Trump's legacy: This is how companies protect themselves from customs chaos!

Trump's legacy: This is how companies protect themselves from customs chaos!

The geopolitical and economic conditions have a major influence on companies, especially in export trade. Although Donald Trump's administration has made many unpredictable decisions, companies are rising to the challenges and developing strategies to remain competitive. According to [braunschweiger-zeitung.de], medium-sized companies in particular have suffered greatly from the uncertain conditions. To be successful in international trade, flexibility is a crucial characteristic.

Companies must react quickly to changes in political policy, which can be achieved primarily through flexible supply chains and customs optimization. Careful maintenance of country of origin information and customs tariff numbers is necessary in order to quickly assess the effects of changes. In addition, well-thought-out contract design can increase the scope for action when tariffs fluctuate.

Market adjustment strategies

Adjusting trade relations is a key measure to avoid punitive tariffs. For example, the USMCA, the successor agreement to NAFTA, excludes politically motivated additional tariffs between the USA, Mexico and Canada. According to [gtai.de], these changes are of great importance for German companies, especially vehicle manufacturers and suppliers. The agreement came into force on July 1, 2020 and is initially valid for 16 years, with a review after six years.

The USMCA also introduced stricter rules of origin, requiring vehicle manufacturers to now source 75 percent of their materials locally. In addition, a value added of 40 to 45 percent is required from workers with an hourly wage of at least 16 US dollars. These new requirements provide leeway for manufacturers in the early years, as Customs Service CBP is granting a transition period until 2024.

Proactive risk analysis

Another important aspect for companies is the proactive reaction to changes in political direction. If punitive tariffs become unavoidable, companies must be able to pass on the additional costs to customers. A prior analysis of the maximum levies can help to avoid losses in sales. Regular scenario analyzes and early warning systems to monitor economic and political developments are essential.

Overall, it shows that companies can be well prepared to face both political and economic uncertainties through well-thought-out contracts, a proper database and analysis tools. Trade is therefore influenced not only by current conditions, but also by companies' ability to adapt and act proactively.