What You Need To Know About the State of Tariffs

Licensed Customs Broker Kim Cummiskey Weighs In

As geopolitical tensions fluctuate and trade policies shift unexpectedly, SiShips is here to guide you and your business through the uncharted waters. Kim Cummiskey, a seasoned Licensed Customs Broker at SiShips, who brings twenty six years of experience, unpacks the intricacies of tariffs and their ripple effects from manufacturers to everyday consumers. 

SiShips: Let’s start at the beginning. What is a tariff?

Kim Cummiskey: Tariffs are what you’re paying to customs, to the government. They are taxes on commodities that are coming into the country. Every country has tariffs. It’s just a matter of what percentage they are charging for those foreign commodities to come into their countries.

SiShips: How do tariffs impact different participants (i.e. manufacturer, shipper, local retailer, consumer)?

Kim Cummiskey: Once the price goes up, consumers are likely paying more, because people making the goods have to pay more. It becomes a circle of the parties making the goods to try and keep the costs low by pushing their manufacturers to lower their costs. That way the consumer doesn’t feel too much of the brunt of the increase, but sometimes it is unavoidable and consumers see that increase where manufacturing costs cannot be lowered.

SiShips: It has been an extremely volatile month for importers and exporters, with President Trump alternately enacting and rolling back tariffs against Canada, Mexico, and China. As an import operations manager, how have you handled these rapidly changing duties?

Kim Cummiskey: For us, we’re sometimes getting the notifications in the morning when they are going actively into the federal register. There are a lot of rumors back and forth, hearsay when Trump threatens certain tariffs, but until it’s in the federal register, it’s not a concrete absolute tariff that is going to be enacted.

We are constantly listening to everything about what is being threatened. We watch continually throughout the day to see what is actually being enacted or revoked, because we’re getting notifications for both. Some updates may be one thing in the morning, and it changes by the time we go home for the day. We’re proactively staying ahead of it as much as we can.

SiShips: Can you foresee how long these tariffs, or the threat of tariffs, might remain in place?

Kim Cummiskey: Short answer, no. We expect this to be ongoing for quite some time. 

SiShips: President Trump has said he believes the United States is being treated unfairly and would like to institute reciprocal tariffs. Are there any goods or industries in particular we should be on the lookout for to be affected by those?

Kim Cummiskey: The specific commodities at the top of the list are steel and aluminum. Currently steel and aluminum has had an additional 25% enacted, no matter the country of origin. 

Canada and Mexico has 25% added for all commodities however there is an exception with the USMCA (United States-Mexico-Canada Agreement). That’s the free trade agreement that has been in place prior. If the goods qualify for that preferential treatment under that free trade agreement, they can still come in as such and are not subject to the 25% that was just enacted. China and Hong Kong have also received 20% for all commodities with a few exceptions that are in place. 

SiShips: In recent days, President Trump has doubled the tariff on Canadian steel and aluminum to 50%, demanding Canada drop their tariff of “250% to 390% on various U.S. dairy products.” 

Kim Cummiskey: All of it’s very fluid. The 25% on aluminum and steel is what actually got enacted and put into the federal register. 

SiShips: Should importers look for other sources of products that have been affected by the tariffs? What are possible alternatives to trade with Canada and Mexico?

Kim Cummiskey: At this point it seems all countries across the board are getting hit with these tariff increases or might be. There are unconfirmed rumors that every country is going to receive an increase come early April. I can’t say for certain, but we’re expecting to see some changes again.  We do have importers that are looking to produce in Vietnam versus China or change to other countries that might not have such high tariffs. 

Canada and Mexico are very fluid and changing, for now, the USMCA is excluding some goods from the extra 25% but this may change again. Moving trade from Canada/Mexico may or may not be a beneficial business decision, depending on the tariff situation for the new chosen country it could end up with similar high additional tariffs. It is unpredictable at this time.

SiShips: There is a lot of concern with the downturn in the stock market. At the same time, gas prices are the lowest they have been year-over-year since March 2021. How do you see the current economy affecting the spending habits of the average American?

Kim Cummiskey: Well, it’s all going to go back to the question before of where do these costs get passed down to. If the costs of the goods are going up, people are less likely to spend as much. Ultimately the pricing increases get built in somewhere, so you’re still going to be affected by it. 

Now, speaking freight wise, we might see a turn in parties trying to start sourcing goods domestically and locally instead of bringing it in from international providers where you’re being subject to these ever-changing tariffs.  As costs go up, people tighten up on what they’re spending. They might order a little less than what they would normally, focusing mostly on what is absolutely needed and not carrying extra stock on hand.

SiShips: Given all of these tariffs can change in any direction literally overnight, how can people best protect themselves and their business?

Kim Cummiskey: By staying as informed as they can. Here at Sheltered International we are listening to news sources and the media to stay up to date and informed on the topics being discussed. We are reading and investigating, as well, so we can be as knowledgeable about the current situation as possible. You can come to us at Sheltered International if you have any questions.

There are some aspects that are going to affect businesses in the future that people need to start thinking about, like customs bonds. Importers are going to saturate their customs bonds quicker and are going to have to increase those. That is an effect of these ever changing tariffs that is not immediate, but is coming further down the line.

SiShips: If importers are facing cash flow issues from increased duties, do you have any suggestions for importers?

Kim Cummiskey: ACH payments can be extremely helpful in this situation. When businesses set up payments for duties to customs with the ACH (Automated Clearing House), it allots extra time for payments as it’s paid directly to Customs the following month. This allows some extra time so they can be fully prepared for when that duty payment will come out of their account. This process can make a difference for every business. It gives a little bit of breathing room. In some cases, depending on the calendar and when business days fall, cash flow can be extended up to 54 days. 

Stay Up to Date with Sheltered International

Global economies shift every day. SiShips puts the shipper in control, offering efficient and cost-effective ways to transport your product.

To learn more about our personalized expertise and state-of-the-art software, contact us today.