Broker Partnerships: Building Trust, Strategy, and Compliance in Global Trade

Machine Operated Script:

Welcome to the simply trade Roundup. My name is Annik. I’m your host today, as I am always.

We’re gonna get through this. Bear with me here, because I’m struggling a little with my sinuses, and so I might sound a little crazy, and I probably will not be able to listen to this episode, because I just have to, like, no addict, I just can’t listen to you, but hopefully you can. I’m so sorry. I have to listen to myself all day, so you just have to listen to me for 30 minutes. That’s it. Okay. Bear with me, but I won’t be the only one talking here. Thank God, I have a great guest, which I met her at the GTE conference. She’s been on the show before, but we officially met at the GT conference, which was just incredible. She has the same energy that she brings to the show every time. And you know you never know what you’re gonna get in person, but you get a lot from her, which is amazing. And I was so happy to have invited her, even before GT back on the show. And so she’s here. It’s Jen Diaz, who is also the president of Diaz law, and you’re a practicing trade attorney, correct? 20

years, crazy, time is flying by. So 20 Yeah,

exactly, exactly. That’s, that’s, that’s what we need to hear for life. Well, Jen, so we met at the GTC conference. Lots was going on there. How was? Well, I’m not going to bother you about the whole conference, how it was, because it was spectacular. We loved it. The

first time I went on a scooter that was like my highlight, ice cream and scooter rides and all that fabulous networking. It’s always great to see you, Lalo and the simply trade crew. I love being on this podcast. And I think you guys produce amazing content for our customs or export worlds, which it’s it’s a necessity, and I the tariffs are always the hot topic, and it was absolutely the hot topic at the conference. And what was interesting was a lot of the feedback from other practitioners about the trade environment right now, and what we’re seeing, feeling and hearing, and what’s on the ground. And the interesting take back from all of us was the aggression and the force that we are seeing from this administration in what they are doing to protect the national interests and to ensure tariffs are collected and paid, and we’re protecting domestic industry. But we are all. We all have very, different perspectives of what we’re seeing from our clientele, but we all have the same perspective in what we’re seeing from an enforcement perspective, in that there was a previous history of getting what we call requests for information and notices of action Before customs officially took action, we’re seeing more of customs either taking action or leading straight to letters of investigation and getting straight onto enforcement or not sending the request for information and straight rejecting the shipments. Basically, customs is using its administrative tools to proactively enforce immediately versus retroactively, versus letting trade flow and facilitating the importations and then reviewing the importations, it’s more so gung ho on ensuring that those collection efforts take place quickly, and we’re going to see a lot More of that aggression and a lot more of the the criminal investigations, which is what I’m more so ramping up for and fearing in that, I think there’s going to be a lot more aggression from what we’re seeing and hearing from the Department of Justice in relation to tariffs as well. So I think, to me, the big takeaway that I saw and heard and felt was one, if your house and compliance is not in order, you’re late to the party and you need to jump on board, and I’m happy to dive into what that means tariffs are here. We’ll see what happens with litigation. And there was another big takeaway there with Are you going to be part of the lawsuit? Are you going to stand by and watch the lawsuit as it progresses? We all have a similar opinion in that. I don’t think anyone in the trade disagrees that the Supreme Court is likely to hear this, and I think they will take that case. That’s my dollar bet, and whether or not they agree with the administration or the importers, nobody’s going to like my dollar bet, but my dollar bet is, I think they’re going to agree with the administration, but we’ll see. I whether or not that’s right or wrong, and whether or not you know it’s we can get into all sorts of holes in regards. Of that, but, you know, we’ll see where they where they ultimately decide. But now the fun part is, if I’m wrong, if my dollar bet is wrong, and the Supreme Court agrees with the importers, which you know, whether or not that’s the right or wrong decision, we can all talk about that. And I, you know, I think whether or not the tariffs were imposed correctly or incorrectly, whether or not Congress should have had a part of this is really the underlying embedded from IEEPA in starting with IEEPA tariffs, but regardless, let’s say the Supreme Court sides with the importers, right? What about entries that have come in where you paid those IEEPA tariffs and those entries have already liquidated and you didn’t file a protest. That was a fun conversation that we had during our panel at GT, where actually we were polling some of the importers and brokers in the room. And I would have thought, because IEEPA tariffs had not really been in place for all that long, that the entries hadn’t liquidated. Typically, a liquidation cycle, it’s about 314 days after the date of entry, and then you have 180 days to protest thereafter. So you know, usually you’re talking about a good year and a half. We are hearing from GTC and from some of the participants that there has already been entries liquidated, that some people within the audience were telling us that they’ve already started seeing liquidation. So now for those What does customs really want you to do? Because when we had 301 litigation, and when we had 301 updates, so many protests were filed for exclusions, and the use of those exclusions, and if you didn’t use it officially and properly at the beginning, for example, you filed a protest thereafter, and customs, five years later, is still flooded with reviewing those protests. So can you imagine customs reviewing hundreds of 1000s of protests when it comes to IEEPA tariffs, which is, you know, what we would envision? So I can’t imagine customs wanting that, but now can we trust that customs will issue those refunds if IEEPA is declared to be unconstitutional in terms of the mechanism for the imposition of the tariffs, and I have a hard time with that one. So there was a lot of back and forth that we had in regards to how we think that will play out, and what you can do to preserve your interests if you want to ensure that you basically tell customs, should the importers win on their challenge of the imposition of iefa tariffs being imposed unconstitutionally and they never should have, as the CIT and it and I think the Court of Appeals will agree with that, that they were imposed in incorrectly, unconstitutionally, without, without Congress’s authorization, and not utilizing the right channels. Then is there going to be a mechanism for every importer that did pay those duties to get refunds of them. Or Should those importers be proactively saying, customs, wait a minute, I don’t want you to liquidate. Should we? There was a big talk about, should we ask customs to suspend liquidation? And will they really do that for ongoing litigation? And there’s back and forth, and different practitioners have different opinions on that. So I think what we more so have a semi agreement, and I think you know, same thing, talk to send lawyers. You get 10 different opinions and some variations of it is whether or not you should be filing a protective protest on your entries and keeping track of liquidations via ace. So in terms of a summary of that, things to think of and do. One if you’re an importer, make sure you have an ace account, because you likely don’t work with one broker. Every broker wishes you only worked with one broker and loved them only, but you know, most importers work with more than one broker, so if you don’t have your own ace account, you’re dependent upon that broker to provide you data for their entries, but they wouldn’t have data for other brokers entries that are filed. So track your liquidations. You can get your case reports and monitor liquidations and monitor your protest timelines of your 180 days post liquidation to file a protest. And you know, we’re debating that internally in terms of working on that for our clients to monitor their liquidations and have protective protest language, basically saying, should the importers be successful? We want our money back, honey. You know, like, why should we? Why should those importers, when and not everybody, if I was declared to be not the appropriate mechanism for the imposition of these tariffs. Like, why shouldn’t everybody get their money back? Right? All

those businesses that can’t even do business with certain countries anymore because of these tariffs? I mean, some businesses are not even standing anymore. Like, what? You do file Sue? You go to sue?

I’m not. That’s not a lawsuit I would personally take on that one, doesn’t you know? I The chances of success there, I don’t know, but I would have a hard time with that particular lawsuit. But I am positive there would be an attorney that would take,

yeah, yeah, but it’s a it’s a good question, and I think it’s a valid concerns for people right now. And I think it’s I mean, whether it happens or not, should people prepare for that or that? Should people take certain steps already so they could possibly get somebody back? Or

that’s exactly what we’ve been debating it internally. So every week we have our team huddle and our team meeting where we talk about issues like this, and we’re, you know, it’s, you get enough attorneys together, and you’re going to have different sets of opinions. And, you know, it’s sweet. We argue this every week. And right now, I I’m of the opinion. I think it’s better to be safe rather than sorry, because right now, with what I’m seeing from an industry and government perspective, is I want to have faith, but I think the days of faith are kind of gone unfortunately, and I don’t want to have to trust and I don’t want to leave it to clients to have to trust. So thankfully, from what I’m seeing, I’m not seeing the entries accelerated liquidation yet. I know some brokers at GTC did say they were seeing that where liquidation was happening faster than your typical 314 day cycle. So that’s the warning. Is to really monitor those liquidations. So what should you do? One if you’re an importer, you should have an ace account, and you should monitor your liquidations by getting ace reports, and you can now do those regularly and have ace automatically send them to you, which is really cool. Ace just came out with a new tutorial and really tout the ACE team from CBP, they’ve been doing a lot of great work on their trainings. So on the CBP ace website, they have a training tutorial now, and one of them is on automatic reporting and going straight to your inbox. It just came out a couple months ago, or maybe within the last month. It was one of the more recent trainings they’ve had, which was a great one. So getting those ace reports automatically in your inbox and reviewing your liquidations and monitoring the use of of ACE and those liquidations, and ensuring you’re you’re keeping on top of those and filing protective protests, basically stating something along the lines of, should the importers be successful in this lawsuit and get their money back? I want mine too, and I want these entries to to be reviewed pending the outcome of the litigation. And now I personally don’t think customs is going to love that, and whether or not they deny the protest or suspend, because what you would hope is that they would suspend the protest upon the outcome of the litigation. Now we haven’t seen the first of these yet, so I look forward to the first lawyer who’s doing it and getting a response from customs and telling us all what, what Customs has said, because then you would also ask for and one of our big conversations in our protest panel was making sure that you ask for further review. And AFR is the application for further review when you’re filing a protest, because the center will make that decision as to whether or not they agree with the protest. So let’s say that they disagree with your protest and they say, you know, I I’m denying your protest. I don’t want to wait for the status of supreme court litigation for the next however many years this takes, and so I’m going to deny it. Well, then you would ask that headquarters has to weigh in and has to review. And this is a new area, this hasn’t been decided. You know, no, there’s no other court. You know that. You know, there’s no other customs. You know, question that’s arising, you know, there’s the ongoing CIT, we wanted to see it. Yeah, importers, you know, we think we’re going to win at the CFC, but we don’t know what’s going to happen at the Supreme Court. We’ll see what happens there. So there. So well, will customs wait for the pendency of the litigation and then automatically refund? And there’s some precedent for that lawyers were talking about. But I just, I want, I want to go back to being able to trust that the government will do the right thing, should the importers win? I’m just having a hard time with that, because it’s so much money, and I have a really hard time seeing that the billions of dollars will be refunded to importers equitably if the importers don’t proactively do something to ask for that money back.

Yeah, I can see that. I mean, I don’t even know if, even if they did all they could, if they would get their money back. But again, that’s that we we don’t know.

We don’t know. So after the outcome of litigation, we’ll find out how this all pans out. But for right now, if you want to be safe and not sorry, get A’s Monitor. Liquidations, file a protective protest and ask for AFR to get this to stall out as long as possible, until dependency of litigation, and then until CBP issues guidance saying they don’t want that, then what else do you want importers to do to preserve their rights? Should they think they should be owed those refunds? So I’d love to hear cbps feedback on if you don’t want to get millions of protests from importers, then what would you prefer those importers do trust? Okay, then are you going to put something in writing? CBP that says, should we lose? Should the government lose? We will, for sure, give you back your money. You know, I’d love to see that, but I personally haven’t

I don’t know. I don’t know. But you know, while we’re here still, and by the way, I don’t know if that’s gonna happen, it’s no hope again. Hopeful is, how could you be hopeful at this point? But what? What are the common mistakes and oversights right now by importers and custom brokers that you’ve seen in respect to these tariffs. So many, okay, give us like, a few. So one,

one thing we just wrote about, which is interesting, is bonds. And there are a lot of questions in relation to bonds, we’re seeing a lot of bonds that are insufficient, which is interesting, and this is just, it’s a minor issue, grand scheme of things, but it’s going to potentially become major, because what’s happening is customs is issuing these bonds insufficiency notices saying you don’t have enough bond coverage for these new tariffs, for example. Now what you should be doing is monitoring your forecast for like, the next 12 months. The next 12 months is for sure going to be worse than the last 12 months. The last 12 months you likely didn’t have tariffs or they were lower. The next 12 months they’re going to be higher. You know, period, it’s end of stories. So your bond amount needs to be enough to cover your prospective importations for those next 12 months. And I’m not I we’re seeing some importers say, Wait a minute. Customs is yelling at me. Now what happens is, when you get your notification from customs, it’s already too late, because your your bond is already insufficient, so you don’t have a bond to cover your next importation, then you have to work with your surety. And now what we’re seeing from sureties is they want collateral or letters of credit and they want financials. So it’s not as easy as it was historically to just get a higher bond amount immediately and for it to take place. Quick, quick, quick, quick, quick. Now you’re going to have to wait a little bit maybe submit data. So a couple of things we’re telling everyone to do is one, understand a what your bond amount actually is. I mean, how many importers actually know their bond coverage and what that amount is, many don’t. So most are 50,000 well, is 50,000 really going to cut it? Because for most of the insufficiencies, it was under $100,000 for the majority of the insufficiencies. So the lower level bonds are now not going to be enough, potentially, to cover your next 12 months worth of importation. So the second thing I say is ask your sureties to put you on a notification when you’re reaching 70 75% saturation, so that you have time to get a higher bond in place. Another interesting note from one of the sureties at GT was you can actually get a separate bond for, like, anti dumping coverage, which I thought was really interesting. I hadn’t seen importers do that, but I do like the concept of segregating potential liability, like anti dumping liability, under a different bond so it saturates that at a different level than the remainder of your importations. I like that concept. So checking out your bond amount and and knowing when your bond time frame begins and ends, and looking at your pro proactively looking at your next 12 months, I think is a really smart thing to do right now, given higher tariffs in place for everyone. But now, in terms of tariffs, what we’re seeing are mistakes in classification, just the basics. What are you? What is your actual HTS? You know, if you don’t know your actual HTS, you’re at a crappy starting place for understanding your tariff obligations to begin with. So time to re evaluate what your actual classification is and not miss classifying your goods. So we are proactively looking at binding rulings for our clients and getting that confirmation of classification, because if you misclassify your you’re at the worst for your building blocks to understand what the right tariff application is. But then the worst of the worst is the actual true cheating. So this is where we’re seeing all sorts of valuation related questions come up, can I segregate out x value? Well, can I double invoice? No, the answer is always, never, always horrible, horrible, horrible before. Never two sets of invoices. Can I separate out? Can I so the schemes are getting more and more interesting. Because of the higher incentive to cheat, which stinks, and it is what it is. With higher tariffs, there are suppliers that make all sorts of crazy suggestions, and you can’t origin wash, you can’t screw with the value purposefully just to pay less tariffs, like that’s not a thing. It’s not a legal thing. Let’s put it that way, but it is a thing, and it’s unfortunate, and because of the higher incentives to cheat, you’re going to see the higher incentives for the government to enforce so it goes hand in hand as they hear and see bigger criminal type acts, you know, that’s in that’s fraudulently, intentionally doing something wrong, and these trans shipment schemes. And the word trans shipment, it’s this is the biggie right now. And you know the wording within the new CSMs message from CBP that just came out for the new reciprocal tariffs. The wording is exactly this. I’ll read it. Goods determined by CBP to have been trans shipped to evade applicable IEEPA reciprocal duties are subject to an additional ad valorem duty of 40% so a few things to pack down from this that I think are interesting. One is goods determined by CDP to have been Tran shipped. How, how are you determining

this? Because, too, right? Who is going to determine

that? Thank you. Thank you. Thank you. Thank you. So to me, I would love this to be a more so fraudulent. Look at this, meaning your goods were made in China, you shipped them to Vietnam, and you just changed the country of origin and slapped on a new sticker that says, made in Vietnam. That’s traditional, horrific, bad actor, trans shipping, right? And that what my my hope was that CBP was going to say, here is the actual definition of transshipping, right. Here is what we mean. But the wording that we have for that one sentence is goods determined by CBP to have been transshipped. What I like about that sentence is to evade, okay, so what I’m unpacking from this is we’re not changing the definition, and this is my hope, is we’re saying if you are purposefully origin washing, you know, if you are purposefully taking goods that are 100% made in China and sending them to a different country for the purpose of explicitly pretending the goods were made in a different country other than China, you’re going to be screwed with an additional 40% duties. And then CBP is also going to rate advance the entry as if it was really made in China. So all of the China tariffs are going to be stacked in addition to your additional fine of 40% and by the way, I can also hit you with other penalties, like 592 penalties and fraud. And by the way, I could also have an FCA claim. It can also have a whistleblower claim, and I can also have criminal liability. And don’t worry, I’m going to throw the book at you if you are purposefully evading.

I think trans shift is two nights of a word like it doesn’t really describe what they’re doing, right? Is that? So what you’re getting at, because to be when someone said, when I was reading it, and I kind of discussed it, trans shift sounds, well, you trans shift something that’s right, it

doesn’t sound like you’re meant to do something so horrible, right? Like, I wish the word fraud was in there. That’d be nice. You know, you’re fraudulently. You really intended to what? The bigger fear that I’ve heard is, what if there’s a percentage of Chinese content, for example, and you are transforming that in another country. Are we changing the definition of substantial transformation? Are we changing definitions of Rules of Origin? Are we changing the rules of the game? And that’s where we have, you know, you get 10 lawyers lined up, and we’re all going to argue over this because it’s okay. Well, here are traditional rules. Are we changing the rules of the game to make a new trans shipment rule? Are we sticking with the old rules of the game? And just saying, if you’re trying to purposefully, fraudulently, intentionally, screw the system? Well, to me, you know words like fraudulently or intentionally, but here, you know, to me, they’re trying to say that you’re trans shipping to evade. To me, that conveys an intent element, you know, but my problem is, it’s good determined by CBP. How is CBP making this determination? Is CBP going to start treating this. It’s more like a forced labor evaluation. I want to know all your raw materials, right? I want to know where your goods are from. So now everything’s going to be a new origin verification, and I want you to show me where all your raw materials are from. If you’re saying your good was made in Vietnam or Malaysia or whatever other country. Okay, so are we now going to have to start asking suppliers for more details in terms of their production then you would typically do. You know now that you’re thinking about this, I think we’re going to wind up having to think about this from a traceability perspective, where it’s more like a forced labor thought process for every item, versus just the items that you would think have a potential to have been made with the use of forced labor. So I’m thinking this is a great time to be a software company, or AI company where or you have some sort of technology to utilize this, because the supply chain mapping that you’ve had to do and had to think about from a forced labor perspective. I’m thinking you’re going to really have to start thinking about this more so from a CBP perspective. So it’s going to be really interesting to see what comes of this. Because what if you look at the wording of the rest of the trans shipment section, it says CBP will direct a correction of the entry or entry summary to be filed, replacing the IEEPA reciprocal number with with the heading 90 9030201, or take action upon liquidation. So to me, that signifies the CBP 29 where CBP is going to take action, or CBP is going to reject an entry and say you’re going to have to refile that entry, or CBP is going to liquidate that entry. Or take now do a 29 taking action, saying I’m really liquidating, or I’m going to liquidate the entry with a rate advance, for example, and I’m going to CBP is going to change this for you. And then the 40% duties are in addition to anything else CBP can do. It’s a lot of power.

It’s a lot of power. And it sounds trans shift just is not the right wording for this to be when I first read it, to be honest, this is like, no, not trade. Well, it is trade related. But like, you know, my brain doesn’t work like yours does, because we’re I’m not on the same trade level that you are. But when I was first reading, I was like, Oh, they shipped it somewhere wrong, on accident to the wrong country. Trans ship somewhere wrong, you know. And, like, unintentional, or they did something wrong, and whatever. And so CBP figures this out, but this is, like, you intentionally do it, and then you change the country, the country of origin, and you do it intentionally, and then CVP figures it out for you, and it slaps on 40% and then you pay all these things. But for me, I’m like, that’s, that’s fraud. Like, Shouldn’t that be wrong already? Like, why is this such a thing? Like, even if you did it before, it’s wrong.

I could not agree with you more, and I think that’s the hardest part right now, is not having a framework and being left to guess. And if you’re left to guess, you’re going to think worst case scenario. And that’s the hardest part, because to me the way I’m reading it, I’m hopeful that this is not changing the rules of the game where CBP is saying, Look, I’m not trying to make this harder on myself than it is. We already have our rules of origin. We already know what it takes to have a change in country of origin, despite the fact that that can be subjective at times with our substantial transformation test, and it’s not necessarily common sense always fine, but we’re sticking with those rules. But now, if you are purposefully, if you are purposefully trying to evade, if it’s more so like an intentional act, but now this is where I personally foresee criminal investigations, personal liability and other implications from CBP and cbps interpretation of whether or not you were trans shipping personally to evade where in your mind as you were reading this, what if? What do you mean? What if company got raw materials from China, and they thought the goods were transformed in Vietnam, and they thought the goods were really made in Vietnam. They didn’t think they were really screwing the pooch here. So now, what do you do as a company, if you have a supplier in Vietnam? Are you asking? Okay, great. What are all your raw materials? What’s your production process? Give me your bill of materials. Show me where all your raw materials are from. What comes from China, for example, what happens in Taiwan thereafter? Is the product really substantially transformed in Taiwan? Are you getting a binding ruling? Are you asking an expert to look at this and unfortunately, with the level of distrust about. Good Faith like your good faith doesn’t matter anymore unless you’re actually using reasonable care. So now the fun question is, if you are using reasonable care, what are you doing to really get to that confirmation from your supplier that their origin is legitimate? Are you really asking any of those questions? Because now, if you’re not, you can’t just say, in good faith, I trusted my supplier. I’m a good guy. I didn’t mean to. Now I think the book is going to be thrown at you more so, but I’m hopeful that it’s going to be a well if, on it was purposefully colluding with the Vietnam supplier to screw the pooch and to not pay the duties. We’re going to treat her worse than if Onyx said, Well, I met the supplier at a trade show and I saw their factory, and I really believed, you know, what happens when you’re lying to

Yeah, no, it’s, it’s incredible, and the way we’re discussing it. I think these discussions happen well, I hope they happen everywhere, because I think everyone needs to think about where you know, how we’re doing business now, how we’re how our supply chain is operated. What kind of tools are we using? Are we do we have the correct documentation? And I kind of want to lead into, like, one of my last questions, which is like, what are the most important steps going on now? Because we’re recording this on August 7, there’s a lot of things happening tonight that’ll go into effect, which I think this entire week has just been, like, things are going into effect and and we have to change our operation again, we have to evaluate, are we using the supply the correct supply chain? Can we still operate with that country? Do we are we able to pay the tariffs? Are we even able available to import anything at this point? Like, do we have the money, the funds? But what can people do? Like, how do they stay sane? Or what is the most important thing right now?

So much that’s the problem is there’s so many things to do, and it’s a hard it’s a hard time right now to be a trade practitioner when you also had to Fortune tell what those rates were going to be. But now you know the rates, for example. So now the question is a right, can you pay? Can you renegotiate? So going back to the basics, in terms of the items that are really important for you to think about valuation, country of origin and classification, are your building blocks. Those are always going to be the building blocks. So now, when it comes to valuation, can I go back to my supplier and renegotiate my agreement with them? Right? Is the price set in stone? Is the price the price? Or can I go back and negotiate my contract? Because I am seeing more than I’ve ever seen in my short 20 years doing this, where suppliers are more negotiable now than ever, because they really just don’t want the business, and they’re scared of losing business period, and they’re scared of their factory, you know, going going under period. So I’m seeing factories and and being more negotiable on price and more transparent where bare bones cut off really is than ever before. So I do think there’s wiggle room to negotiate price where there might not have been years past. So once you get your valuation set in stone, ensure you’re not using an incorrect valuation method. One, one thing we’re seeing are assists, you know, tools, molds dies, that are not incorporated in the price, and those are dutiable. Nobody wants to hear that, but it is what it is. We’re seeing a lot of people try to incorporate weird things into value, like I want to make everything a service fee, or where a lot of creativity is going into there. We are seeing some creativity the right way. Something happens post importation that’s included in value. Great. Sometimes there are really complicated questions around value. My point is, value is one whole area to look at to see if it’s negotiable, and how to ensure you get to a legal correct valuation. Second is classification. Is there a tariff engineering perspective in some way, shape or form? Can you make something a little differently? Can you do something in a different country. Is your country of origin change? Can I relocate? Can I friend, sure? Can I get this closer to a happier nation that has less tariff in some way, shape or form? Is there an opportunity for me to move? I mean, I think more and more entities have been looking at relocating operations and sourcing over the years, and I think there’s still a lot of that. I do think the census has some really cool tools, and they’ve been working on those over the years. And I think if you haven’t checked out census data, it’s quite cool. With your HTS, you can look at which countries make those particular items in what countries, and the relative value from that classification. I think that’s a fun a fun way to look. At, well, I’m making this particular item in China right now. Does any other country make items that are similar? And then you can start boiling down to bill of lading type data to start trying to boil down which actual companies make that data make that particular item, which I think is interesting as well. We are getting a lot of first sale type requests, as everyone is, you know, if you’re not dealing direct with the supplier, if you have a middleman in place. But that goes back to valuation. Is there a way to try to lower the correct dutiable value that I’m reporting to customs legally so going into whether or not for sale, there is or is inapplicable, and then on the deferral side, should I be using a bonded warehouse? For example, is, do I think it’s going to get better later? So there are many companies that were hedging their bets utilizing bonded warehouses, and I think that was interesting, and many, many got the benefit of that when they did when there was fluctuation. So if we have our 90 day pause with China, you know, it’s a good time to maybe bring goods into a foreign well, think, yeah, exactly to front load. So the fun part is to really understand the differences between what’s going to happen with the FTZ versus bonded warehouse. Because the FTZ you’re going to be under privileged foreign ports when it comes to IEEPA, so you’re locked in. But in when it comes to a bonded warehouse, the duty rates at the time of your withdrawal. So, you know, if, let’s say China, we’re happy with them now, and we’re at your 10% you know, for your IEEPA portion, but let’s say we’re not in the next 90, 120 days. And let’s say that goes up to something crazy. You know, if you’re in an FTZ, you’re stuck at the date that you originally entered it into the FTZ. But if you’re in a bonded warehouse, you’re stuck at the date that you actually withdraw and import near and you actually import the goods thereafter. So it’ll be interesting to see what companies are utilizing for their mechanism to try to get that deferral tactic. And I know that there’s more, I would say, contention from some in relation to DDP and negotiating Incoterms and trying to put more of the liability and onus on the seller. And I would say, my caveat to that is I don’t hate DDP, and I like the concept of it. I don’t like the fact that if I was to purchase from you on it and you were in China, let’s say and I was to say on it, I need you to bear the brunt of this with customs. It’s just too much for me. I can’t deal anymore, so I’m going to purchase from you, but you’re going to be the importer, you’re going to deal with the customs broker, you’re going to deal with the logistics process. I just want the goods at my door, and I don’t want to deal I just want to negotiate a final price with you. Final price with you. Now, if you’re committing fraud and if you’re undervaluing, if you’re lying about the country of origin, if you’re doing whatever it is you’re doing, the fun question is, am I in on it? Do I know? Am I taking part in it? Is it going to be one of those? Is it too good to be true? And Jen, how dare you buy for manic, and you know, just change your Incoterm and you have the same price duties went up. You had to have known better. The fun contention is, will there be personal liability and responsibility on a consignee in the US, on the purchase party, rather than the importer of record? You? And the fun questions that pop up there. Well, did I have any did I ignore a benefit of it? Yes, but did I cause the importation in any way, shape or form? And that’s where the arguments lie is, should there be liability and responsibility on a US, purchase party that really had nothing to do with the importation or nothing to do with any false declarations, but now with the new administration’s focus on tariff fraud, well, if you on a commit fraud and you’re outside the US and the US government can’t get to you, are they going to try to get to me? Because I am here, you know, I’m an easier one to get to. So that’s the the warning when it comes to the DDP Incoterm is you’re not completely absolved of liability if you should have known better. But now, what are our standards there? You know is it? Is it concrete that we know exactly what those standards are? So right now, with the new task force from the DOJ, was been like typically dealing with financial crimes, now being directed to prioritize trade fraud and all of these new cases and false claims that cases that we’re seeing and penalties that we’re seeing in whistleblower actions like now’s the time to a be nice to your employees, and if you’re committing fraud, don’t do it in writing. I see all sorts of horrible things. I mean, imagine the email train if you’re explicitly telling me on it you’re going to origin, wash and change the country of origin, and double invoice and fraudulently value, and you’re putting all this in writing to me, and I’m still purchasing from you. Then shame on me. Yeah, right, right. That’s true. So because you have to do your research too, that’s right, that’s right, you can’t just throw the onus on to somebody else and you. Close your eyes and hide in the sand either. But with whistleblowers actually collecting and recoveries, it’s, it’s interesting. So now there’s, there’s an incentive financially for entities to be turned on by their employees, and there’s an incentive from the government to level the playing field and to make it so that US businesses can compete, for example, and that’s the thought process by protecting our national domestic interests. Right now, there’s a lot of arguments on all sides of this, because most US entities that I’m speaking to that are manufacturing the US still have raw material imports. You know, they aren’t able to 100% self sustain their operation in the United States without importing some raw material, so they’re impacted too by tariffs as well. So prices are going to go up for everybody. And there’s the conversation we didn’t have of who pays the tariff, and it’s obviously the importer of record who’s paying the tariff, and it’s not the foreign supplier itself, unless you’re on a GDP Incoterm for the foreign supplier, for example, could be the importer paying the tariff, but it’s not the other country, for example, paying but it as a result of these tariffs, we are seeing companies shift origin and shift production, shift value, you’re shifting whatever you can shift at this stage. So what are the tiers again? And the basic building blocks are your valuation, your country of origin, and your classification. That’s the basis for your tariffs. So what are the ways that you can think about that? And lastly, drawback is another thing we’re seeing a lot of companies get back into is, can I get a refund if I wound up exporting the goods thereafter? So something to really take into consideration is you may have some good drawback claims thereafter to get a 99% refund for your reciprocal tariffs paid if you wind up selling to a customer outside of the United

States. Yeah. Jen, I honestly, this is insane, because you, your brain works so well. You just, you could just shout it out. You’re just, like, giving us all the tea is what I would say. You’re giving us all the tea here and and truly, it’s, I mean, it’s everything you said just makes so much sense. First of all, while, it doesn’t right. It makes sense coming out of your mouth, but it really doesn’t make sense when we put it onto paper and we have to do what we have to do, or importers have to do what they have to do. And we’re so lucky that you give us this information, and people can evaluate that within their own companies, and go back to their employer and say, Hey, we didn’t look at our value. We need to look at our valuation. We need to look at our country of origin, or we we need to research who we’re doing business with and just the little things, and even the basics. And then, you know, if you’re not doing the basics right at this point, I mean, there’s a lot of trouble. Yeah, there’s a lot of trouble coming to you, but here we are, and we’re giving you, or Jen is giving you some of her expertise, I would say, I mean, there’s so much more right that we can discuss, but I’m so lucky that you came on to discuss this part of the industry at the moment, which is just incredible.

The caveat is, everything changes every second, so this is good today, tomorrow, I don’t know tomorrow, we’ll see what what holds. And I this is where I urge every importer to ensure you’ve got a rock star team around you, to ensure you’ve got trade counsel you can rely on to ensure you love your broker and they’re providing you great Intel to ensure you’re following law firms, we provide daily updates on social weekly blog updates on what’s going on with all agencies. Monthly newsletters. We’re consistently scouring all of the agencies for updates and following so if you’re not following CSMs messages, Federal Register notices, every agency’s updates, I mean, you’ve got to, in addition to the fact sheets and executive orders, there’s just so much going on and so much turmoil and so much change. Ensure you’re keeping up with the times, or keeping up with somebody else, keeping up with the times, so you can stay in the know. And we have a top 10 Tips cheat sheet on Diaz trade, love.com on generic what’s important when it comes to importing and exporting and valuation, country of origin, classification, they’re all there, and lots more on the exporting side as well, separate and apart, which is a whole nother ball game. So so much to do and learn and to keep up with in these crazy, trying times. And I really think every person in the logistics industry deserves coffee, chocolate, a drink, something, just to keep up right now. So this is a time to hug your logistics partners right now, because there is just so much everybody really. Needs a hug, coffee, chocolate, alcohol, something.

So guys, every listener, take this as a virtual hug. At least, right? At least we can be there for you, and we can talk, you know, we can talk about this in a fun matter. I know it gets serious behind the scenes, and there’s obviously a lot of money that’s at stake. A lot of you know, companies are at stake in itself, so it’s, it’s a critical time for for a lot of people in the industry. Everyone really so again, Jen, thank you so much for coming on. We’ll have a conversation right now offline, because I need to ask, ask about other things. But thank you so much for coming on. I appreciate you so much. We appreciate Diaz law to just, you know, come on and just engage and and share your expertise, you know, with whatever you can. And yeah, so thank you so much for that, and to all our listeners. We’re recording this on August 7, and this comes out on might have to edit this because I’m not sure. Oh, August 11, so we have a weekend in between. Not sure what’s gonna happen. We never know, but we’ll be back every Monday. So please stay updated with us. Follow us on LinkedIn, like anything you see, and yeah and have if you have any questions, please reach out. We’re always here for you. So thank you so much. Thanks for having me.

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