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  April 25th, 2019 | Written by

In an Unclear International Trade Environment, Tariff Forecasting Provides Answers

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  • Rather than merely react, businesses that use tariff forecasting open new possibilities and solutions.
  • Tariff forecasting is a proactive and automatic way some providers leverage their routine business with customers.
  • Forecasting offers new opportunities for businesses to rethink their broad importing strategy.

If there’s one thing we can say with a fair amount of certainty amid the rapidly shifting priorities of the U.S. government’s current administration, it’s that tariffs appear to be their preferred international trade tactic. Though customs duties have always been a part of any worldwide shipping equation, their renewed prominence has the potential to create serious (and expensive) headaches for companies that are not proactively assessing their supply chains and goods classifications.

To combat this, cut through the confusion, and stay ahead of changing customs regulations, perceptive businesses are turning to a new data-driven analysis method offered by some logistics providers: tariff forecasting.

How tariff forecasting works

As the U.S. government announces lists of new tariffs or changes to existing tariffs, the delay between announcement and implementation offers a window of opportunity for immediate action. Beyond merely issuing client advisories detailing the impending impacts, savvy providers use historical shipment data to predict what their customers’ actual cost ramifications will be once the new or altered tariffs come into force.

Essentially, providers will analyze what shippers imported in the past six, twelve, or eighteen months to calculate what the total duty would have been on that historical cargo, had the approaching tariffs been in place during those times. Then, using information about upcoming shipments and business intelligence about a company’s importing patterns and cadences, providers can automatically project the additional costs that newly announced tariff changes will impose on importers.

Understanding future customs impacts today

When customs brokerage and trade compliance services originate from the same company that also offers global air and ocean freight logistics services—like with C.H. Robinson—customers benefit from their provider’s ability to synthesize that information and provide innovative insights.

As a result, importers gain true visibility to their incremental costs, eliminating the manual guesswork and uncertainty that changing tariffs can create. With concrete data on how changed tariffs would affect their bottom line, shippers are in a better position to reallocate resources or shift strategies before they experience impacts. Rather than merely react, businesses that use tariff forecasting open new possibilities and solutions for taking charge of the international trade situation, mitigating consequences, and preserving their margins.

But more than just easily highlighting anticipated duties on a shipper’s impending imports, forecasting offers new opportunities for businesses to rethink their broad importing strategy.

A chance to reconsider customs importing strategies

Because tariffs apply to particular countries, classes, and commodities, seeing duties’ specific impacts can spur new conversations about the best ways to declare imports. This often involves revisiting the basics of customs enforcement and asking holistic questions that may have previously slipped under the radar: Do our goods have the right tariff number/classification, or are they misclassified? Are our imports’ countries of origin correct? Are we properly declaring value?

With the rise in tariffs bringing renewed scrutiny to these compliance considerations, revisiting the customs process may suggest fresh ways for companies to keep their costs down. Here, providers’ modeling can also offer perspective on what would be the current or future impacts of changing strategies, helping importers project and evaluate the consequences of different courses of action to adapt to tariff volatility.

Additional opportunities around exclusions

Providers’ access to importers’ shipment information also allows them to provide valuable services surrounding tariff exclusions.

When the U.S. government announces that currently active tariffs will be reduced or suspended, providers can “invert” their tariff forecasting, using their customers’ historical information to quickly locate past shipments that were charged duties but—under upcoming cancellations—would not have been had they shipped later. With this data, providers’ local experts can approach U.S. Customs on their customers’ behalf to request refunds, saving importers time and money.

That means whether tariffs are coming or going, good logistics providers, like C.H. Robinson, proactively combine their experience and scale with the vast amounts of customs data they submit for their customers to create an information advantage that helps deliver better outcomes.

Staying prepared in a volatile trade environment

With all the politics and personality that surrounds U.S. tariffs and economic policy, seeing through the rhetoric and determining concrete impacts can be a real challenge. But doing so is essential for companies to remain in compliance and avoid unexpected, unpleasant increases in costs. Tariff forecasting is a proactive and automatic way some providers leverage their routine business with customers to provide additional insights and value-added services that keep companies ahead of changes, putting importers in better positions to make crucial decisions.

In an unclear global trade environment, it’s a powerful tool that can provide shippers some much-needed, tangible reliability.