Tariff Trends 2025: Expert Insights on the New U.S. Customs Landscape | June 4, 2025

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

00:22 - 32:06 Hello. Good morning, everybody. Good afternoon, good evening, depending on where you are. We have a a webinar for you that got more exciting in the last, sixteen hours than what we had planned. So I do hope, this is something that's good. We scheduled it for forty five minutes, but given the late breaking news yesterday, there's a possibility it goes a little bit longer. So hope you can stick around for for the whole thing. We're gonna do my name is Marcus Eamon. I'm a senior customs manager here at Flexport. And if you've attended these webinars regularly, you might notice we have a new platform that we're using, today. So before we dive in, I'm gonna go over a few quick housekeeping notes to get yourself oriented. On your screen, you see a sidebar on the right of the main stage where you can submit questions. At the end of this presentation, we'll host a q and a and answer some audience questions. So try to get your questions in early, and we'll we'll try to get to yours here. On that same sidebar, you can also see a tab labeled docs. This is where you can download a copy of today's slides and find some other helpful resources. Above your screen, you have a button to request an ACE analysis from Flexport. It's something that we like to plug and we we feel very, very good about. We will review in further detail about the presentation and talk to you about it, but please click that button if you want Flexport to reach out to you to discuss an ACE analysis for your business. Okay. Now slide two, just a brief legal note. Please keep in mind that all this information, is provided in the session is based on the situation at this current time 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. Okay. And let's have our speakers today. Right now, just two of us today. I have my colleague, Alex Naderolf. He is our senior director of engineering for customs, in financial services. He does a lot of the tech side. So as I try to understand what's going on, he looks to try to make it happen, both in our internal and external systems. So very happy to be sharing the stage here with Alex. Okay. So with that, let's, make a look at the agenda. We're gonna go over the latest news, which got even click even later, some freight side advice. So just a little bit here. We're coming up on some very key dates, and I talked to some of my, freight colleagues to find out maybe what should what should, people be planning on. We're gonna talk about what's coming up next. You know, we know where we are today, but what happens, after today? Then we wanna go through our care simulator, some tool that, Alex and I and several others worked really hard on the last few weeks here to get get launched, and we wanna walk it through with you. And so we wanna show some cool examples about what what we can do, and then we'll have some q and a at the end. Alright. Latest news. So the quick headlines. First, you know, the in transit provision, on IEPO was extended, you know, from May 27 to June 16 arrival. So if it left before, you know, in early April, it it had to arrive by May 27, but they extended it by a few weeks saying, actually, if it's in transit, it still applies by June 16. Quick reminder on that. Customs did say very specifically they don't count transloads, or feeder vessels in that timeline. So if you had something that maybe left India, transloaded in Singapore, and Singapore was the last four import before coming to The United States, customs is only gonna count the departure date from Singapore, not from from India. So, some importers are disagreeing with that and and making their case to customs, but that is the current interpretation that CBP is enforcing. Second, what I thought was gonna be a very small bullet, that just got pushed into prominence here is that section two thirty two on steel and aluminum is increasing to 50% on on June 4, but there's quite a few other things that are are happening here today. And we'll go through that on the on the next slide. Point three, for anybody that still had some of the section three zero one exclusions, that's ninety nine zero three eighty eight sixty nine, 90 nine zero three 80 eight, 70. Those exclusions are actually extended to August 31. They are gonna ex expire here. May 31 is a little over a hundred. There's also some exclusions for semiconductor manufacturing equipment. Those exclusions, you have a few more months to import. This was a bit of a surprise. So nice to, to have that if you're, one of those few importers who can still claim, some of those original three zero one list exclusions. And fourth, what I thought I was gonna be talking about today, which I still will talk about today, is that last week, there are two court cases, one in the federal I'm sorry, in the Court of International Trade, and one in the DC Federal Court that made some headlines and talk a little bit about, what that means and how it actually is is impacting business, coming up here. So with that, let's, let's go to the next slide here, and, see who who ran on the stage. Sorry for the very info heavy slide, but it was more than just what I thought. What I you know, what the president had said at the at, you know, on Friday was, we're gonna change the the $2. 32 tariff amounts from 25% to 50%. But he actually did quite a bit more, which made for some late nights and early mornings all all around here. So that was the first change that that cleanest to understand. But there's also two two other main changes that are a little bit more complicated. And so I'm gonna walk through a few examples of what some of these changes mean. The second one here is a changing, of the tariff applicability order, for both Canada and Mexico. So, previously, if something was subject to IEPO fentanyl duties this was the fentanyl IEPO duties back from from February, March. If something was subject to those, then any two thirty two duties, the national security duties on steel and aluminum or steel and aluminum product derivatives, those did not apply. But as of starting today, if something is subject, they reverse the order. So if something is subject to the section two thirty two steel and aluminum duties, then the IUPAC fentanyl for Canada and Mexico doesn't apply. So instead of looking at fentanyl first and then going to looking at the effect on two thirty two, what they're saying is look at the two thirty two applicability first, then decide about whether or not the IEP of fentanyl for Canada and Mexico does apply. What this does is this effectively moves goods that had flagged for both the IEP of fentanyl, from Canada and Mexico and section two thirty two from 25% to a higher 50%. So instead of saying, okay, we're just gonna have this apply with 25%, you know, because it's subject to IEPAA, now it says no, no, no, it's 50% because it's subject to two thirty two and we're gonna ignore the IEPAA. And so if we take a look on the right hand side, of this slide here, you'll see an example that I sort of put together. So say we have some, you know, aluminum bakeware, % aluminum, non USMCA qualifying. So if you had imported this June 3 and before, your sub you know, entry summary line would look something like this. You have your 99030110, your, you know, 25% I e bifentanil from Canada code. Right? Then you're also gonna have your seventy six fifteen, you know, your regular commodity code of 3. 1%, but you would have been exempted from the two thirty two duties on aluminum. That would have given your total duty rate to be 28. 1%. However, as of June 4 and after, because of this reversing of the order, we have something a little bit different. It's now gonna look something like this. You're going to have a ninety nine zero three eighty five zero seven code, which instead of being worth 25%, now gonna cost 50% for the aluminum derivative articles as well as the standard 3. But now it's going to be exempt from the 25%, I. E. Preferential Canada. So that means your total duty rate for this product starting today and after is 53. 1%. So in a way, let's make sure that the $2. 32, there's no more, you know, kind of favorable treatment that could have been coming from Canada or Mexico. They are now kind of evening out, and so that 50% is gonna be felt, for Canadian and Mexican products, as well. They don't get kind of a bypass, you know, or anything kind of like that. I do wanna highlight one other kind of somewhat, counterintuitive quirk that also resulted from this ordering changes here. If you import USMCA qualifying auto parts, that flag for both the $2. 32 order on auto parts and the two thirty two order on steel or aluminum, it's actually probably cheaper now to not claim USMCA. Whereas before, you could claim USMCA for the excluded from the two thirty two on the auto parts. You'd still have to pay the 25% for section, three or for section two thirty two on steel and aluminum, 25%. But now if you claim USMCA auto parts, you don't get the or that exclusion means you're no longer subject to the 25% auto, and you would now have to pay the 50 percent steel and aluminum. So let me say that again. That's a little bit kind of a weird quirky example here. If you have something that qualifies for USMCA, it flags for both the automotive two thirty two and the steel and aluminum two thirty two. If you're claiming USMCA on it, it's probably more expensive now because you are going to be forced into paying the, the two thirty two duties on steel and aluminum. Even though you're not avoiding the ones on automotive, you now have to pay for steel and aluminum ones. So that is definitely something I think is very, a little bit a weird consequence of some of this reordering here. Maybe you no longer, you know, wanna claim USMCA MCA. Maybe take a look at it. There's maybe some other considerations if you're using USMCA to build some assemblies here, and you're trying to have originating products, you know, going down the line, don't just say, like, okay. Marcus said, never claim USMCA on auto parts again. There's some consideration here, but all of a sudden, we've seen a little bit of a change in the flow where maybe USMCA, may no longer be in your advantage. Do run it against your entire kind of supply chain. Make sure that if you're gonna try to use these USMCA products as part of a double substantial transformation or I'm sorry, a double origination change, you may need to, say we still will pay it. We'll still claim it, but, very, very interesting funny consequence, that kinda got buried in this. This third one, this third bullet, reciprocal tariffs also now apply to non two thirty two lines. So before, if a product had any steel or aluminum on it at all, the entire thing was exempted from the IEPO reciprocal tariffs. That is no longer the case. And on the next slide, I'm gonna walk through an example about about how that point three works. And the final one is that there's now language in there that says there's value breakouts for intra 73 and intra 76. So remember there's derivatives. There's two kinds. There is derivatives that are from outside of chapter 73 outside of chapter 76, but then there's also derivative products of steel and aluminum that are within chapter 73, that are within chapter 76. And if there's a silver lining to any of this, it's that now you are allowed to break out the value of the non steel and non aluminum portions of your 73 or your 76 article and only pay duty on the steel or aluminum content. Whereas before, you couldn't do this, on the intra 73 and the intra 76, only the extra 73, the extra 76. So those are a little bit, a little interesting here as well. So if there's any kind of very nice fig leaf, you know, token benefit, that may be one that you could use to save a little bit more money. So maybe you have products that are rightly classified in 73. They're on their list. You've been paying 25 percent of the whole value. Well, now you can break out some of that value if it's in 73 or if it's in 76. Okay. Let's go to an example of how this reciprocal tariffs now apply to this point three here. So let's take a look, an example here, June 3 and before. So let's say we had a $10,000 shipment, country of origin, New Zealand, just to avoid any free trade agreement entanglements. And our HCS code is 830250, some sort of miscellaneous bracket or hat rack. It is on the derivative list. Right? 80% of the value is aluminum. So before do do the third and before, line one, you kind of split this out. Right? You have your first line where you don't have your two thirty two. You don't have your steel content, and you have your second line where you list your steel content. So the first line was $2,000 of value. You applied the exemption code saying you're exempt from those 10% reciprocal because the product itself is subject to two thirty two duties. You don't have any duty rate on that first line. Your second line, though, is where you do apply that that, aluminum, two thirty two tariff code. So you have an $8,000 value on your second line, 8,000 of that total 10,000. Right? The first one, you have your eighty five zero eight code, 25% section two thirty two, and that's your aluminum, like, extra 76 derivative, 25%. But you are exempted from that 10% reciprocal. You don't have a and your standard duty rate is free. So the total total duty for the import is 25% just on the $8,000 value. So 25% just on the aluminum value. You don't apply the 25% to the non aluminum value, and there's no reciprocal tariffs on either of those two lines. So your total duty of eight was $2,000. Now June 4 and after, suppose we have the same shipment, $10,000 value, country of origin, New Zealand. HTS, you know, still the same thing. Still, like, maybe a bracket, you know, 80% aluminum. Maybe there's, like, some wood accents that are the the remaining 20%. Line one still has your $2,000 value, but notice that first code. You don't get to claim that 99030133 exemption from the 10% reciprocal. You still have to pay that 10% reciprocal duty under this new interpretation, under these new rules. So that just increased your duty amount most as it's or I'm sorry. Increased with the biggest change on these two lines even though on the second line, you'll see the larger monetary impact. There's just more of kind of a philosophical impact. And so, you know, we had thought originally maybe this is how it's always gonna be, then customs gave out very specific guidance. And I haven't I guess I'll admit I haven't checked CDP's website today to see if they still are advising this, but they had published guidance on their website advising you to do things in accordance with the second side, the the June 3 and before. They've now changed that. The president's new order has changed that. Line two, is is $8,000 value. And because this is actually paying two thirty two duties on the same line, that still does get the exemption even though the two thirty two has increased now to 50%. So you get your standard free rate of duty. The total import value is 10% of 2,000, the $2,000 value, the reciprocal value, plus 50% of the 8,000, meaning your total outlay, your total duty spend on this product is now $4,200 with that extra 200 coming from this chain to the applicability of reciprocal tariffs. Okay. So I'm gonna look for questions on that because I'm sure there was some, and we may have to come back to this slide. But I just wanted to kinda run through a couple of examples here. You can download the slides if you wanted to kinda print out some, like, kinda clear understanding of how this works. But, this was this was definitely, something we weren't expecting, based on Friday's Friday's announcement, which is why we only really try to implement things that are official, actually, as they're written, not based on on a speech or or or, you know, an informal source. We only look at official official documents. So okay. I think we can move on from the two thirty two here, and let's talk about a little bit what I thought I was gonna be talking about today, the US Court of International Trade ruling. So I'm just gonna talk about one. There was a second one, that was from the DC Circuit Court. I'm just gonna let that one let that one sit. But I do wanna talk about this one here. The court said in this ruling, it's about 49 pages. They said that IEPAA doesn't give unlimited authority to the president to do so, which is interesting. The president asserted it and he said in this case, like, yes. It does give me this authority. I can do anything. Virtually all powers are, you know, assigned to this to deal with any kind of emergency situation. The court disagreed and said that the legislative history of IEPAA doesn't suggest that, doesn't actually specifically mention tariffs. And when you you have, you know, the, the constitution saying the tariff power is for Congress. And unless Congress very specifically mentions the tariff power moving under IEPAA, they don't buy it. So they they didn't do that. The other part as part of the rationale, they said the tariffs don't actually deal with the emergency. Like, okay. Suppose there is this emergency at the border with, you know, the opioid crisis from Canada. Right? How does a tax or a tariff on maple syrup stop the flow of fentanyl from Canada? How does a tariff on avocados from Mexico stop the flow of drugs or the migrant crisis at the southern border? They said that it wasn't related to, you know, the the means to try to resolve the crisis weren't related to, the actual crisis itself. And, also, this emergency wasn't exactly the extraordinary situation that it was required to be, under the National Emergencies Act. They were ordered the court ordered CEP to stop collection within ten days of these IUPID duties, but that was paused while this has been on appeal. So for right now, this is a very loud sound, but it doesn't actually really do anything. IEPA duty is still being collected. No change for current imports and importers. What was a little bit interesting is that the question of de minimis wasn't clarified. The restrictions on de minimis for China, were part of one of the executive orders that were supposed to be stayed by this court ruling. But it wasn't actually specifically addressed, and so there was a question like, well, wait a minute. If you're saying that these IEPO orders, including the ones that stopped de minimis, weren't allowed, the minimus weren't allowed, and that they're, like, they're illegal, is the minimus still allowed now for China? It seems like no, but it it's an unresolved question. It seems like that's something we're still gonna wanna see exactly what, what they say. Does the CIT come out and clarify further about the applicability of of de minimis? And, also, the questions of refunds was also not addressed in either the decision, or the court's order. So how refunds are gonna be calculated, when they're gonna be given, who needs to give them, how do importers get it, that's not defined either. So those are a little bit two murky questions that are pretty important that we're not quite sure exactly what this means, what we're gonna see. So what needs to happen next is that the court of federal appeals for the federal circuit is deciding this appeal. So they agreed to keep the stay of the order in place. Right? The order would actually prevent the collection of duties. They said they stay the order, meaning the stopping is stopped. The double negative there, in short, means that the IEPAA duties are continued to be collected. The Supreme Court could also weigh in. That would be the next level appeal, depending on the decision here. And what else could happen are potentially more duties. So I don't think this necessarily changes the, the overall effect for most importers. It just may change its form. And I'm gonna talk about section one twenty two and section three thirty eight on later slides. You may have heard some headlines about these. Even section one twenty two, I should mention, was mentioned in the CIT's decision. So, CIT was was definitely pointing that way, and so that could you know, section one twenty two could could see some life. Okay. So let's, move on here. That was kind of a a bit of the news here. But let's do a quick a quick pause. Let's just cleanse our pallet here. It's a little freight side advice. I was thinking, you know, we have all these dates coming around here. We have all these changes that happened. Who knows what's what's going on here. And so I wanted to say, okay. Well, given all the stuff that has happened in some of these ninety day pauses, what does that actually mean for me on the freight side? I'm not a freight expert, but we have freight experts here. I asked them about some advice here. So the question really is is if if I wanna try to beat some of these potential tariffs before these pauses come to a close, when should I move them? Right? So April 9, Trump said, okay. We're not gonna do those country specific things. I'm not gonna put tariffs on Svalbard and, Jan Mayer. Right? I'm not gonna not gonna do that. We're going to, just do 10% for everybody while every country negotiates their own trade deal with The US. And so that ninety day pause comes to an end on July 8. Then on May 14, Trump paused the 25% reciprocal on on China. Right? So he increased it. It was gonna be 34, then 84, then a 25. It was a 25 for about a month. And then he said, okay. We're gonna pause this here while we would look to make a make a deal with China. Well, that ninety day pause ends on August 12. And finally, he also said we're working with the EU to try to figure out some sort of trade deal. I was gonna increase tariffs on them, but now I'm gonna wait until July 9. And so these are kind of those three dates that are sort of sitting out there for a lot of imports. Like, okay. July 8, this ninety day pause on the country's non China reciprocal tariffs comes to an end July 9. That's this negotiation deadline with the EU. Otherwise, it's 50% reciprocal on the EU starting then. Okay. And then potentially, we go back to a higher 34% reciprocal rate on August 12 with China. So the question on top of the slide, if I wanted to beat those potential deadlines, when should I be moving my goods? July 8 for every other country, July 9 for EU, and August 12 for China. When do my goods need to be moving? When do I need to be booking by? When should they be getting here? Well, let's go to the next slide. We'll kinda go through what our freight team provided to me. Now they made me promise that I'd say, hey. I'm not gonna overcommit you guys, that, I I'm only gonna speak in very general terms. So I'll start with the disclaimer at the bottom. This is general guidance only based on historical trends for demonstration purposes. So your own shipping needs look different, but just wanted to get a little bit of advice, in case you, your trade professionals, talk to your your folks on the on the supply chain and the freight side. So let's say you wanted to move something from Ho Chi Minh, Vietnam, rest of world, right, and you wanted to get there by July 8. Now I know I said that, July 8 is the effective date for the end of this ninety day pause, but we wanna build a little bit of buffer. There's a lot of bookings going on right now, a lot of sailings happening. Last thing you want is some port congestion to delay your arrival. Let's just give you a three days margin here. So July 8 for rest of world. Let's try to target July 5. Okay? Well, EU is going to the fact July 9. Well, let's target a a July 6 arrival just to buy you an extra day, a little bit of buffer. Or what about the, you know, August 12 deadline for China? Well, let's just maybe target August 8 as your as your ETA, just to, you know, make sure if something comes a day late or two days late, you're not, you know, stuck. If you're trying to book from Vietnam and, you know, if you're trying to get product from Vietnam, book now. You may already actually be too late for ocean, and you should look to probably look to do some air freight moves, at this point from from Vietnam or rest of world. If you're concerned that those high reciprocal rates remember, Vietnam was 46%, Cambodia, forty nine %. If you're concerned about some of those higher rates, this is the time to potentially look to to move things. It would need to load on an ocean vessel by June 8, a few days from now, so hopefully you've already had it booked, and the average transit time being twenty six days. That would get you to about July 5. If it loads on June 8, moves twenty six days, gets you to July 5, couple days of buffer, in case of, weather delay or something. What about going EU to New York City here? You wanted to get there by July 6 just to make sure you have a little hedge against the the July 9 deadline. You should probably be booking today. So if you have any kind of, you know, shipment, Sawyer, or something, take a look at what are your high, you know, high duty items maybe. What are some of your more EU, specific things and say, okay. We need to really prioritize these bookings today. Ideally, you'll be on the vessel in two weeks by the nineteenth. That transit time from Rotterdam to New York City is about sixteen days. So if you want it by the sixth, you probably need it loaded by the nineteenth. Shanghai to LA Long Beach, as an example, around from China, you got a little bit more time here. You have a little bit, of leeway. You still actually may be able to work with your factories, try to pull forward some orders, you know, encourage them to, you know, do a little bit more a little faster production. You should probably book this by July 8 is what they said. And so that'd be about two weeks in advance, a little bit more, to then have it load by July 23. You wanna onboard by July 23. Shanghai to Long Beach is about sixteen days, but I'm building another four days of buffer here just because I'm sure there's gonna be quite a few, of your friends and your competitors and neighbors in your in your industry who may also try to be beating these tariffs on the same duration. So the sixteen day transit time that gets you to arrive, if it loads on the twenty third, it'll probably get you arriving around August 8, plenty of time four days before the August 12 effective date, of, or the the end of the ninety day pause with China. Okay. So, that's a little bit about kinda what's happening now. So what is next? What are we looking for around the corner? Well, there's really kinda two things I'm sorta looking at around the corner. And the first one asked if we have to take a look at the president's tariff toolbox. He is no stranger to this. He's been using it, since his first administration here, but he he's using it again. He's already kinda gone through a few things, but as you know, there's there's a couple of tools that have kinda fallen out of the box, already that are are maybe the next ones to be to be picked up. The first one I wanna highlight is section one twenty two, of the trade act of 1974. This was meant as kind of a short term stop gap. What it allows is a 15% tariff on countries with a balance of payments, problem with The United States, a balance of payments imbalance for for a period of a hundred and fifty days. So for one hundred and fifty days, there could be a 15% tariff on a country's goods. Now section one twenty two has never been used, and there was a congressional review of some of these tariff measures back in February. And what they noticed is they said, the section one twenty two legislative history was focused more about balance of payments, current account deficits, may have kind of gone around with, like, the gold standard and some of these other sort of, like, overall trading goods and services. So the question that is unresolved and unknown is, does balance of payments equal balance of trade? It won't take much for a White House lawyer to make that argument, and there's certainly evidence that they could. Right? What this would mean is that very quickly, they could institute 15%, duty on anything, which sounds an awful lot like the 10% IEPA reciprocal. Right? So, if they happen to, you know, the say the 10% reciprocal duties, are defeated in court. Right? Supreme court, nine zero, says IEPA reciprocals are are not allowed. Well, very quickly, the president could roll out section one twenty two. There's no investigation required. It could just happen, very quickly. In fact, if you read the CIT ruling, as part of the rationale for their decision, the court says, well, there's other tools in the president's toolbox like section one twenty two. If he had concerns about unfair trade practices or or, you know, trade imbalances, well, the president should have used section one twenty two, not IEPAA. So the court has already kind of given a little bit of a nod to one twenty two, even though, you know, they may they also use that same decision to to end IEPAA. So with that in place, section one twenty two might become the new buzzword in trade, coming up here pretty soon. We're gonna see how this works. After that one hundred and fifty days is maybe a good question. You know, what happens after that point? Well, congress would have to reauthorize it for another period, which given, you know, the congress's ability to work with the president now, they're probably likely to do. So this, you know, hundred and fifty days, fifteen percent could be extended one, two, three times, until congress changes its line. Section three thirty eight is another one. This is meant to address, discriminatory actions against US products. And so, you know, when something is discriminated against, it means that there's maybe a tariff failure or a non tariff failure against US products, specifically, that a country levels against The US products that they don't level against maybe some other countries, you know, similar products. So, maybe for instance, you US chicken. Maybe that has a certain trade restriction from, I don't know, the EU that maybe the EU doesn't show that same level of restriction toward other, other countries' chicken. So that is maybe one place where the section three thirty eight could come into play. It doesn't require an investigation either. The ITC is supposed to give periodic reports about those unfair trade practices, but it doesn't it can move pretty quickly, and it can be duties up to 50%. This is another one that could come up very, very well, or very common as well, and it also has the potential for very broad use on all products from all countries. And any other countries that maybe benefits from that US discrimination arrangement are also within scope of getting their own section 33850% tariffs. So, effectively, what this means is that even if the IUPTA tariffs are struck down completely, we could have 60 up to 65% tariffs from these these two other provisions here combined, on different products on different countries. And so even if AIPA has defeated, the hydra heads from the toolbox, one twenty two and three thirty eight may still pop up. The last one I wanna talk about is another place we may see some more action, is, expanded February. '2 '30 '2 on the next slide, has, February investigations that are active, and there is many that are active happening right now. Steel and aluminum, we already talked about. Automotive, copper, timber derivatives, that includes furniture, semiconductors, pharmaceuticals and ingredients, heavy trucks, critical minerals and derivatives, commercial airline things here. These keep expanding on national security grounds. It's very possible more investigations are going to be launched. These due dates are when the, US Trade Representative has to submit his report and recommendation to the president saying like, hey. You know, we've looked into the copper trade. We think that US products, this is a, you know, tariff would benefit. Maybe for for timber, we need a quota system in place. Maybe for semiconductors, we wanna do something. All of those reports are due, toward the winter, but they could be published earlier. There's no reason they couldn't have these reports come to the president sooner, and there's no reason why new investigations on two thirty two could start. Two thirty two, though, does target specific industries, and specific products, but they can get pretty broad. And so I'll kinda highlight the steel aluminum ones. Right now, they're accepting comments about should we include more products, more HTS codes under section two thirty two for steel and aluminum. And they're getting pretty broad. Some you know, there's quite a few companies out there who are pushing to include their products, their particular things within this from all sorts of different chapters, you know, that that maybe otherwise wouldn't necessarily be be thought of. So, no doubt this will continue. This may be kind of a slow burn way, that the president can, can keep rationing up tariffs on certain products. Not quite the country wide level he has been using, but more the product wide level, instead. Okay. With that, I'm gonna pause here and get a drink of water. I wanna bring on stage, my colleague, Alex, talk a little bit about, our tariff simulator, which is something that we've been very happy to happy to see, come to come to life here. And just would have been great if you had presented us yesterday before only two changes went into effect. Our team has been working on making some updates here. But, Alex, what, what is this, this tariff counter here? Do you wanna tell us a little bit about it?

Alex Nederlof

32:06 - 33:30 Yeah. So, hi, everybody. I'm Alex, the senior director of engineering, and, I'm here to show you, the tool that we've been working on, after getting basically observing that the number one question we got from all of our customers, and we see it here in the q and a as well, is actually how do these tariffs work, how does it, apply to me, and what effect will this have, on my imported goods. Now we already have all this data, internal, and we very closely look at the federal registry and try to implement everything, immediately as it comes in to update our internal systems, and we figured why not help everybody, also people that are not customers of Flexport, and make it available to everybody. So we're very excited that you can all use it. We'll drop, the link in the chat, and you're, yeah, free to use it and try it out. And, I think, Marcus, we should show them here as well with some some demos. Now the tool has not been updated with the latest steel and aluminum because we're still testing a bunch of edge cases. So we'll roll out that release later today depending on or tomorrow depending on which time zone you're in, because we'd rather, be accurate, with these things. So you'll see the, the last change date change when we've updated the tool. But, yeah, let's, let me share my screen.

Marcus Eeman

33:30 - 33:42 Yep. Yeah. I think I have a few examples I think I people might find really, really valuable that I'd like to to plug in here. Yeah.

Alex Nederlof

33:42 - 34:01 Okay. So if you go to, tariffs. flexport. com, you'll land on this page. And from here, you can search for the description, of the, HCS code. We have some examples going here, and below, we'll actually see the calculation. So where do you wanna start, Marcus?

Marcus Eeman

34:01 - 35:07 Well, I actually wanna start with that search bar real quick here just to kinda give a quick context here. We really built this in mind for kind of a trade compliance professional. Like, this was really kinda meant for somebody who really kinda knows what's going on in supply chain, not just kind of maybe well, maybe more casual person here, but maybe seem somebody that's you know, they know what an HTS code is. They know how to find it. They have a good understanding of it. But they're just trying to make sense of all these tariffs that are moving. So those descriptions that you search for, that's from the HTS language. That's maybe not your commercial language that maybe you use. For example, if you search computer, you wouldn't find anything. But if you search automated data processing machine, you'll find eighty four seventy one comes up. So just an example here. This is really a bunch of time more targeted toward people that know, what, you you know, maybe what an HTS code is and maybe not their first rodeo here. So if you try to search for standard things, you may not find it right away. But, certainly, for for any other tariff people out there, tariff nerds, I think you'll find a lot of value. So, yeah, I'll take a look. Alex, why don't you pull up, some copper tubing? I think this is a good a good illustration here. Oh, wait. I'm sorry. I'll just give you an HTS code, if you don't mind.

Alex Nederlof

35:07 - 35:11 I'll that's the one that ends in 0035. Yep.

Marcus Eeman

35:11 - 43:42 That's what I was saying. Yep. 7412. That's right. Yeah. Okay. So let's take a look at this one here. And this right off the bat, this is just kind of a standard view. But where I think this tariff tool really shines is when you click the blue bar that show advanced options and details. This suddenly gives you a little bit more of, like little bit beyond the headline. This gives you the the real story, the full story behind what's what's happening here. So, let's take a maybe a look at this one here. So we have our country of origin, China. Why don't we put in an entry date of, say, maybe 06/25, and, you know, just, change that entry date there to to June 25, if you wouldn't mind. Alright. And so you'll notice here, you have your tariff calculation on the right hand side. You have your standard 3%. You have your section three zero one list three. Right? This is Chinese origin. You also get your 20% AIPA from China, but you also see your annex two exclusion from the reciprocal. So that 10% that applied to China, that no longer applies. Right? And this just pops in automatically because we know this HTS code is on the annex two list. We don't even wanna show you the option about the 10. We just wanna make that choice for you so you just have clear data right there. On that same point, Alex, why don't we tweak the, the, entry date just a little bit? Why don't we make that entry date, maybe say, like, June 15? You'll just notice a second field just popped up down below, the date of loading. Well, why did the date of loading pop up? As you may recall, as I said earlier in our tariff news, there's a date of loading in transit exemption potentially for that point two eight code. So if you had that point two eight in transit exemption, that would exempt you also from, the tariffs. Now as it happens, this is on annex two, so you're already exempted from those tariffs. But we don't wanna give you that date of loading field if it's not relevant. But if you do have a certain entry that you wanna look at, import your date of loading, and you can also see how their date of loading may have affected your total duty rate that you have to pay. Yeah. That's a good one. Let's maybe do another one, I think, for how what all that chaos was in early April. There are some shoes here. I'll just say we have some, shoes from Nicaragua, Central American. Those are short transit times, and they had some some funny, some funny business around that implementation back there in April. Nicaragua. Nicaragua. Right. So let's just say our our entry date here was 04/09. So that was on April 9, the one day when those country specific rates were in effect here. So we have our we'll change our entry date to April 9. Look at the right hand side. Right? Just a quick validation. Make sure your date of loading is right. So let's make sure we get that in order. Let's make our loading date 04/06. Right? Central America, famous for their short transit times. Real pain in the butt if you file ISF. So here we are. We can see that we have our standard duty rate of 20% on these shoes, but we can also see the 18%, the one day applicability of the reciprocal tariff, 18% specific to Nicaragua. Now wait a minute. Nicaragua, that's a Doctor CAFTA country. So, Alex, under the import programs, why don't you go ahead and apply, indicator p here, and see what our duty rate comes down to? Okay. So, yeah, we lost that 20% standard rate, but remember, that applicable rate of the 18% is still in effect. Now what if the vessel was delayed one day? Why don't you bump our entry date, Alex, to to 04:10? Oh. All of a sudden, just now 10%. So if you if you were stuck in stuck in limbo with everybody else, it actually would have paid you 8% to wait one day here. So really great to kinda see how this all sort of moves at one in in in one go, especially around this date when we are building this tool. It's like, you know, we gotta make sense for people out there about how this works in April, what the hell happened, All these loading dates. People need to understand how this works. That was a big part of what we of what we did here. So okay. Let's, I I wanna show this one. This is a great sweet, example here. Maybe we can do that 18 o six, example, Alex. This is chocolate chocolate confections, by the way. So, a great great tariff, option here. Let's change the country of origin here to Mexico. Let's let's do that. Let's take a look here. Okay. Reason I wanna show this is because USMCA, outside of perhaps some automotive examples that just came up, is still actually very valuable, and we can really see how this how this really comes out. So let's change the dates here to let's just say entry date today, and, date of loading today. Say it's a truck shipment from Mexico of the of this chocolate. Okay. So you see on the right hand side, we've got 31% overall tariff. We have 25% AIPA from Mexico. They don't have any reciprocal duties, but it's also 6% on the standard. So a total of 31%. But USMCA is still one of the only free trade enrollment programs left where you can actually get down to 0%. So why don't you go ahead, Alex, and apply USMCA indicator, from the import programs. And look at that. We actually can have a 0% right. And we can actually get free chocolate for everybody from Mexico, assuming it, of course, qualifies as originating under in terms of USMCA. But I wanna highlight this. We have a free trade agreement, with Australia. Right? Why don't we see what if the country of origin was Australia? Do they get that same benefit? That's a great question. Right? The answer is no. They don't get that specific, USMCA, IEPA removal, and they don't have that USMCA, reciprocal exclusion. So doing all of this, you can see, like, even though there's a free trade agreement in Australia, and, Alex, if you want, you can even, like, you know, apply it. That even, you know, this still brings out as, you know, 10%. You still have to pay 10%. But USMCA is still potentially the most valuable free trade agreement out there because it gives you the biggest savings even today. What about let's do one last one here, maybe. This liquid leak detector. Here's a funny funny machine with other functions that elsewhere specified. Let's take a look here. Let's change this back to China. Let's go through a China example. Okay. I will just do some, entry dates here as kind of maybe random. We'll just say entry date May 21, loaded April 21. So reciprocal tariff toward effect. Higher ones here. Yeah. So okay. There we go. Okay. So we had, May 21. Right? This was after the May 14 pause of a 25%, so China got back down to 10. So that's correct there. But this does have an exclusion for it if you have certain liquid leak detectors. So if you look at those exclusion codes for the bottom of the screen, Alex, why don't you click the toggle in 99038869? That's an exclusion for, specifically, liquid leak detector. So this this, you know, classification includes all sorts of weird machinery. However, the 69 toggle is specific to China, specific to, like, detectors that look for leaks in your home. So if you have that, you can see the potential exclusion codes. I think the last thing we can do to kinda wrap up here is we can scroll down to the very bottom here, one step below this, and also see, well, okay. If I wanted to import this, these kinda same ideas, these kind of other machines, what are the countries that were the biggest producers of this back in 2024? Right? So we pulled in international trade data from 2024 to move to this heat map here. So let's see. Where did some of these countries come from? What was their average duty rate spend? We have all this data. Right? We have all this data from from CBP or I'm sorry, from Bureau of Industry Statistics. We have all this data. We just loaded it here. Right? So let's take a look. Like, what can we actually save from? Maybe it's, you know, cheaper to get it from Mexico than it would be from China. Right? USMCA is still a very valuable free trade agreement. That really drives down your duty rate. Maybe getting it from China is not so good. Where is maybe a good near shoring or reshoring opportunity, for your products? So, obviously, we can't you know, we don't have a whole list of suppliers and have that whole catalog. We can at least give you a place to target from. Talk to your buyers. Talk to your sourcing agents. Maybe they can find something where you can lower your overall duty exposure even if maybe your costs of goods change. Yeah. I'd like those a lot. But I guess maybe, Alex, just a couple of quick questions here, and I can see this from the q and a. Can you just talk a little bit more about, like, how often do we keep this up? Who maintains it? You know, how has this kind of been put together?

Alex Nederlof

43:42 - 44:30 Yeah. We, we maintain it, as flexible. So as I said, like, we follow the the federal registry very closely, and when we notice that new regulations come out so, really, we only look at official notices, I guess they're called. We process them in, we bake them into the program, and we do a lot of testing as we're doing, like, right now. The team is testing everything for the new steel and aluminum updates, and then we release it out, and you'll see, that the last updated, indicator will get, bumped, so you know you're working with the the latest version. So we're not pulling data from any other source but the the federal registry at this point.

Marcus Eeman

44:30 - 45:00 Okay. Yeah. We're good. Well, we are gonna continue to do so. And I also wanna highlight is this little, like, sort of gray bar we put down on bottom right side of the calculator just for people to kinda know about. When was the last update done? So last update was June 2. So if you've been plugging in February tariffs and you've noticed, well, wait a minute. This isn't quite calculating right. You're correct. But I challenge you to take a look at it tomorrow when Yeah. We push and we merge in all the all the PRs and everything and it comes together. Yeah. Yep. Yeah.

Alex Nederlof

45:00 - 45:44 And for all the observant watchers, this is all in EU, in EU data format because my browser is configured for EU. You'll you'll get that configured for your own browser. And the other thing is we're today only supporting US imports and US HTS code regulations. We have plans to expand this to other countries later on. We're also embedding this in several places into our own product. If you're interested in doing this in bulk or having us review your entire product library with a similar methodology, please reach out. We're very happy to do it. But, in the nearby future, the calculator that you see here is only gonna be US, and it's only gonna be one HS code at a time. I I would go on.

Marcus Eeman

45:44 - 46:04 a limb here and say maybe The US is in need of this calculator the most. More than that. The most dynamic country, in terms of tariff fuel. So good to push up the emphasis, on The US, but excited to see rest of world too. Yeah. Well, what do you say, Alex? Should we look at some of the questions we got here?

Alex Nederlof

46:04 - 46:05 Yeah. We're doing it.