February 7, 2019


CEOs Scramble to Avoid Trump's Tariffs to Survive His Trade War (Mark Niquette  and Andrew Mayeda, February 7, 2019, Bloomberg)

The president's duties on $250 billion of Chinese goods -- with an increase in tariffs to come unless a trade deal with Beijing is reached by March 1 -- have affected U.S. companies big and small. Apple Inc. lowered its first-quarter outlook after demand for the iPhone in China slowed more sharply than expected, and the company's suppliers in China are considering shifting production. [...]

For companies caught in the trade war, the options for mitigating exposure to tariffs range from a simple change in paperwork to creative "tariff engineering" and the overhaul of supply chains often developed over decades. It's forced some executives to consider how far they can push the legal boundaries to avoid paying tariffs of as much as 25 percent.

"It would almost be something that would be a firing offense if you're in charge of supply-chain management and you don't point out to someone that you could save 25 percent tariffs,'' said Amanda DeBusk, a former Commerce export enforcement official who now is chair of Dechert LLP's international trade practice.

Primex has already tried some first steps that companies often take to mitigate the tariffs: trying to pass on the added costs and checking if their products were properly classified under U.S. tariff codes. Some items incorrectly categorized in the past went unnoticed because no duties were applied, said Randy Rucker, a trade lawyer representing Primex.

The company also filed 79 requests with the Office of U.S. Trade Representative for exclusions from the tariffs. Decisions are based on whether a product is available only from China, if duties "would cause severe economic harm" to the company or U.S. interests, and whether the item is strategically important. All of Primex's requests were denied.

"We were like, 'You're about to put a 75 year-old company out of business?,''' Shekoski said. "Why would it not be economic harm?''

Taxes and regulations are a small price to pay for racial hygiene.

Posted by at February 7, 2019 3:58 AM