, but we have tried to put together some information for you based on the current details that we have.
The Tax will only apply to goods that are manufactured in China. Goods manufactured in Hong Kong will not be affected. We do have a list of printers still producing products in Hong Kong if you want to contact us.
It is not possible to redirect your goods through another port in order to avoid the Tariff. The tax is based on the country of origin of the goods, so it is not possible to import the books into the UK, to then export as a UK / US shipment, unless the goods have been reworked and significantly changed. This would tend to apply to components of a finished product.
Even if you have stock transfers from UK to US but the goods originated in China then the tax would still be due. It may be that you will need to consider a process that will allow you to identify these items and it needs to be clear on documentation to avoid delays.
The effective date will be the date of importation into the United States – not the shipping date, nor even the date of manufacture.
Value of Goods: Unlike the UK, where we include the costs for transportation as part of the import value, the US only considers the cost of manufacture for taxation purposes. Where you have bundled deals for DAP or CIF you should be looking to break out the transportation costs to avoid paying more than necessary in Duty. Customs entries made by Publiship in the US will be checked automatically, but it is something to consider for any other work that you arrange, or goods being cleared by other brokers.
Freight Rates: We will see spikes and volatility in rates again to USA as all importers will look to beat the rises. Airfreight has reportedly increased by 35% in just the last few days to beat the 1st June increase.
Capacity: There has been a rush to source manufacturing from other countries in Asia, for example Vietnam, Cambodia, Thailand and Laos. However, China has become such a huge manufacturing country that there simply isn’t the capacity in these other countries to meet demand. Infrastructure and logistics should also be considered – trucks, ports, warehousing, administration, freight services and transit times. You should be careful to consider all factors when looking at other options.
Cashflow: The taxes will need to be settled as the goods arrive, so you should ensure that you or your Clients in the US have sufficient funds available at the time of importation, and the means to transfer funds at short notice. The taxes are the responsibility of the importer under all terms except DDP.
If you are registered as a US non-domicile registered importer, the taxes will still have to be paid.
Please do not hesitate to contact us if you have any questions. We will update you as the situation develops.