By Tom Leahey and Greg Spangler, CPA
Over the past few years, tariffs have been used as a blunt instrument of international diplomacy for our most favored economic partners as well as those countries where we have stark differences. From Venezuela and Iran to Mexico and China, trade policies are shaping our diplomatic approach to geo-political events which extend far beyond economic considerations.
As one might imagine, the influence of America’s trade policies is considerable both here and abroad. Consider that foreign direct investment (FDI) into America has fallen by nearly 50% to $268 billion since 2017. American workers are also deeply affected by trade policy – the U.S. commerce department recently stated that 7.1 million American workers (5.6% of the private-sector labor force) are employed by U.S. multinationals.
These multinational companies accounted for 25.6% of America’s total exports (2016) and 29.3% of total goods imported. There’s no question that trade and tariff policies are the most potent economic and diplomatic topics of the day.
How does Washington’s approach to trade affect middle-market companies based in the Southeast? Is it time to delay replenishing inventory, consider moving production to countries outside the immediate scope of Washington such as Vietnam or India? Or, given the pace of change, is it time to bring production back to the U.S.?
More tactically, what can be done to ensure that your business is not victimized by the current trade environment? It’s never too late to ensure that your business is efficiently documenting and tracking classifications on imports and effectively managing inventory. Simple steps such as properly classifying imported goods with correct tariff codes can insulate companies from excessive trade-related expenses.
Companies should also consider consulting with a specialty law firm in navigating the complexities of classifying tariffs to ensure that international taxes and tariffs are proper and appropriate. If international trade is an important component of your overall business, you may consider hiring an experienced logistics broker to help you stay up-to-date on regulations and compliance.
Join us at Insights on December 3, 2019, for a panel discussion on the latest impact of tariffs on American business. Georgia Department of Community Affairs Commissioner Christopher Nunn will join the panel to share statewide perspective. Email firstname.lastname@example.org for details on Insights, Windham Brannon’s one-day conference in Atlanta, Ga.
If you have any further questions with the new Tariffs, please contact your Windham Brannon advisor.