How will a Trump presidency affect Trade Compliance? Well frankly I don't know. But he has clearly stated that his administration will move quickly, after assuming the Presidency, to "level the playing field" with targeted trading partners. And as President he has very strong discretionary powers to impose trade action without the consent of Congress. If this happens there certainly will be retaliatory tariff measures and other actions that will affect trade between partners. There has been a lot written about the implications of President-Elect Trump's trade threats and the response from trading partners. If implemented they will result in a highly uncertain, and therefore very worrying, state of affairs.
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These actions, if implemented, will directly impact the way global trade is done and this will most certainly impact both import and export trade compliance. Here are some thoughts on how trade compliance might be affected:
- Increased administrative burden for export certification and documentation. The president elect has indicated that he will target China and Mexico with punitive trade tariffs to level the playing field - by as much as 45% and 35% respectively. The impact of any such action will certainly affect the current trading relationship with these two countries and lead to resulting counter-measures which would, in all-likelihood, significantly increase the export administrative burden on certifications and documentation required to support the import at the port of entry. However, it is likely that the punitive measures will be extended to other countries which will lead to additional trade retaliation.
- Increased enforcement at the border. Although not explicit, CBP and PGAs have incredible power to affect the inbound flow of merchandise. It is already well documented that CBP has increased the number of officers dedicated to enforcement and inspections as opposed to security. Any overhead related to importing product because of additional enforcement from either CBP or the PGAs can have detrimental affects to importer's ability to move shipments through the ports of entry into commerce. The pressure on trade compliance will increase to respond to the increased burden imposed by the regulatory agencies.
- Increased post-entry scrutiny. CF-28 and CF-29 letters (CBP Field Instructions On Form 28 And Form 29 Notice Of A Formal Investigation) are on the increase. This is before a more import hostile administration is sworn in. The result is that CBP may become much more aggressive with the result that importers who have poor or weak import compliance process control will find themselves burdened with much more administrative work just responding to these requests. If the response is not satisfactory, the importer will find that they are even more involved with CBP with the dreaded focused audit.
Will any of this come to pass? I don't know. However, what is certain is that there is a reasonably probability that the workload for trade compliance professionals will increase and the companies compliance risk exposure will magnify.So what is a trade compliance professional to do? There are two options: First, there is no need to change the status quo until there is a reason to change. The second option is to be proactive and seriously look at how trade compliance is being managed and look for ways to ensure that your processes are controlled and audit-able, that your entry declarations (to CBP and PGAs) are correct - the first time, and that you respond quickly and comprehensively whenever CBP and PGAs call.The trade world is being stood on its head by ACE for better and worse. It provides government the ability to tighten or loosen the control it keeps on the goods flowing in and out of the country. A Trump Presidency will, in all likelihood, result in a tightening of control, making global trade more difficult, not less. Companies that have a firm control over their trade processes will find it less of an impediment than those that don't.