Washington’s temporary relief to import tariffs of goods covered by the TMEC has caused an increase in US companies seeking an exemption under the commercial agreement, industry experts said.
The White House imposed new 25% tariffs on products from Canada and Mexico on March 5, but later announced that the levies on the products covered by the TMEC would be delayed until April 2.
The TMEC grants preferential treatment to products from any of the three countries or have a minimum percentage of added value in any of them.
“We are seeing how importers rush to obtain the TMEC certification (…) The risk is too high for not doing so,” said Brian Riley, senior customs vice president of customs brokerage from the Geodis logistics company.
Some of the companies, mostly small that depend on cross -border trade, are struggling to verify if their products already meet the requirements for exemptions.
At present, only 37.8% of imports from Canada and 48.9% of those from Mexico can benefit from the exemption of customs rights under the TMEC, according to a Global Market Intelligence S&P report.
To meet the requirements, an importer must analyze the list of materials (a list of all the parts and materials used in a product) to determine if their products meet the requirements.
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Mike Short, president of Global Forwarding in the Chineseon merchandise transport company, said there was an increase in tariff and TMEC qualification applications even before the official announcement.
“Now that official amendments have been published, these requests have only increased, and we hope that this trend will continue.”
Previously, companies refrained from obtaining certification due to their complexity and the costs of meeting the requirements, especially because their products already entered the United States free of taxes.
Even after certification, a company has to keep detailed records up to five years after importation and guarantee continuous compliance.
“The companies are covering their backs obtaining the certification of the T-MEC because, who says that the exemption will not continue after April 2? Or, if the exemption expires then, what happens if it returns in the near future?” Said Riley, of Geodis.
Uncertainty has led companies to overlook immediate cost savings.
“If 25-50% tariffs are applied to everything, companies that had never needed it before are forced to assess whether (T-MEC certification) is an option,” said Sung Choi, vice president of products management of the supplier of supply chain solutions E2OPEN.
With Reuters information
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