Thriving in Global Trade

Machine Operated Script:

Steve Johnsen 

Our old job is still all there, like what we did before January, 20, we still have to do all that, so this is just an additional exercise. So yeah, it’s a fun time

Annik  

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Andy  

Hey folks, we’re in for a great show today on simply trade podcast, and it is going to be a good discussion. Lao, I am really excited about today, because this is going to be a show that, you know, we talk a lot of to our frontline folks, men, mid management folks. Occasionally we talk to some executive leaders. Well, this is another one of those executive leaders that we’re going to have a good discussion with. But why don’t you? I think it’s kind of a cool little thing there that you kind of reached out, and it turns out Steve and I had the connection and knew each other. But tell everybody how you got our next guest on on the hook here. Well,

Lalo  

it’s funny, because I hear everybody in the trade community talking about, obviously, how busy and how things are changing and everything. Of course, everybody is like, you know, just trying to deal with all the turmoil, I guess, or you know, whatever, you know, whatever is going on in the in trade right now. And one thing popped into my mind is that, how do people deal with it? Well, they need to, you know, they get headaches, they need to take medicine. And what better medicine than aspirin? And so that I’m kidding, but anyway, I’m just trying to, I’m just trying to find a segue here. But actually, our guest is from bear, the famous bear brand that everybody sees on their, on their in their pharmacies, but so Steve Johnson has been a connection of mine here for a while, and I thought, you know, we need to try and see if we can get some frontline, actual importers here and talking about, Maybe, what exactly is there? Not give away any trade secrets or anything, of course, but just how do, how are they dealing with and how are they working through these times where you almost have to be just, just obviously up your resilience here, you know, just to try to make sure that you are going to comply with any of the changes and what strategies maybe you may be pulling out of your trade tools you know that that are available. So I decided, hey, let’s, let’s, let’s see we can have him on the show, and thank goodness he was available and and say Yes he was. He’s being very generous with his time here. I know you’re a busy guy here, especially these days, but Steve, thank you so much for joining us here on the podcast.

Steve Johnsen 

Yeah, thanks, Lalo and Andy both. You have had a lot of time back and forth with Andy over the years, and thanks for that free advertisement. You know, aspirin is one of the best products in the world, and remains the wonder drug that works wonders

and today, yeah,

Steve Johnsen 

but definitely, yeah. Captivating time for trade compliance professionals around the world. So it’s look forward to this discussion and talking some more with you guys.

Andy  

Steve man, it is great to see you again. And it is, I’m looking forward to this discussion, because this, you know, you’re dealing with both sides of the pond, as we would say, both sides of the ocean here, right?

Steve Johnsen 

Yep, yeah. And I mean, just teeing that up, that’s definitely illustrative of the challenge for trade compliance professional. We don’t just have CBP or customs, you know, we got all the alphabet soup there, so our portfolio is full of that stuff, FDA or others, EPA, USDA, that’s all hitting us. And yes, bear, bear is a multinational company, but we’re German headquartered, so we we’re really keen nowadays on the tariff, let’s say threats hitting EU and threats being targeted at pharmaceuticals in particular, that that you know, that has us up up, you know, has our alerts up. So, yeah, yeah,

Andy  

it’s like, I’m sure that you have been getting phone calls from. In your peers or in the different operating companies, and you know, what’s this mean? Whatever, and responding to that has got to be unbelievable. And as as I’ve been saying, some of these threats go out there. What I always say that folks have been, and especially at the leadership levels, they’ve been as jumpy as a long tail cat in a room full of rocking chairs. And it’s one of those like, what do we do? What do we do? You know, so has that been one of those where you’ve been getting calls or emails middle night, like, what? What do we do now

Steve Johnsen 

at multinational companies, for a long time, taking trade compliance seriously, but this has really the attention of upper management, you know, in the C suite, and, you know, functions like investor relations. I mean, if these things are such a level of materiality that they they can really pose financial impacts to companies that have never seen before, if any of these threats were realized so that, I think is a part of the value demonstration for the profession is the ability to communicate, you know, potential impacts. I’ve shared that in a couple other venues like that. We had, over the years a lot of criticism of the ACE system, but the ACE system is proving to be a powerful tool. You know, not every country has something like Ace, and we can leverage that and almost instantaneously tell you, at least based on historic transactions, you know, what would these tariffs look like, you know, if they were imposed, and what would the impact be? And so, yeah, that is something to quickly be able to tell top management, if this happens, this is what it could mean. You know, might be the worst case scenario, but you can provide it in, you know, less than 24 hours, because of what you have in Ace,

Andy  

it is almost impossible for one individual to be able to, you know, research and gather the information and be able to respond quickly, so you’re I’m sure you’re having to rely on your team and in feeding you information, so as they’re looking at the potential scenarios, sure, there’s been a lot of last minute ad hoc meetings and whatnot, but when you send your team out and to research certain things and Come back. How is it that what’s the best way for somebody from the front line or the middle management ranks to be able to communicate up to you? What? What is the do you want? Just a bullet point. You want a verbal Do you want a presentation? What? What is it that you would like to see from your team that empowers you to be able to respond to your peers around the world. I

Steve Johnsen 

think it is the distillation of all that you know you’re going to get a sea of data, and how can I take that from from my team, or whatever, and present it into those three or five bullets that my management can understand? You know, that they can give me the sea, and I can, can pretty quickly get to that, but the quicker we can narrow the focus, you know, kind of fishing with a spear and not a casting net, you know, we want to highlight those big sharks, the big fish, not necessarily, all the minnows, and allow that to be distraction. So that’s really like the distillation of the galaxy down to the point of the sun, and how can we get that big one and show it? This is really what we’re talking about. And you’re very gracious in your remarks, but that is definitely part of the role I’m playing. And I think trade compliance people are playing, is this voice of calm, you know, the it’s a different type of presidency with with Trump, and he makes a lot of statements that are, you know, get people excited, let’s say, and so, you know, to try to keep that steady keel And that voice of calm. You know, there’s a lot of little quips that have been said. You know, focusing on, you know, what he actually does versus what he says, taking him seriously but not necessarily literally. Yes, he loves terrorists, but he loves to make deals. So, you know, kind of putting all those things in context and how you get from your team, you know, all this digital data and analytics, and then putting that with a little color of reality to it to your upper management to maintain that calm in the organization, because losing calmness in the organization is not helpful for anybody.

Andy  

How are you, I guess, leading your team and communicating with them. Are you pulling regular meetings together? Are you doing an ad hoc I would

Steve Johnsen 

say, my interaction with what I would call my traditional direct report team hasn’t changed much. We have a cadence of a regular touch point and try not to overwhelm our agendas. With meeting time, because we’re constantly doing stuff, and that was the case before any of this happened. I would say where the agenda is getting overwhelmed is the reporting up. And we’ve created cross functional, cross divisional, cross regional tariff task force to look at all this. And we’re a bit of a conglomerate still. You know, we have divisions that do medicine, some do medical devices, some do agriculture, and they have a little bit different supply chains and potential impacts, so that, you know, in certain instances, I’m having to do things three times because of the way we’re structured as a company, and then because of the materiality of the threats you have more than ever senior managers eat in different functions. One want to have that direct connection despite best efforts to say, let the experts take care of it. Let’s trust that they’re doing that. You know, you still have bits and pieces like, oh, I want to hear this directly from Steve, or from the tariff team, or whatever you want to call it. So that is stealing calendar space. And so this is a friction there to balance the communication and the awareness with trust and the ability to keep your calendar free enough that you can actually do the work in the meantime. And the one last point is for all of us, our old job is still all there, like what we did before January 20. We still have to do all that. So this is just an additional exercise. So yeah, it’s, it’s a fun time,

Lalo  

Steve, I guess playing off of that, like you said, your your old job is still there, although some of the I some of the tariffs that that are coming down right now. For example, a lot of these are not, you cannot, like do drawback. You know you’re you’re gonna pay the tariff. You cannot do drawback, even if you’re eligible for drawback, that’s fine and good. But other stuff that you may have normally not declared drawback for, maybe you’ll now that, now you’ll do it because that’s a little more money that’s coming back to you all, like, how do you do that now? Like, I’ve heard, like other people, for example, that never used to do usmca Because they were duty free anyway. You know, their products were coming into the United States under 0% duty, so they didn’t bother doing usmca. But now if your product qualifies for USMC, you better declare usmca If it’s coming in from Mexico or Canada, because you do get that exemption or that 25% additional tariff, might as well do that, because you are taking advantage of that. And of course, there’s also the MPF and going into Mexico, the DTA that you’re saving. But again, I don’t know how, how more, how much is that playing into your business, or is it just status quo? I mean, you’re still doing it because you did it all along. Or I don’t know how, how are any of these playing into your your your normal process now,

Steve Johnsen 

yeah, it’s a great question. I would say, first of all, I feel well positioned. And, you know, Andy alluded to it like I feel I have one of the best teams in the world and one of the best programs in the world, so a lot of those tariff mitigation options we’ve already been exploring and exploiting. And, you know, I know stories and companies that have a duty free product, and they’re not claiming usmca, because the efforts not worth saving merchandise processing fee. And now they have to figure out how to do it and if to do it. And it takes time to get that build up. And I can say, to a large degree, we have that built up that said we’re also, I mean, essentially, this is forcing us, I use this term over and over again. It’s no stone unturned approach. So we’re looking at every scenario and every option for mitigation, be it a customs preferential program or changes to the supply chain. You know, any and every option is being considered and put on the table to help the overall situation that some, some are showstoppers from the beginning. Some, you know, would require a lot of time and effort and investment, so they’re couched that way. Others, we can say, you know, we had this prep, but not fully turned on. So if this switch gets turned on, we’re turning on ours too. And so yeah, it’s just multi faceted, but leaving no stone unturned, so we’re ready when it comes out

Andy  

of all of this, what do you think is the general reaction right now in Germany?

Steve Johnsen 

I I’m not sure. I don’t want to pick on my German friends, but I think a lot of countries are a bit shocked by the approach of the administration, the rhetoric that can be a. Pretty abrasive. I mean, you think of some of the things that were thrown out there about Canada, I, you know, I’ve heard, I have a lot of Canadian friends, and they kind of take it personally. You know, I feel like, as Americans, we’re like, Ah, it’s Trump. We know what he says and does, and you know that take it with a grain of salt. But, you know, there’s people on the other end of those remarks, that it’s it, you know, feels injuring. So there’s that, and then there’s kind of, like the disregard for multilateralism and for kind of, not say, rule of law, but like pushing things beyond where they’ve ever been pushed before. And that, you know, it feels very chaotic. You know, certainly feels chaotic to us in the US. So imagine what it feels like in another country, and also from prior administrations. Even a first Trump administration wasn’t quite like this. This is a different level, but taking Trump aside, but you know, all former US administrations, for years previously, was never this zealous on trade. So it’s it’s Yeah, it feels new, it feels uncomfortable, it feels chaotic. I’m hoping

Andy  

that there are not friendships or relationships and businesses well that are have been separated and damaged so much because it became a visceral problem. It’s like, hey, let’s, let’s focus on, you know, the issue, and not from a personal standpoint. Do you see some of that tensions that builds up in your organization at times?

Steve Johnsen 

Honestly, I think within trade compliance and within these tariff teams, it’s probably the opposite. I mean, there’s, there’s this kind of common goal, and so we’re, you know, we’re peers, we’re friends, we’re colleagues. And you know, when nobody’s saying tariffs are good or bad, or, you know, say a general consensus that they add cost. And you know, us, we’re humanitarian company, or, like the company’s vision is Health for All, hunger for none, and tariffs on food and medicine are an impediment to that, regardless of how they’re structured. So you know, we’re working together to meet our customers needs, like our patients. Able to get medicine affordably? Are people able to get food that’s healthy and affordable? So that’s our common goal. Like, we’re not fighting about cross jurisdictional, you know, Trump or versus Trudeau, like it’s, it’s about, how do we serve our customers?

Lalo  

I think I saw that also I was at last week at icpa, and there was many, many attendees there, from Canada, of course, and from other countries, in fact, for some strange reason this year, I think I engage with a lot more European attendees than I have in the past at this icpa conference. And I think you’re right, Steve, everybody, there was probably quite a bit more like united as a team, you know, like, almost like united. We stand divided. We’ve, well, you know, it’s, yeah, a lot of exactly, solidarity. There was a lot of that. I think more of what I did see is just like the personal attacks, you know, on like you’re going to be our 51st aid or, you know, like things like that. That’s what pisses people off, and that’s they do put that aside, you know, it’s still in the back of their mind, you know, but it’s still at the same time. They’re, they’re, they’re, they’re the trade community is, well, you know, united in the efforts of getting, getting through all of this and and rightfully so. You know, it makes it makes it makes sense. So what

Andy  

has been some things in your show, your your younger self, in your career, that has prepared you for the position you’re in now. You’ve been in your role for quite some time, but I’m sure there’s some things that maybe it’s been some mentorships, maybe it’s certain, shall we say, courses or something, or experiences. What is in looking back there has prepared you to handle where you’re at today, understanding we’re all going to say, well, I could always probably do something better, but you’re in the midst of the fire now. Now is not the times like. Well, let me understand and go get a training course. I mean, you need to be prepared, and you’re capitalizing off of your arsenal of experiences and proficiencies and things. So what has been what have you done in the past that has prepared you for today?

Steve Johnsen 

I would probably say most of my preparedness wasn’t coming from, you know, books or courses. You know, it’s been going through fires before, and they were. Different types of fires, and probably not of this magnitude, but that, all you know, kind of has prepared me for this type of situation. You know, certainly, you know, the evolution of doing this over 25 plus years, you see a lot of things, you experience a lot of things, a lot of change management, a lot of, you know, maybe in the early years, selling trade compliance, like this is a real thing companies, you know, 30 years ago that wasn’t like it is today. It has a lot more reputation and acknowledgement than it did when I got into this. So that kind of, you know, pushing upward to get the program to where it needs to be has all been there? I do gain a lot from interaction with peers in industry, you know, like my counterpart at other companies, being in industry associations like you mentioned icpa or AEI or one I’m in chair, and now it’s called Baucom Business Alliance for customs modernization. I mean, you’re talking with big companies, big importers, big exporters, all reputable, all compliant, trying to do the right thing, sharing in the misery, kind of solidarity. Again, you learn a lot from those people, and that definitely helped a lot too. Probably the thing I it’s helped me the most is a skill, it risk management. And the thing that I’m leveraging now that I never leveraging now more than I ever did before, is data analytics, that you know that having that data of, you know, duty, impact, country of origin, HS code, having that, you know, instantaneously, or as quickly as possible, you know that, I don’t think ever was more important than it is today.

Andy  

Outstanding. Let me, let’s talk just a second here on the risk management side. Because a lot of people look at that from you know, it’s almost like, well, it’s an insurance type thing or whatever, once you elaborate, because that’s not what you’re meeting as far as that goes, I would assume it’s like, What do you mean by risk management?

So we

Steve Johnsen 

view our international trade compliance program through the lens of risk management, and look at all the potential issues facing the company in import and export activities, let’s say, and kind of subjectively map them out in terms of, you know, what is the potential impact if this risk is realized, you know, if Trump puts X tariff on country y, what does that translate into? What is the likelihood that will occur? You know, is it, you know, this a bluff, or is this, you know, pretty darn real, and the velocity like it, could it happen tomorrow? Or could it happen in nine months? And kind of use all that to inform what we do? And so, you know, if, if you have something that is super impactful, super likely, what can we do to mitigate that and make it less likely and less impactful? What can we already do before that risk becomes realized? And it’s just, you know, philosophical approach to trade compliance. Well,

Andy  

I appreciate you so much. I would say that as we look at this, if there is something that you know, as we’re looking and going down the road here, you get some other ideas of how to people should be looking at and getting involved. You said, the the trade associations, I would love for you to come back and let’s talk through some of this, especially as we get over the hump, and say, All right, well, now what’s the collateral damage of some of these negotiations? Because there’s always going to be, you know, here’s one thing, and this is moving so aggressively. Okay, now, how do you come back and pull your team back together in some of this, or some of the companies and all that. But I’d love to talk to you more on that later and while. And I really do we talk through some of these things. And when he mentioned about reaching out to you, I was really excited about this. This is, this is great. I mean, Laila and I tag team on a lot of things here and all that, but you, once again, have just hit a home run, as far as I’m concerned. Well,

Steve Johnsen 

I appreciate it. It was, it was a good time. I’d be happy to do it again. It’s just fun talking with you guys, and you’re way too gracious. Andy, but I appreciate everything you said. Well,

Andy  

with that, I will say again, Steve, what just thank you for the time. You’ve been gracious and folks, we hope that you please look at this, get that nugget of knowledge, that action step you may need to take, but also reach out to those in other countries that you have relationships with. Don’t let the saber rattling damage your relationship. Stay together with this, and let’s figure out a way to work through that, but with that, Lalo, any last words,

Lalo  

nope, that’s it. I mean, thank you all for joining us and looking forward to our next episode. But thank you all and have a good day.

Steve Johnsen 

Thanks, guys. This was a treat.

Lalo  

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