Tariff Trends 2025: Expert Insights on the New U.S. Customs Landscape

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Angela Lewis

00:01 - 02:00 Hello, everyone, and thank you for attending today's webinar, tariff trends 2025, expert insights on the new US customs landscape. My name is Angela Lewis. I am the global head of customs here at Flexport, and we have a great webinar for you today. But before we begin, let's cover a few housekeeping items. On your screen, you will see a sidebar to the right on the main page. If at any time you need any assistance during this live webinar, please message us in the help chat located on the sidebar. You can also ask questions via the q and a on the sidebar. Time permitting, at the end of the presentation, we will answer a few audience questions. Be sure to get your questions in early. In the menu above on your screen, you have two tabs. In the first tab, you can download a copy of today's slide deck. And in the second tab, there is a brief feedback survey for this webinar. We really love and appreciate all your feedback, so please fill out that before exiting the webinar today. Now on to a brief legal note, please keep in mind that all information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert to discuss your particular situation. So joining me today are my colleague, Steven Lund, senior customs manager, and Anna Zajac, senior trade advisory manager here at Flexport. We also have a special guest, Patrice Lafayette, who is the vice president of the Western Region at Roanoke Insurance Group. We're really excited to have her here to talk to you all. Moving on to today's agenda, we're gonna start off by covering the latest tariff news followed by a deep dive into bonds, then we'll cover duty savings and deferral strategies, and we'll close it out with a review of what's next on the horizon and a live q and a session. So let me turn it over now to Steven who is gonna give us an update on where we are now.

Steven Lunn

02:00 - 06:50 Hey, everyone. So, obviously, things keep changing, but we did have a little bit of a pause. So there's not quite as much news as there was last time we were getting stuff kind of day to day. But, I'll go ahead and give you guys some updates. Wanted to start out by just kinda showing a timeline of how the tariffs have changed just since we've been doing, as things have been changing. So, you know, we're seeing the additional 0%, tariff kinda went into place. Then in May or April 5, we were seeing the 10% additional, then April 9, the country specific, and then April 10, the additional, 10%. We're just seeing all these changes happening very rapidly. So, again, I know you're probably being reached out to by your brokers. You're probably being reached out to quite a lot for what additional items are being added to your 75 o ones, what kind of additional information is being required. And this is just sort of a timeline to show you that things are happening very, very quickly. So we wanna make sure that you're aware of that, that you're kind of seeing that. One benefit is that there was that ninety day pause, but these questions will probably start coming back up again, on July 8 as that is when that ninety day pause from the IEPAA reciprocal tariffs will expire. We can go to the next slide, please. Just wanted to talk about two things here, exclusions and two three two updates. So there was a message sent out by custom on a on by customs on April 11 stating that there would be exclusions put in place for certain smartphones, computers, chips, and other items. Now this basically right after we got a response from the president saying nobody is getting off the hook for the unfair trade balances. So I think this proves that we need to be very, very careful as to how we're making decisions because things are happening very, very quickly, but they're sort of being taken back right afterwards. Now these are still in place. These exemptions are still or exclusions are still expected to continue to go forward, but there is conversation that things may change in the future as well. On top of that, we're seeing additional two three two investigations opened. So some of the big ones or the three main ones that have happened are process critical minerals. This is a big one because it sort of has minerals that have undergone activities that occur after the mineral ore. And this includes, derivative products, complete products, anything where the, between the process where, the ore is extracted from a mine up through its conversion into a metal, metal powder, or master alloy. The other thing to keep in mind is that is act this is not only including rare earth metals, it is also including aluminum, magnesium, nickel, tin, titanium, and zinc among other elements. So this may be more broad reaching than you would expect kinda reading processed credit critical minerals. The other two items that are being, targeted for investigation are semiconductors and pharmaceuticals. Both of those are open to comments currently, and those comment that comment section does end on May 7. So if either of those do impact you, you can go, if you download this, presentation, you'll be able to click on those and get to the the page where you can, submit comments. We can go to the next slide, please. Lastly, I wanted to talk about sort of some international updates. So some things that have happened, the EU, states did approve countermeasures that would apply to $26,000,000,000 in goods, which matches the economic scope of The US Two Three Two tariffs. So this is basically expected to be a one for one. It's expected to impact 26,000,000,000, from the EU, so 26,000,000,000 coming out of The US. Tariffs of 25% on US origin goods, including food and beverage products, personal care and household products, textiles, wood, and transportation equipment have all been approved, but all measures have been suspended for ninety days until July 14. Similar to our ninety day pause, this is just to facilitate negotiations between countries to see if we can come to some kind of agreement. On the other side, China, just some kind of general updates. Right? As of now, The US import tariffs on Chinese products are a 25% plus 20% that originally happened coming to a 45%. At the same time, China has, put tariffs on US products of 125%. Recently, it was, China warned that it will be it will take corresponding countermeasures for any deals made at the expense of China's interest. So, you know, looking at any any kind of deals that are made, there may be questions on them. And then kind of just last night, there was a message from the president that stated the tariffs on China will come down substantially, but they will not be zero. So we know that changes are coming, but, again, we're not sure exactly how those are gonna take place because there is, you know, there is no saying what exactly that means. We know it won't be zero, but we know it's expected to come down from the 25%. So that is all I have for the latest news. I'm gonna go ahead and pass it over to Patrice to talk about bonds.

Patrice Lafayette

06:50 - 24:38 Thank you, Steven. Good morning, everybody. I'm Patrice Lafayette with Roanoke Insurance Group. We specialize in insurance and carnees and surety bonds for the international trade community. And today, I'm gonna talk more specifically on just the import bond in general and how the the trade remedy tariffs are affecting that. Next slide, please. So the the we're gonna start off just as a quick review of, you know, how you calculate a a standard bond. It's 10% of the duties, taxes, and fees paid in twelve months. The minimum bond amount is 50,000, and, you know, they're in between 50 to a hundred. It's in increments of 10,000. So any duties, taxes, and fees between 0 and a million would go rounded up to the nearest 10,000, and then anything greater than a million would be rounded up to the nearest hundred thousand. So from a hundred thousand to 2 hundred thousand. This is including all duties, taxes, and fees paid or payable to customs, including antidumping, including two zero one, two 30 two, and three zero one tariffs as well. I thought this was kind of just an interesting slide to look at. Historically, and this is as of the end of twenty twenty four, you know, we've always seen the majority of our bonds, and this is all of customs data, be at $50,000. So that was about 95% of all bonds were 50,000. At the end of twenty twenty four, that dropped to about 88,000. And at the end of twenty twenty five and even into 2026, we we anticipate that number to drop further. Where we are seeing a lot of large bond requests are, you know, over the million dollar request and even the latest, you know, we've seen it up to in the billions at this point of bond calculations that people are looking at while trying to anticipate the tariffs that have been put into place and also what might come into the future. So certainly a big change for liability for us, but also for importers to be able to obtain those high level bonds. Do I talk a little bit more about insufficiency and sufficiency of your bond? Again, this is just data that I think is, you know, interesting to share. This is the this is all of customs data, the historic bond insufficiencies, and you can see the big jump in 2019. No surprise. That was the original tariffs. 2020 kind of dropped a little bit. During COVID, customs paused on issuing mandated increases for a few months, but it kinda just trickled down over the years, you know, with those original tariffs. So far in 2025, for the first quarter, customs has issued a little over 2,200 mandated increases a lot in the month of April, which you can see is about half of what was the whole year of 2024. So we certainly are anticipating a large increase for 2025 overall. So this is what a mandated increase looks like when you receive something from customs where they determine that your bond is insufficient. So that $50,000 bond you may have had no longer sufficient to use for your upcoming imports. Again, it's calculated at the 10% of your duties, taxes, and fees for the past twelve months, and it's a rolling twelve months. They review it on a monthly basis at the beginning every month. And so even if your bond renewed two months ago, they're looking at the previous twelve months. If your bond is found to be insufficient, you'll receive this letter as the importer, and the surety company also receives the letter, which is then shared with the customs broker. And even in the letter, customs is suggesting to forecast for the future twelve months because they do indicate what bond amount they suggest you should have based on the previous twelve months. But, historically, we have seen that many times this gets increased a couple months later, especially with the unknowing of what's coming forward with tariffs, and how much those duties might be, that changes what a bond amount looks like. So a lot of times you we are recommending that you are looking and forecasting into the future, and customs is doing the same. I recognize that forecasting is not something that's easy to do right now, but certainly something that we highly recommend, you know, not just looking at what tariffs could possibly be, but also looking at your supply chains and if you're going to change your import activity or not. Customs requires fifteen days to terminate a bond, so they do give you that time to replace the bond plus an additional thirty days. So there's not a lot of time to turn this around once you receive it. They also have the ability to, render a bond grossly insufficient and and actually, render insufficient immediately. You won't even have the forty five days. That just means that whatever duties, taxes, and fees you've paid in the last twelve months have significantly gone over your current bond amount, and they would like you to get a higher bond amount immediately. Right now, we have not seen any of those issued so far. So just tips again on calculating your bond amount. Again, the rule of thumb projecting into the next twelve months, making sure you're looking if you, you know, you are importing anything subject to antidumping or countervailing duties. De minimis is obviously also something that is changing potentially next month. So looking at those types of things and what your future holds in terms of how the tariffs are affecting the volume into your import bond. And we're recommending to overestimate, and I'll go through stacking in a minute. But the reason why is because it can cause some some problems for you if you don't have a high enough bond amount and you have to continue to increase it, you know, every few months because we did see that in the first round of tariffs. So we definitely think that the risk of overestimating is certainly less than the risk of underestimating. Roanoke does have a bond calculator that you'll get here if you download the slides that you can access on our website that will help you learn to be able to calculate your bond. You can also use other sources of data. You can use your ACE portal to look at your data and the the historical data of your imports. You can work with your customs broker who also has that data, and they can also work with us as the surety company because we get downloaded data from customs as well. So I'm gonna talk a little bit about aggregate and stacking liability and what the risks of that with the insufficiencies that we just talked about. So the the bond, you know, per customs is a contractual agreement between the surety company, the importer, and customs. You know, it is a liability exposure to the surety company because it's a it's a guaranteed payment to customs. If you don't pay your duty to customs, then they will come to the surety company on your behalf for the bond to pay. The liability is exposed to the surety company as long as there's an entry that hasn't liquidated. So, standardly, because of a liquidation process, a bond usually always has two liabilities two bond periods with liability just because the the liquidation process is so long. But when you're looking at increases every few months, then that stacking can increase, and you you're not just looking at the one bond period that you have open. If you have open entries, then you're looking at the total aggregate for all the bond periods with the open entries. And I'll kinda give you an example on the next slide. So let's just say you had a $400,000 bond in November. In January, you got a mandated increase for $500,000, and this is a live example. We did see this, happen. And, you know, and then all of a sudden, you didn't project to have the right bond amount. So in April, you get another mandated increase for $800,000. Again, the projections weren't done, so you get another mandated increase in September for a $1,800,000 bond. You don't just have liability for $1,800,000. You actually have a total liability of 3,500,000. 0 by adding all of those bond periods with open entries. This is a very big difference, obviously, between 1. 8 and 3,500,000. 0 because the surety companies are looking at that total 3,500,000. 0 of what they're underwriting on your behalf. We can go to the next slide. So, you know, you want to avoid that stacking and aggregate liability. Again, making the accurate continuous bond sufficiency projections and avoiding midterm increases. If you can try to look at your bond renewal date and get ahead of getting a mandated increase from customs, we certainly look at recommending and looking at that right now. Reviewing it forty five to sixty days prior to your renewal. There there might be underwriting requirements with the surety company. Collateral may be required. You may have to be talking to your bank. And so those are things that, you know, you need to look at when you're thinking about increasing your bond, but certainly looking at it at renewal, not just waiting for customs. And the risk of failing to increase your bond, you know, you that you would your bond would either be rendered insufficient if you don't file the mandated increase that they're requiring or if they render it grossly insufficient and it's turned off immediately. No entries will be allowed. Your imports would be, you know, completely stopped. You might have to use single transaction bonds, which can become costly or even more underwriting because they're calculated differently. They're calculated differently. There's stacking and aggregate liability issues, demurrage charges, storage, fees that can increase certainly because you can't import. Additional collateral or even additional premium might be required. Sometimes that happens as bonds get very large. Sometimes that happens as bonds get very large. And, obviously, underwriters are looking at this a little bit closer when you're not able to to do it in a timely manner to increase your bond. So I'll talk a little bit about, you know, what we're looking for in an underwriting standpoint and just kinda give you a a brief overview of what we've seen in the past as well. Again, why we underwrite, it's a contractual obligation. The bond between the importer and the surety company and customs, it's a financial guarantee. And we we we obviously have we've been writing bonds for a very long time. Been in business since 1935. So we have a history of of what we've looked at. You know, we've looked at higher losses over the years. Historically, our losses have always been with anti dumping and countervailing duty. I will say that in the last few years, that has changed. We've seen debit voucher claims, due to which are basically bounced checks due to multiple reasons either from the economy issues or sometimes even just from the banks not being able to approve that high of a of a payment through their ACH with the importer. We've also seen a lot of classification changes, whether that is anti dumping or not. Sometimes it's not. So we anticipate that this might be something that might be more prevalent now. I know that it's very confusing to keep up with the tariffs and filing the right entries, and so I I think that this is something we're gonna see more of. And then there's always market capacity. A surety company is essentially an insurance company. So it's really what their appetite is for the risk and how large of a bond they may want to write or what kind of risk they wanna take on. Under other conditions that influence underwriters, you know, of course, the trade remedy tariffs and forced labor, liquidated damages, and supplemental duty bills. This would be if an importer has historically received any claims from customs and hasn't paid them. Then, you know, we look at that history with the importer. And then, of course, economic issues like I mentioned, not just inflation, but also recession. You know, during COVID, one of the things we saw was a lot of companies were doing really well, but it was also temporary. Right? A lot of, you know, let's just say grocery stores or even treadmills. You know, those types of companies had very, very good financials, but there's only so many treadmills you could buy. So they they do look at not just that one year sort of historically looking at how that company is doing. So when we're looking at financials, you know, we would like to look at audited financials. They're always best. It's it's a little bit different. The surety companies are looking for mostly cash. It's current assets, things that are easy, equitable to be able to pay duties, taxes, and fees to customs. If you don't have the cash in the bank, you know, what else can you quickly turn around to be able to to pay the duty? A lot of the times, you know, people have a lot of, goods in a warehouse, and sometimes that doesn't turn over very much. So that's something else they look at, like, how often is your inventory turning over? They wanna make sure that there is, you know, a a profitability in the company, and they're looking at your working capital and your net worth. We also are looking at bank loans. So if you have a long term debt, or even short term debt, what what credit rating are you getting from the bank? Because if the bank is looking at a higher interest rate, more than the standard, then the surety company is gonna see that as more of a risk. If your financial statements don't support the risk, we can always look at other third party financial statements from a sister company or a parent company. General indemnity agreements can also be used. Collateral can also be required if none of that is is qualifying. But and sometimes that collateral may not, again, just be for one time. It's not it it because of the stacking when I talked about before, sometimes, you know, surety companies ask for collateral on multiple bond periods because the exposure is so high. Some of the things that we look at as well, obviously, is the bond amount or the the aggregate amount that we talked about, the importer's credit rating if they have one, whether that's S and P or D and B. We look at the commodity and the entry type. Sometimes those some of the risks are higher on certain commodities or certain entry types, like I said, anti dumping or countervailing duty. We look at the duty rates. We look at the liquidation history of the importer and the claims history. Do you historically have a liquidation that normally goes through and you don't have a claims history? Then they're gonna look at that as a positive factor. But if you have consistently had issues, you know, with the surety company and not being able to pay on time or have not being able to resolve the claims that have been put against your bond, then they're gonna look at that and and question that or also take that, you know, looking at it on a negative side of it. We're looking at red flags, whether or not there's CBP extensions on current entries that haven't liquidated on the bond, and, of course, late payments, whether that's by yourself or, you know, how or a customer's broker that you've worked with. So I'm just gonna kinda end this with some best practices, that that we think are really important right now. Of course, I again, I'm just gonna keep reiterating this because I think it's very important, is discussing and projecting the plans for the next twelve months, Reviewing if you're currently filing de minimis entries because that might be changing. Look at anything subject to antidumping or countervailing duty because that obviously increases the duty rate as well. And I highly recommend getting ahead of underwriting. If you're anticipating a larger bond much larger than 50,000, I really recommend discussing that with your customs broker, discussing the possibility of collateral. One of the things that we saw in the first round of tariffs was the banks weren't able to keep up with the collateral request. So importers were going to the banks trying to get a letter of credit, and it was taking them much more than thirty days, sixty days. And so if you're looking at that increase from customs and you only have forty five days, that may not give you enough time. Right? And and also looking at banks because the surety companies are looking at the credit ratings of the bank. Some of these very large bonds, one bank may not be able to give you a letter of credit. You might have to go to multiple banks. So you wanna get ahead of all of this while and give yourself some time rather than feeling, you know, under that pressure of the mandated increase. Going back to that renewal date of the bond and potential stacking liability, trying to look at your renewal date. If it's coming up in the next few months, then then start thinking about your bond amount even if it's in six months from now. You wanna be able to to give yourself again that that time and that cushion to look without having to deal with the stacking liability issue. Keep in mind that customs requires 15 termination notice. Again, don't wait. Use your resources. You're gonna keep hearing us all say that, over the next year, I assume, is just keep looking at everything, using your resources, working with your customs broker who, you know, like Flexport, is working very closely with the surety company. And having that open communication is very key with your customs broker and your surety company at this point. Actively monitoring updates, being a part of these webinars that Flexport is actively putting on, I think, is fantastic. Keeping up with data that's information. I know that sometimes it changes daily, and even hourly. And so I think being a part of it and trying to get in front of hearing everything you can is very important as well. And then, of course, reviewing your supply chain plans. What are your plans? Are you gonna continue importing from certain countries? Are you going to change that? Are you going to change your manufacturing? Maybe you're not importing as much. So certainly looking at that, you know, while you're looking at your bond amount. And one other big important thing is, of course, I I mentioned this as well, is reviewing your ACH accounts with your bank. Because, again, in the first round of tariffs that we saw, we saw a lot of debit voucher claims. And it wasn't because someone couldn't pay the duty. It was simply because the bank denied the payment because of the limit that was given to them to pay customs. So you wanna make sure that you've you're talking to the bank, making sure that if your ACH is being paid to customs directly, that your limits are sufficient to what the duty rates you're paying. And I believe that's it. So I'm gonna pass it back to Anna, and thank you again for your time.