Import Challenges: We Explain Trade Barriers and More

Import challenges are a fact of life for U.S.-based importers. These hurdles can frustrate even the most experienced businesses. From calculating tariffs to ensuring compliance with trade regulations, each step brings its own set of issues. Businesses must anticipate these difficulties, and have contingency plans in place. Partnering with a seasoned customs clearance service will help you circumvent these challenges.

The U.S. Customs and Border Protection states that import challenges include the following:

• Navigating complex tariffs 
• Managing strict regulations 
• Ensuring timely delivery amid global shipping delays

Overcoming these challenges can be the difference between a successful business and financial failure.

Don’t let import challenges overwhelm you. In this guide, we’ll review common import business risks and challenges, and how to beat them.

What Are Common U.S. Import Challenges?

Every importer starts out with a vision of bringing goods into the U.S. to grow their business and meet consumer demands. Considering the recent growth of imports to the USA, it’s easy to see why.

Take a look at the following import statistics from 2018 through 2022.

Import Values 2018–2022

Source: bea.gov

The last two years in particular have seen steady, large increases in imports to the U.S.

However, the importing process is often laden with hurdles that can turn dreams of dollar signs into a logistical nightmare. Uncertain economic conditions, complex regulations, and shipping difficulties are just a few examples of importing problems. In importing and exporting, these challenges are referred to as trade barriers. 

Trade barriers come in many forms, and importers must keep a vigilant eye on them to maintain import compliance. If overlooked, they can result in fines and disruptions to your business.

One of the most common challenges for in global trade is calculating duties and tariffs. To shed some light on this area, let's take a closer look at how these costs are calculated in the USA.

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What Are Trade Barriers for U.S. Importers? Tariffs, Duties, and More

Tariffs are taxes on imported goods and services. Tariff rates vary by product and country of origin, affecting your bottom line. These rates can change due to new trade agreements or policies, making it hard to predict costs.

The financial impact of tariffs is direct: they add to the cost of goods, reducing profit margins. For example, a tariff might increase the cost of a shipment of coffee beans by thousands of dollars. This cost either cuts into the importer's profit or is passed on to consumers, making the product less competitive.

When dealing with customs, importers face a series of fees and challenges. Some are put in place intentionally to discourage high volumes of certain products. Others are simply there as standard fees.   

Common trade barriers may include:

• Customs Duties: These are based on the value, material, and purpose of the imported products.
• Bond Costs: Importers must have a bond in place to guarantee payment of duties and taxes.
• Demurrage Charges: Fees for cargo sitting past the allowed time at the port.
• Detention Fees: When containers are held for inspection and exceed the free time.
• Examination Fees: Costs for customs to inspect cargo, which can be random or targeted.

All these fees add up to raise the cost of doing business. Delays can compound these costs, turning a minor expense into a financial disaster. If your goods aren’t properly classified, it can result in fines or even seizure of the shipment.

How Tariffs Impact Your Profit Margins

Unless you’re importing from a nation with a free trade or preferential trade agreement, plan on high tariffs. This cost will either cut into the importer's profit or get passed on to consumers, potentially making the product less competitive.

To lessen the impact of tariffs, importers can:

• Seek Alternatives: Look for goods with lower tariff rates, or consider sourcing from different countries.
• Apply for Exemptions: Some goods may qualify for tariff exemptions. It's worth checking the regulations.
• Use Free Trade Agreements (FTAs): FTAs can offer lower or no tariffs on certain goods from participating countries.
• Improve Supply Chain Efficiency: Streamlining logistics can offset some of the costs associated with tariffs.

Doing your research before committing to a purchase is essential to avoiding certain high tariff rates. Online suppliers from around the world make it easier to buy a wide variety of products, but that ease does not translate over to customs clearance. 

Managing tariffs and duties is a complex task but, importers can handle these challenges by planning ahead of time and working with customs experts.

Non-Tariff Types of Trade Barriers Definition

Non-tariff trade barriers are restrictions that countries use to control and regulate the amount of trade across their borders without tariffs. They can take many forms and create challenges for importers by causing delays or limiting what goods that can be brought into a country. Unlike tariffs, which are taxes levied on imports, non-tariff barriers are often regulatory or procedural.

Some of these barriers, while inconvenient for importers, serve to protect consumers and local economies.

What Non-Tariff Barriers Could Affect Your Cargo?

Here are some examples of non-tariff trade barriers that U.S. importers may encounter:

• Import Quotas: Limits on the quantity of goods that can be imported. This is done to encourage domestic economic growth.
• Customs Delays: Slow processing times at customs due to heightened security.
• Technical Barriers to International Trade: Standards and regulations on product quality, safety, and packaging that differ from one country to another.
• Sanitary and Phytosanitary Measures: These are health and safety standards, which are meant to minimize or eliminate contamination of certain goods.
• Distribution Restrictions: Challenges in getting products to market due to local laws or lack of infrastructure.

These barriers require importers to be well-versed in the regulations set forth by U.S. government agencies. It should be noted that many of these measures are simply in place to ensure health and safety measures are taking place.

Overcoming import challenges requires strategic planning, reliable trading partners, and the assistance of trade experts or customs brokers.

Arguments For and Against Trade Barriers

Many of the challenges we’ve spoken of are deliberately put in place by the U.S. government, as mentioned. This may lead you to ask why they exist at all. Why make it harder to do business internationally?

There are arguments in favor of trade barriers and arguments that they should be removed. 

Arguments For Trade Barriers

• Protecting domestic jobs
• National security
• Infant industry growth
• Revenue generation
• Environmental protections

Arguments Against Trade Barriers

• Increased consumer costs
• Limited selection
• Economic inefficiency
• Stifling innovation

While many free trade advocates continue to lobby for less restrictive international trade laws, it’s safe to say most of these barriers aren’t going anywhere.

Aside from tariff and non-tariff challenges, import challenges also occur as a matter of distance and scale. 

Challenges of International Trade

International trade takes the challenges all businesses encounter and compounds them. Some of these challenges are:

• Logistics and Shipping Complexities: Coordinating the movement of goods over long, international distances
• Payment Risks: Ensuring that payments are received on time and in full can be more challenging when dealing with the global economy.
• Supply Chain Reliability: Maintaining a reliable supply chain over international borders is complex. Risks such as political uncertainty, natural disasters, or labor disputes in another country impact the availability of goods.
• Currency Exchange Fluctuations: The exchange rate between different currencies affects the cost of transactions and can lead to financial losses if not managed properly.
• Cultural and Language Differences: Misunderstandings arising from language barriers and cultural differences can lead to miscommunications. These can result in transaction errors and strained business relationships.

Given the variety of challenges importers face, having a reliable customs broker on your side can make doing business dramatically easier. 

What Are Import Risks?

Like any business, importing carries some financial risk. However, the risks tend to be greater than a fully domestic business would have. 

These are just some of the risks involved with importing to the U.S.

• Receiving product damaged during extended shipping times.
• Being undersold by the competition.
• Uncertainty dealing with developing countries.
• Losing suppliers due to political or military reasons.
• Being unable to inspect or return cargo.
• Getting substandard merchandise.

This last point is worth further elaboration. The penalties for selling goods that don’t meet U.S. standards are severe and numerous.

What Happens If Your Goods Do Not Meet U.S. Standards?

When importing goods into the United States, you’re expected to meet all legal requirements. . U.S. import-governing entities and other regulatory agencies have standards in place to ensure safety, compliance, and fair trade. If your goods fall short of these standards, the repercussions can be severe. 

Here's a snapshot of potential penalties.

• Seizure of Goods: If your items don't meet the necessary standards, CBP has the authority to seize them. This means you could lose your entire shipment and, by extension, any profit.
• Fines: Importers can face substantial fines if their goods are non-compliant. These fines can vary depending on the nature and severity of the violation, but can easily reach thousands of dollars.
• Denial of Entry: Non-compliant goods are often denied entry into the U.S. This not only delays your current shipment, but can also lead to increased scrutiny on future shipments.
• Legal Action: If the non-compliance is found to be intentional, or if the imported goods pose a serious risk to public health or safety, importers can face legal action. This could range from civil lawsuits to criminal prosecution.
• Forced Recalls: If non-compliant goods have already been sold or distributed, the government can mandate a recall. This is not only costly, but can also damage the reputation of your business and erode trust with your customers.
• Loss of Importing Privileges: Repeated violations or serious non-compliance issues can lead to being banned from importing, effectively halting your ability to do business.
• Cost of Compliance: Beyond penalties, there's also the cost of bringing your goods into compliance, which may include additional testing, modifications, or complete remanufacturing.

To avoid these penalties, it's crucial to understand and adhere to all U.S. standards and regulations. Working with a customs broker mitigates the risks that come with importing goods into the United States.

How Can Customs Brokers Simplify Your Import Process?

Customs brokers simplify the complexities of bringing goods into the country. They work alongside importers, saving time, money, and stress. 

Here's how customs brokers can make the import process easier:

• Knowledge of Customs Regulations: Brokers know the laws and regulations governing imports. They ensure that all paperwork is correct, avoiding costly and time-consuming mistakes.
• Efficient Clearance of Goods: With their in-depth understanding of the system, customs brokers can hasten the clearance of your goods, reducing delays.
• Tariff and Trade Agreement Advising: They stay up-to-date on tariff changes and trade agreements, providing importers with advice on how to minimize duties.
• Risk Management: Customs brokers assess and manage the risks associated with importing. This includes advising on the correct valuation, classification, and duty payment to avoid potential fines or penalties.
• Money-Saving Solutions: Brokers can identify cost-saving opportunities, such as duty drawback or other tariff lowering strategies.
• Accurate Paperwork: They handle all necessary import documentation, such as invoices and certificates of origin.
• Liaison with Government Agencies: Customs brokers communicate with CBP and other agencies on your behalf.

By partnering with a customs broker, importers can handle the import process more easily. Goods clear customs quickly and regulations are followed precisely. This peace of mind allows businesses to direct attention to reaching more customers and growing profits.

How USA Customs Clearance Helps You With Importing Challenges

While importing goods to the USA can be challenging, it’s also a great opportunity for entrepreneurs seeking profitable opportunities. With an expert customs broker on your side, these opportunities are easier to realize.

At USA Customs Clearance, we offer a number of services to assist importers, including:

• Customs consulting sessions
• Brokerage services
• Bundles for new importers
• And more

Don’t let import challenges affect your business. Give us a call at (855) 912-0406, or contact our team of customs experts online. With over a century of combined experience, our brokers can help you overcome import obstacles while you focus on your business.