Flexport Customs Webinar: CPSC eFiling Is Almost Here. Are You Ready?

The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.

Marcus Eeman

Hello. Good morning. Welcome to today's CPSC webinar. I'm your host today. My name is Marcus Seaman. I'm a customs director here at Flexport. Our topic, CPSC e filing is here. July 8, are you ready? I'm really hoping the answer is yes, and this is all just kind of a for fun meeting. But if it's not, please listen in closely. We have a lot of good content, a lot of good advice. If you're new to our webinars, just a quick, housekeeping lesson here. We have, on our screen, we have a sidebar on the right of the main stage where you can submit questions. At the end of our presentation, we'll host a q and a. We always try to answer as many questions as we can. And so there's been a lot going on in tariff news this week, so we are gonna do a brief update from me on 03/2001 and February. But we do really wanna focus on CPSC and try to keep to the keep to the topic as much as we can. At the top of the sidebar, you also see a tab labeled documents. This is where you can download a copy of today's slides and find some other helpful resources like our tariff simulator. And as a brief legal note to get started here, please keep in mind that all of the information provided in this session is based on the situation at the current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert, for any particulars of your situation. Joining me today is my colleague, Zach Clausen, who is a senior customs manager for the South Region here at Flexport. And here is our agenda for today. As I said, we are gonna start with some tariff updates on section three zero one and two thirty two, talk about a few of the things that have happened here at kind of a higher level, before we get into the meat of our presentation where we wanna focus on CPSC. But these updates this week are just too too timely and too important to just kinda gloss over, so we're not gonna spend some time on that first, but we'll answer questions on both. Then we're gonna wrap up, with a q and a. So, we can go on to the first slide here. Alright. Okay. So the two thirty two updates. So this happened earlier this week here, and there the high level news is that there are some reductions to two thirty two duty rates, but the scope is fairly narrow. The scope is fairly narrow toward both agriculture use, agriculture machinery, combines, harvesters, tractors, that sort of thing, residential HVAC equipment, and what they're calling mobile industrial products, things like forklifts, bulldozers, mobile cranes, things of that nature. Several derivatives, on this list kind of part of annex c six to c eight are qualifying for this reduction, so going down from 25% down to 50%. And a few things are have been added as well. So, you know, some photographic film and some steel racks are gonna be now included on section two thirty two. But I'd just say, like, overall, this is kind of a reduction for any of those particular products. There are additional reductions as well of a capped 15% rate. For certain products that are exclusively used for the production of some of these things. So the mobile industrial equipment, the agricultural machinery. If you have some of these products that are in the c nine to c 10 annex and they're in chapter eighty four and eighty five or 87, and if they're used exclusively, for the production of some of those machines, you can also qualify for a lower rate there as well. The second major update here is that The US content threshold is being lowered across the board, from 85% to or, I'm sorry, to 85% from 95%. So back in April, they, you know, announced, okay. There's a US content threshold. So if you use copper, aluminum, steel, and it's subject to two thirty two, but 95% of that content comes from The United States production, smelting and casting and pouring, all that, then you can get a 10% rate, which is pretty attractive for the 5025% alternatives. They've lowered that threshold to 85%. And if you were reading along in the announcement, you saw that they said, if it's made entirely of US metal, and then they define entirely as 85%. The interesting interesting use of the word there, but, the good news is that that threshold is just a little bit lower, for that to qualify for that really generous discount down to a 10% effective rate, and that still also applies to the existing breaks in addition to the, equipment, that just got, updated here. Third major update is that the trade deal countries are getting a capped 15% on some of these mobile industrial goods. Remember, these are cranes, bulldozers, backhoes, forklifts, things of that nature. Any of these countries that have, like, a trade deal worked out, so this is the 27 EU countries, Argentina, Ecuador, El Salvador, Guatemala, the list is there. They get a 15% capped rate. So if you recall how the capped rates worked before for automotive or anything like that, or for the EU under IEPAA, it would basically be the the IEPAA code, was, you know, the difference between the base duty rate and 15. It's similar here for section two thirty two as well. The fourth one is a bit odd. There is a reduction for USMCA content if you're importing, these mobile industrial products. Again, bulldozers heavy kind of construction site equipment, that's moving around. You're allowed to do a value breakout. So we got rid of value breakouts in April, but here they are again. We're coming we're bringing them back for purposes of USMCA. There's a 25% rate for these products that applies only to the new to the non US content, so the Canadian, Mexican content or just non US content. That only gets the 25% rate. The, US content does not have to pay that 25% rate, but only up to The US content being 40% of the article value. This effectively creates a 15% minimum rate, which as we're working through the math and updating our Terra simulator, we noticed that there's a weird, cliff that that occurs here. And just to kinda illustrate what this looks like visually, you can go to the next slide. Here, let me move over. Suppose we have a $10,000 forklift under $84.27 $104,000, and we're importing this under USMCA. The green line is just a percentage of The US content in this forklift, and the blue line is the duty rate you're gonna pay on this $10,000 forklift. So remember, at 0% US content, there's nothing really to break out. So you pay 25%. On a $10,000 forklift, you pay $2,500. Okay. But and as you increase the amount of US content, the amount of duty you pay goes down. So at 20% US content, you only pay $2,000 in duty. Right? Because 20% is duty free. You pay 25% on the remaining 8,000 non US content. Right? 25% of $10,000. Okay? So we're seeing a reduction. That happens again at 40%, and that is gets down to 15% effectively. Right? We have this $10,000 forklift. We're gonna only pay $1,500 in duty on it. But something happens. They say after 40%, you now have to go and pay 25% on the entire value. So at 40% US content, you're paying 5,100 or $1,500. But then at above 40%, say 41%, 42%, you now pay $2,500 in duty. This is a bit odd. It sort of means that the more US content you pay, you or the more US content you have, the more you'll actually pay. This is a bit strange. But what I think is happening here, is talk about it on the next slide, is that at some point, this, 40% mark correlates and eventually flips over what is actually the country of origin for marking purposes. Remember that something that is the product of The United States is not subject to two thirty two duties. This has been true since, since the beginning of last year when they started doing these two thirty two duties. There's large exemptions based on if the product is made in The US. If it's for marketing purposes, country of origin, US, 232 does not apply. So I think the implication here is that, supposedly, at some number, 60% US content, 70% US content, depending on the exact product, it's more likely that you have, to be country of origin US and the two thirty two duties you pay go down to zero. But I don't think that's necessarily gonna be the case for everybody. There's definitely gonna be some odd situations where you don't meet the marking rules of one zero two for purposes of, you know, country of origin determination for a USMCA country. Still not, you know, country of origin US, but, your value content may be 60%, 70% US. So there's gonna be some weird situations where people who maybe move production back to The United States, increasing the value add there, but finishes it in Mexico, finishes it in Canada, may actually be paying more because they move production to The United States. A little bit odd, but I I think I see what they're what they were trying to do here. But, there are gonna be some some people with some unusual cases for these mobile industrial equipment importers. Okay. So that's two thirty two. We'll go on to section three zero one. We got news, of some preliminary findings on the forced labor investigation. Note remember, there were two going on, forced labor and structural overcapacity. No update yet on the structural overcapacity as of this moment. Watch closely. We could see something soon. And there's a few takeaways here. They created two tiers of a 10% rate for 13 countries plus the EU 27, 12 and a half percent on another 46 countries. And most of those trade deal countries that kinda had a an arrangement and understanding and memorandum, they are on that 10% list. We'll go over the full list in a minute. The exclusions are are also pretty clear as well, and they sound pretty familiar. They sound pretty similar to IEPAA, unavailable natural resources qualify, banana, coffee, that sort of thing. Goods subject to two thirty two would not be subject to these three zero one duties. That also sounds like AIPA. Critical minerals and ore is exempt. Chemicals, pharma, beef, civil aircraft also exempt from these three o ones. And USMCA and Doctor CAFTA also get a break. So in many cases, this looks a lot like some of the exclusions you were used to under IEPAA. It's just coming a little bit later. What is a little bit odd about this one that that we we need to see more details on, I'm I'm very interested in, is seeing that the return of tariff rate quota being proposed for textiles. Remember, a tariff rate quota means that after some number of products per year, you can bring it in duty free or maybe at a lower rate of duty. But then after a certain volume of imports has been reached, the tariff rate jumps up for everybody over the course of the year. So, you know, the first 1,000,000 T shirts come in at an extra at five percent three zero one, but then everything after the first million T shirts now has a 20% rate or 10% rate or 12 and a half percent rate, something else. The mechanism is unclear. It was pretty vague in the announcement, and they actually asked for comments on this. So if you have thoughts about how, a textile tariff rate quota system could work, feel free to submit the comments you see in the fourth, the fourth bucket here. But it did say that it wants to be proportional to the textile exports that we send to that other country. US is still a pretty big grower of cotton. Most of our cotton, though, is long staple, a little bit higher quality cotton. We still also do polyester, nylon, those sorts of things as well. But we're not exactly the major powerhouse we had been in terms of textile production. Much of the developing world has caught up and is probably exceeding what we're able to produce now. So an interesting interesting dynamic here, but I think if you have a strong opinion about this, there is a little bit of a window to maybe try to influence this process, via the comment period from the USTR. They are receiving these comments through July 6. There's gonna be an in person hearing on July 7. And it's just a little bit odd because in theory, forced labor or products made with forced labor are banned from The United States. They shouldn't be allowed in at all. They're not allowed entry under any duty rate whatsoever. But remember, this is more about there's not enough controls in place from some of these countries for forced labor, and that's really the driver of why they're saying this is being done. They're saying these countries are tolerating forced labor. Maybe it's not done exactly in their country, but they turn a blind eye. Their laws are too loose, something of that nature. Many countries disagree with this. Many countries are saying this is ridiculous, USTR. We highly disagree. We have very strong protections in place or at least just as strong as yours, but that it seemed to not be compelling, to the USTR in this case here. So I'm gonna leave you with two maps, on this section three zero one, review. And so this is what I showed you a couple months ago if you'd seen this. Those that were in blue were under review for forced labor only. Blue and green were being looked at for both forced labor and, excess overcapacity, that second three zero one investigation here. And you can see here on the next slide where these kind of duty rates are breaking down for all the countries that were blue or green. Those that are in orange have a 10% rate proposed for forced labor investigation saying that, okay. They haven't done enough to do it or they, you know, they've tolerated it too long or they haven't done enough enforcement on forced labor. And so we're gonna propose a 10% rate. And then there's another tier of this 12 and a half percent rate that would apply to everybody else. And this, in theory, is more about you don't have any laws on the books. You're really not trying very hard at all, which includes some odd countries like Norway and New Zealand who maybe don't have quite the same history of forced labor as maybe some of the other countries on this list, but that, is not exactly what, USTR, has found. They found that these countries maybe are more tolerant of it, more lenient on it, or that they're just not being cooperative enough in trying to reduce this. So 10 for those countries in orange, 12 and a half percent for those countries, in blue. Okay. That's our tariff update for today. Thanks for the slight distraction here. And, we also have another thing that I couldn't fit into this webinar without kicking out all of CPSC to talk about the new executive order on foreign importers of record. Spoiler alert. This also impacts regular customs, brokers and regular importers as well. So we're gonna talk a little bit about that. I'm gonna have that tomorrow, I believe at the same time as this webinar. So see you in twenty four hours to talk about this new executive order on foreign importers of record. But with that, we will get now to the main topic, of our webinar. We will turn this over to my colleague, Zach, to talk, consumer product safety. And he will, tell us a little bit more about how to register products, how to be prepared. Only a month away, so we gotta make sure our importers are ready to go.

Zach Claussen

Thanks, Marcus, and thanks to everyone joining on the webinar today. You know, tariffs, in my opinion, are so 2025. We're in 2026. Right? Now we're caring about CPSC more. That's half a joke. I know all of y'all are still waiting for your refunds, but, this is also super important for a vast majority of the importers bringing, items that may be subject to CPSC. So a few of my slides here at the beginning, if you were on the first webinar, are going to be review, but we kinda wanted to touch on these, just so those that couldn't attend or didn't watch have some familiarity or just some basic entry level, visibility into CPSC and e filing and things of that nature. I will admittedly say that, I'm not an expert on everything that's, subject to CPSC and required and things of that nature, but, we'll talk about that more later in the webinar here. We'll start with subjectivity. We, as a broker, have some expertise in certain things. We know, you know, mattresses, toys, things of that nature. Those are all heavily regulated by CPSC. There's a good host of resources that CPSC has provided in order for you as the importer to try and identify what goods are subject and what goods are not subject. Some of those are the HTS set, and all of these with the underlying are linked, in the slide deck that you can utilize and visit CPSC's website to do your own kind of back end research. What we're primarily going to be talking about today is the efiling website, but we figured this would be a good kinda introduction here. So, CPSC also encourages you to reach out to them directly if there's anything that's a little gray or murky or you're unsure, you know, hey. This is a component, of a certain item that may be subject to CPSC or it's not subject to CPSC, but maybe the component might be that's something you're gonna wanna reach out to CPSC about directly. It's it's more concrete guidance and, you know, what we can provide. We can do research as a broker, but, ultimately, you as the importer have the onus, to make sure that CPSC is registered properly and everything, is handled appropriately before the importation. So couple of links here. I'll skip over to, something that, we've kinda introduced. I'll I'll actually go bottom up here. So, we have, updated our ACE analysis. If you're a current Flexport customer or or potential prospect, we've we've beefed up our ACE analysis, and what this allows us to do is deep dive into your customs information. You give us cross functional access to your ACE account. We pull that data, run it through some of our proprietary, software that we've created, and it will actually tell you which items, previously have been flagged for CPSC. Keep in mind, on the brokerage side of things, we have not been filing anything for CPSC. It's just been, I'll call it a soft flag that's been, getting flagged as you file the entry. So we file the entry. We see the CPSC under review status. We either get the may proceed or maybe you've had some CPSC exams in the past. That's not uncommon for, more of the heavily regulated items. But, in general, this is kind of how it's worked today. Moving forward, this is going to be more of a broker having to input information, and we'll we'll kinda dive into that a little later. But CPSC is also, at the top here, released, what we were calling a high risk level HTS code list. It's not all encompassing. CPSC's kinda giving theirselves some wiggle room when it comes to giving you the full yes or no on certain items, but it's a good start if you have, you know, your product list up to date. It's worth running through these 600 codes in the additional list on the first slide there. They also have been guiding importers and brokers, those that have been researching to the regulatory robot. Everything is going to AI. Right? So when I get the regulatory robot, in here, if you haven't used it, it is fairly intuitive. It'll let you know. You can search by item, things of that nature. And I'll go to the slide here. They do preface that it's intended as guidance only. So my from the Roker side, what I would recommend is going through this process if you're unsure. It will spit out actually kind of, results that you can print, save as a PDF, and I would fire that over off to CPSC and see if they can review for you. They might say this is the best guidance that they can provide, but it's worth at least having something from them in writing in regards to applicability if you're unsure on a certain product. So you can either search in the search bar there or or you can click a specific, commodity that you might have, and this will help identify if you need a certificate of conformity or a general certificate, things of that nature. So or the children's product certificate, you might need that as well. You know, most common for toys, things of that nature. But this is also a good start, a good tool for you to save, bookmark, utilize when you need to. Maybe it's after hours, CPSC isn't working. You can utilize this tool to kinda do some research, as you wait for their response to your email if you have one pending. So I found it somewhat handy. I think others that I've talked to, it's been kind of a mixed bag in regards to how, effective it is, but, you know, it's worth giving a shot. And CPSC, if you reach out to them directly, the first time probably will push you to using, the robot here. So okay. The product registry. If you have not already registered or signed up for the registry, it's not too late, plenty of time. You know, we are going to have some mandatory filings for the CPSC starting on July 8. So just some time for that holiday weekend. Corny joke here, but, why we want you to, celebrate the fireworks for the fourth of July and not have fireworks, when it comes to your supply chain and being, you know, having some issues when it comes to the filings because the brokers will be asking you for this information. So let's, leave the fireworks in there. Alright. So first slide here is kinda going over how you can register. It's very simple, not like ACE portal. You can click a register now link. And what this will do, what I recommend is at least having someone who plans on being a long tenured person at the company applying or someone maybe in the compliance role, at your department that can manage this in the day to day. I would have them sign up, maybe use a team email so people can utilize that. I wouldn't silo it with one individual. You you know, if you wanna take DTO and no one can update the CPSC information, vacation might be ruined a little bit. So I would recommend using a team email. Just kinda keeps, you know, everyone involved that needs to be if you're out of the office or if you leave the company. So super quick. Certify certifier ID is very important. You're gonna wanna pick something that's specific to your company. So if I was doing this today, I'd put Zach Clawson LLC or ZC LLC just to identify, who I am. That'll be important as the brokers go to file the entry. So keep that in mind. You don't wanna put something random like, I don't know, best broker ever 2019, something like that, something that's more applicable to your business. So these are some of the roles and responsibilities that you'll find on the eFiling website. So there's the business administrator, collection administrator, collection editor, and viewer. From a brokerage perspective, I've been advising clients to add us as the viewer. We don't need to be the collection editor, administrator, or even the business administrator. We can't create the account for you. Viewership is fine for us as brokers. We will have access to your e filing website. It's almost, like, cross access to your ACE account if you've given that to your broker. So anytime you input a new product into the registry, we'll have access to that. You do have to give us viewer permissions. So if you have, you know, five different collections that you create, we need five different emails sent for each collection. There's, as far as I've seen, not an all encompassing one that you can send. I'll double check that. But, usually, what we've received is the links to each specific product collection. And when it comes to the collection administrators or editor roles, the importer can have the suppliers added as those roles as well. So if you want a supplier or a manufacturer to have access to your eFiling to upload the information, that's totally okay. It might be recommended for some too as the manufacturers or suppliers usually have more insight maybe into the testing that's been done on the products. Totally okay, fine, and acceptable. It's really what permission you want to grant to individuals, because they will have access to this data. They will be able to edit. If something goes wrong on entry filing or if someone accidentally, you know, fat fingers some information, that will affect the e filing. But if you're comfortable giving those permissions, to your suppliers or manufacturers, then by all means do it if it takes, you know, some work off of your load there. Business administrator, as I mentioned before, you want someone, that's really gonna be long term at the company. You don't want a junior specialist or intern as the bin business administrator. No offense to the business, or the interns out there or anything like that, but you want someone that kinda has a long standing time at the company. So in case things go awry or if CPSC needs to reach out to somebody, you can have that person as the point of contact. Ultimately, this the onus of the CPSC e filing does fall on the importer. CPSC has made that very clear. And, again, it's up to you and your discretion on how much visibility you want to give to other parties. So all of these screenshots, the screenshot here is directly from a, CPSC guide. CPSC has done a great job in, I would say, gathering all their information. There's a handy link. I will put it in the chat here at the end, that lists all of kind of a timeline of events from, like, the beta pilot all the way up to present day information where you can watch, videos or get templates on how to do things or user guides. Some of them are lengthy, but, you know, this is very new process for everybody. So they wanna make they wanted to make sure that everything was very detailed and, the ease of access for everyone to have their information. They have a a set of YouTube videos as well, which I've watched a few times, and those are pretty handy, especially when it comes to you first getting your login and adding pro or adding items to your profile or your e filing platform, things like that, your product collections. The videos are very handy when it comes to doing that. Okay. There's two ways that you can register the products. There's a bulk upload, which is a big CSV template linked here. It's also on CPSC's website. If you're a major importer that has a lot of items flagged for CPSC, this might be the route you wanna go rather than a one by one upload. That's gonna take some a lot of time. The fields, you know, will show you what's required, what's not required as you upload, the bulk. And what will happen, and we'll kinda see this as I do the live demo here, is the CPSC's website will show you what, turns out that you need to fix and one what is actually valid on the website. So it's less time consuming. You can't change the format of the fields. There is a a user guide, that they provide in regards to how CPSC wants the data structured on the bulk upload template itself. It is a little particular, I'd say. Sometimes they don't want commas in certain cells and things like that, so you wanna make sure that your data, is extremely detailed, but not overly detailed. That would cause an error on the actual form itself. So here's kind of what it looks like as you go to do the bulk uploads. There's four steps here. I won't spend too much time on this slide because we are going to do the live demo here momentarily, but you'll have the slides here in case you wanna view. And then you can also as I mentioned, CPC does have a a YouTube video that you can watch on how to do this. So as soon when you have the successful uploads for the bulk, what will happen is the products, will become visible almost instantly on the platform if you've done everything right. There is a forty eight hour grace period for you to edit the information if maybe you realize you copied down a cell the wrong way or things like that and you wanna make sure that information is right. You can go back in there and edit it. You can also bulk export out of the product registry, which is nice. So maybe you don't wanna give your broker, viewer access to your e filing. That's totally understandable. It's your supply chain, your information, your data. What you can do is export the data and send it, in a CSV or an Excel file to your broker, and they should be able to file entries with that information. The purpose of essentially uploading this information into the CPSC e filing is so that, you get a reference message set. I'll talk more about that in a bit as we progress through here, but that's gonna be super important for those that are heavily, affected by these changes here. The single manual uploads, exactly what it is. It's more manual. You're having to go in to the website. Each field you're having to enter, as you can kinda see, in the GIF here, well, this is what we're going to walk through here in a few moments. But, if you're a smaller importer, maybe you have two or three items that, or maybe 10 that are subject to CPSC. This might be easier than trying to go in and do the bulk upload, especially if you have one supplier, it's fairly quick to just go in here and kind of add them. You can save products, which is a nice feature. If they're incomplete, you can still save them as an in progress. So you can come back, edit those. Maybe you're missing what SKU you wanna use or maybe you're missing the testing laboratory, things like that. You have that ability, so you're not, just doing these things and then losing all of your data in case you step away from the computer, get called into a meeting, or things like that. So okay. I am going to stop sharing. Unfortunately, you're gonna have to stare at me for a second, and I will reshare. Let's go through the live demo here. Let me get situated. And we are collecting questions in the chat. So if you have those questions, feel free to shoot those over, and let's get started here. Alright. Okay. We're gonna go this is our kind of compliance login here. We're gonna go to the webinar test. We're going through the singular upload now. And so here, I'll kinda talk about these little blocks that you can utilize. We can manage users here. So Calum here works at Flexport. If you haven't met him, great guy. We can also invite other account administrators here. We can invite users. This is where, you can invite your broker or maybe they're just a freight porter or your supplier or whoever you wanna give these permissions to. You can invite the user. You type in their email. You give them what collection they want, and then you give them the viewership access level that you want. So this is kind of like the premium access, mid tier, and then lowest tier. And, again, I recommend the viewer as for the brokers when you're sending this out. We don't we