Expeditors International of Washington, Inc. Status update

I appreciate it. Thanks everybody for joining us. We're going to talk about some great topics. I know I'm biased because I'm part of this webinar. But we've got some great trade developments plus some bonus content that's not listed here that I'm excited to talk to you about. There's some ongoing legal challenges, things that are coming up. I'm super excited to share with you guys our takeaways from the Trade and Cargo Security Summit that we had, that we attended. Ashley's going to give an update on that, and enforcement and compliance trends from Sila. So super excited. Let's get into it. Yeah, this slide should be familiar to you if you've joined our webinars in the past. The main thing I wanted to cover here is that there's a brand new trade remedy in the toolbox, so you can say.

So familiar with these four on the left, but there's 338 brand new on the far right. What I want you to take away from here is that things come on quickly, kind of out of the blue. For 338 specifically, it's interesting because this section came out of nowhere and then is actually only valid a little bit later. So they set the actual implementation date a month ahead in advance. What we've seen from the current administration is that either they go in immediately, yesterday, in three hours, or they give a lot of breathing room for them to actually implement. When that happens, it's mostly trying to get people. It's a tactic to get people to come to the negotiation table, right? That's what's unique about those. Sometimes they go in, sometimes they get negotiated out in the final hour.

We can just keep our fingers crossed that maybe some negotiations will go down with Canada. Also, these are governed by the U.S. ITC, and they've posted a comment period. Hopefully, it's about what does discrimination mean under Section 338. This is just the new crossroads of a brand new trade basis that the administration is trying to implement tariffs under. It's going to come with a whole new set of legal challenges. Section 338, we were kind of hoping that it wasn't going to happen. But here we are. This is one of those ones that it had a further implementation, and now we are seeing very, very high rates be implemented. We've seen even higher from China. The main thing I want to talk about here is tariffs, kind of old news.

We always know that there's lists, there's things that are happening. I want you to remember that even though the proclamation says alcoholic beverages, dairy, and motor vehicles, that does not reflect the products that are covered. These are actions meant to combat their treatment of alcoholic beverages, dairy, and motor vehicles. The products covered are all not under those topics. Please check the list, please check the provisions, check your products against those, because it's not just those three product categories. I also wanted to make sure I call out that the scope had changed. We had additional proclamations that came out, two of them. It covered alcoholic beverages and motor vehicles that added, removed, and modified some HTS numbers underneath those actions. Please know that the lists have changed from when they were originally announced back in August.

But the main thing I wanted you to take away from this are the import bans. We've seen a lot of tariffs. We've seen very, very high rates, but we've never seen an outright ban. I think this is something that we should all pay very close attention to and recognize what it means for the implementation of 338. 338 is not just tariffs, it's also outright banning products. It's indicative of the lengths that the administration is willing to go to for this and any future trade remedy actions. I think that is something that is very notable and we should be cognizant of as we move forward. Another thing I wanted to mention for Section 338 is the difference between the language that it's used for the tariff, the actual tariffs, the 50% is entered for consumption or withdrawn from warehouse for consumption.

Very entry based. The import bans are actually more about the date of importation. Goods imported on or after. We're interpreting this to mean it's not necessarily that you have to make entry on those goods. The goods just have to be in the country. The options that I wanted to highlight before their ban goes in on 9/29 are you can just do the usual, bring your goods in, clear the goods, and you're home free. But if you're trying to beat the deadline, if you're trying to get these things in before 9/29, before the import ban is actually implemented, and doing an entry on all of those goods, trying to push them all through at the same time is prohibitive because of the duties. You can also explore FTZ admissions.

It doesn't exempt you from the duties, but it does put off that duty payment. You could do an admission to get all those goods into an FTZ and only pay the duties as you pull it out of the zone. You could mitigate or put off that duty payment using an FTZ and in-bond warehousing. If you enter your goods into an in-bond warehouse, you can also gamble that that duty rate will be set when you remove it from the warehouse. You can also see if maybe that 50% rate will move or change. It reminds me of the IEEPA China situation from way back when a lot of importers were gambling, I'll say gambling, that the duties wouldn't stick at 125%. A lot of importers were letting goods sit at the port.

They were just trying to move things in bond, give themselves more time, so that way when they finally did the entry, that the duty rate would be lower. Of course, this is complicated because this is Canada, and the transit time is much shorter than something from China. But something that we wanted to call out and something to keep in mind. My next topic is CBP Form 5106. If you're not familiar with the 5106, it is the form that you use to update your contact information as an importer of record for CBP. If your company is the importer of record on your entries, you need to make sure that the records that CBP has on their side are accurate and complete.