WEBVTT NOTE This file was generated by Descript 00:00:11.980 --> 00:00:16.700 Hello and welcome to today's Industry Week's Production Pulse, how manufacturers 00:00:16.700 --> 00:00:18.550 can prepare now for more tariffs. 00:00:18.880 --> 00:00:22.310 I'm Jill Jusko, and I'm executive editor of Industry Week. 00:00:23.170 --> 00:00:23.589 So the U. 00:00:23.589 --> 00:00:23.729 S. 00:00:23.759 --> 00:00:28.260 presidential election is over, and what we know is that President elect Donald Trump 00:00:28.350 --> 00:00:30.840 will be returning to office very shortly. 00:00:31.750 --> 00:00:34.760 We also know that he's shown a willingness in the past to 00:00:34.760 --> 00:00:36.570 will tariffs as a trade tool. 00:00:36.980 --> 00:00:41.340 And we also know that he has been vocal about implementing new tariffs 00:00:41.350 --> 00:00:43.690 during his most recent campaign. 00:00:43.720 --> 00:00:48.910 Two examples of that are, uh, you know, we've heard anything from 10 to 20 00:00:48.910 --> 00:00:52.480 percent tariffs on all Ford imports. 00:00:52.480 --> 00:00:55.440 We've heard 60 percent on Chinese imports. 00:00:55.900 --> 00:00:59.210 Uh, those are two examples that he has. 00:00:59.665 --> 00:01:06.485 Uh, throw out thrown out, however, despite what we do know, there's still 00:01:06.485 --> 00:01:11.504 a lot that we don't know, um, what the outcome of the election truly means in 00:01:11.504 --> 00:01:16.454 terms of new tariffs and their impact on the supply chain and manufacturing likely 00:01:16.454 --> 00:01:18.384 will remain unclear in the short term. 00:01:18.935 --> 00:01:23.115 Our goal in today's Production Pulse is to discuss what U. 00:01:23.115 --> 00:01:23.324 S. 00:01:23.345 --> 00:01:28.214 manufacturers can do now to prepare for changes to trade and tariff 00:01:28.214 --> 00:01:33.965 policy in light of this uncertainty and whatever those changes might be. 00:01:35.395 --> 00:01:41.895 Joining me today to share some thoughts on the topic are Jeremy Tancredi, partner 00:01:41.905 --> 00:01:44.235 in West Monroe's supply chain practice. 00:01:46.270 --> 00:01:53.960 Dan Swartz, International Tax Services Principal at Crow, and Greg Houssissian, 00:01:54.000 --> 00:01:56.190 partner in the law firm Foley and Lardner. 00:01:57.530 --> 00:02:03.890 With that, thank you gentlemen, and we will go to Jeremy with our first question. 00:02:03.899 --> 00:02:11.870 And Jeremy, uh, you know, given that we don't know a lot yet about when and how, 00:02:12.530 --> 00:02:18.480 you know, tariffs may be impacted by the new presidency, what can, what should, 00:02:18.980 --> 00:02:21.200 Manufacturers would be doing to prepare. 00:02:21.210 --> 00:02:23.380 What should they be doing now? 00:02:25.390 --> 00:02:25.620 Yeah. 00:02:25.620 --> 00:02:26.260 Thank you, Jill. 00:02:26.290 --> 00:02:29.380 Um, I think the first thing that I would recommend and something we're 00:02:29.380 --> 00:02:33.340 talking to our clients at West Monroe about is really just, uh, don't 00:02:33.350 --> 00:02:35.280 take too hasty of actions right now. 00:02:35.769 --> 00:02:38.670 The thing I would recommend they do do is look at, take a hard 00:02:38.670 --> 00:02:39.959 look at their supplier base. 00:02:40.459 --> 00:02:43.379 Um, you know, it's, it's fairly straightforward to think about your 00:02:43.399 --> 00:02:47.029 tier one suppliers who are going to be sourcing products directly from 00:02:47.030 --> 00:02:48.600 China or some of these other places. 00:02:49.145 --> 00:02:51.255 and plan accordingly with those sources. 00:02:51.704 --> 00:02:54.345 But what we're telling them to do is really take a look at those tier two 00:02:54.345 --> 00:02:55.925 and tier three suppliers as well. 00:02:56.395 --> 00:03:00.225 Um, any tariffs that impact those suppliers are going to filter back 00:03:00.225 --> 00:03:02.165 to the end manufacturer or consumer. 00:03:02.564 --> 00:03:06.634 So understanding where all your, even tier two and tier three sources are coming from 00:03:06.995 --> 00:03:08.515 is going to help you plan accordingly. 00:03:08.925 --> 00:03:12.045 And then you can take a look at potentially sourcing different 00:03:12.045 --> 00:03:13.515 suppliers from different areas. 00:03:13.874 --> 00:03:16.564 that may not be as heavily impacted by the new tariffs. 00:03:18.584 --> 00:03:20.494 Yeah, I would agree with all of that. 00:03:20.494 --> 00:03:24.845 With the Jeremy just said at this point, the key things to do are 00:03:24.864 --> 00:03:27.444 understanding and risk planning. 00:03:27.834 --> 00:03:32.294 Um, a key thing companies can do is pull your ace data, you know, from 00:03:32.294 --> 00:03:35.864 the customs portal and make sure you have a good understanding of what 00:03:35.864 --> 00:03:39.654 your tariff risk exposure is and from which countries, particularly 00:03:39.654 --> 00:03:42.185 with regard to China and Mexico. 00:03:42.935 --> 00:03:47.195 Those two countries have to be at the top of the risk planning, 00:03:47.525 --> 00:03:53.615 first of all, because China is a bipartisan, um, source of, of angst. 00:03:54.095 --> 00:03:57.714 Nobody is really going to complain too much if, if, um, President Trump 00:03:57.714 --> 00:03:59.924 increases the China, uh, trade tariffs. 00:04:00.215 --> 00:04:02.084 And he's already shown once that he could do it. 00:04:02.095 --> 00:04:07.709 And he has the authority under Section 301 To declare that China is not 00:04:07.709 --> 00:04:11.470 in accordance with its settlement for the less for be tariffs. 00:04:11.769 --> 00:04:16.659 And so on day one, he could literally increase those imports. 00:04:16.890 --> 00:04:18.129 And then Mexico. 00:04:18.159 --> 00:04:22.599 Um, secondly, they're a potential target because in 2026, the 00:04:22.599 --> 00:04:24.599 USMCA is up for reapproval. 00:04:25.025 --> 00:04:30.755 So that, um, makes that a potential source of higher tariffs, if even if 00:04:30.755 --> 00:04:35.654 it's as part of a threat to achieve other goals, such as on, on immigration. 00:04:35.945 --> 00:04:40.025 So it's the first thing is to understand your, your risk exposure. 00:04:40.025 --> 00:04:44.325 And the second thing is to start risk planning, beginning with China and Mexico. 00:04:44.565 --> 00:04:47.605 And then also then after that, looking to see what your exposure 00:04:47.605 --> 00:04:49.995 is for the rest of the world. 00:04:51.595 --> 00:04:52.325 Okay. 00:04:52.475 --> 00:04:55.245 And Dan, do we have Dan with us? 00:04:58.224 --> 00:05:00.604 It looks like we may have lost Dan. 00:05:04.395 --> 00:05:05.075 Okay. 00:05:05.075 --> 00:05:08.905 We, if hopefully Dan will rejoin us, um, in the mean time. 00:05:30.815 --> 00:05:31.824 I'm sorry, Jill. 00:05:31.824 --> 00:05:34.685 This is Robert Schoenberger, editor in chief here at industry week. 00:05:34.685 --> 00:05:36.484 Your audio just went out for a second. 00:05:36.484 --> 00:05:39.114 So if you could repeat that question, I'd appreciate it. 00:05:39.665 --> 00:05:39.925 Sorry. 00:05:41.255 --> 00:05:41.554 Okay. 00:05:41.554 --> 00:05:42.245 Thank you, Robert. 00:05:43.075 --> 00:05:48.005 So the, the, what I wanted to ask you about is I have, um, heard some comments 00:05:48.005 --> 00:05:50.175 about, from manufacturers about. 00:05:50.585 --> 00:05:55.104 Um, you know, what they should be doing in advance and are you telling 00:05:55.104 --> 00:06:00.504 anybody that they should be purchasing, moving up capital equipment purchases 00:06:00.534 --> 00:06:03.414 or, um, robust scenario planning? 00:06:03.414 --> 00:06:05.594 It sounds like that is some of what you said. 00:06:06.065 --> 00:06:11.934 Um, and it sounds also like you said, country of origin, you know, making 00:06:11.934 --> 00:06:15.814 sure you understand your country of origin is an important component. 00:06:18.840 --> 00:06:21.190 We're definitely seeing that for some of our clients. 00:06:21.190 --> 00:06:26.030 They're trying to, um, see where they can get goods that they were planning 00:06:26.030 --> 00:06:29.339 to bring in, you know, maybe next year, get them into the country sooner. 00:06:29.339 --> 00:06:33.179 Anything that's entered into the United States is obviously, um, 00:06:33.209 --> 00:06:35.400 immune to the, to the tariffs. 00:06:35.680 --> 00:06:41.359 People have already been in a multi year process of moving production out of China. 00:06:41.359 --> 00:06:43.119 So we're telling them. 00:06:43.360 --> 00:06:47.780 That's that's great because they're they're at the highest level of tariffs 00:06:47.780 --> 00:06:52.440 generally, but make certain you understand like the substantial transformation rules. 00:06:52.709 --> 00:06:57.809 And if you're using the parts and components from there that you are doing 00:06:57.809 --> 00:07:04.895 it correctly, um, because, um, Customs has unprecedented ability to see into 00:07:04.914 --> 00:07:09.324 importing patterns now with with all the data being electronic, and they're 00:07:09.324 --> 00:07:13.385 using that quite frequently and finding a lot of instances where people aren't 00:07:13.385 --> 00:07:16.495 really doing enough in the third country because they're using substantial 00:07:16.495 --> 00:07:17.974 parts and components from China. 00:07:18.550 --> 00:07:23.140 Um, those efforts by customs are only going to go up if the tariffs 00:07:23.140 --> 00:07:25.729 from trying to go up, because that's going to give people even more 00:07:25.729 --> 00:07:28.780 incentives to try to claim their products are from a different country. 00:07:29.130 --> 00:07:35.010 And, uh, that could lead to, you know, big, big bills for, for unexpected 00:07:35.010 --> 00:07:40.140 tariffs if customs disagrees with you on your tariff engineering strategies. 00:07:42.865 --> 00:07:43.045 Yeah. 00:07:43.045 --> 00:07:46.105 And I think to, to add on too, and to, to answer the question about, you 00:07:46.105 --> 00:07:50.005 know, large capital investments, that is the one area we are recommending 00:07:50.005 --> 00:07:51.655 potentially looking at for our clients. 00:07:51.945 --> 00:07:55.165 Uh, you know, we know there is uncertainty, but you know, we serve the 00:07:55.165 --> 00:07:58.645 upper mid market Fortune 1000 type of clients, so they don't always have the 00:07:58.645 --> 00:08:03.445 largest capital line around for some of these major investments into manufacturing 00:08:03.445 --> 00:08:04.945 automation and things of that nature. 00:08:05.495 --> 00:08:09.115 So any of those type instances where we may not be a hundred percent 00:08:09.115 --> 00:08:10.795 certain what the impact's gonna be. 00:08:11.195 --> 00:08:15.205 But if that's already in your plan for the future, do what you can expedite that 00:08:15.414 --> 00:08:19.534 as much as possible, uh, to avoid, you know, additional tariffs on top of that. 00:08:21.534 --> 00:08:21.974 Okay. 00:08:21.974 --> 00:08:22.265 Terrific. 00:08:22.265 --> 00:08:22.545 Okay. 00:08:22.605 --> 00:08:28.664 Dan, would you like to, uh, share some of your thoughts on how manufacturers 00:08:28.695 --> 00:08:30.754 what they can do to prepare? 00:08:31.095 --> 00:08:34.775 Um, not with this level of uncertainty that still is facing us. 00:08:36.375 --> 00:08:36.924 Yeah, Jill. 00:08:36.924 --> 00:08:39.764 I think there's two suggestions I have. 00:08:39.765 --> 00:08:42.934 I know everybody's recommending things such as going back and looking 00:08:42.934 --> 00:08:44.795 at your tariff classifications. 00:08:45.250 --> 00:08:47.500 Looking at options for near shoring. 00:08:48.220 --> 00:08:54.440 But from our experience with the 2018 tariffs, I really recommend everybody 00:08:54.440 --> 00:08:59.859 who's attending today's, uh, meeting here is to find out who your customs 00:08:59.870 --> 00:09:02.959 broker, uh, or your bond broker is. 00:09:04.000 --> 00:09:08.590 A lot of companies have no idea who has sold them their customs bond, yet 00:09:08.940 --> 00:09:12.440 this could be one of the most important relationships that you have as we go 00:09:12.440 --> 00:09:14.640 through this period of increasing tariffs. 00:09:15.029 --> 00:09:20.199 And the reason why is that your bond has a limit, and that limit is based 00:09:20.199 --> 00:09:23.920 upon the amount of duty that you accumulate during a 12 month period. 00:09:24.800 --> 00:09:29.850 And as the tariffs increase, your bond limit's going to have to follow. 00:09:30.450 --> 00:09:35.550 And as the bond limit climbs higher, The underwriters of the bond are now going 00:09:35.550 --> 00:09:38.010 to pay more scrutiny to your company. 00:09:38.829 --> 00:09:42.089 They're going to be wanting to look at audited financial statements. 00:09:42.569 --> 00:09:45.800 And in many cases, they're going to require that you put up collateral 00:09:45.800 --> 00:09:47.480 in the form of letter of credit. 00:09:48.079 --> 00:09:52.550 So I'd recommend now is the time to reach out to your bond broker, start 00:09:52.559 --> 00:09:57.030 having a conversation with them instead of waiting until you start receiving 00:09:57.060 --> 00:09:59.640 insufficiency notices down the road. 00:10:00.019 --> 00:10:05.959 With everybody else and then trying to vie for some time, uh, from your bond broker. 00:10:06.494 --> 00:10:09.884 Also, if you're in the market shopping for a bond broker, there 00:10:09.884 --> 00:10:11.514 are some really good ones out there. 00:10:11.535 --> 00:10:16.314 They're relationship oriented and that have good relationships with underwriters 00:10:16.314 --> 00:10:18.204 and that really hone in on those. 00:10:21.725 --> 00:10:22.204 Okay. 00:10:22.204 --> 00:10:22.824 Terrific. 00:10:23.254 --> 00:10:25.255 So let's move on to our next question. 00:10:26.184 --> 00:10:30.495 How about what shouldn't manufacturers be doing at this time? 00:10:30.895 --> 00:10:36.774 And by that, I mean, Are there things that could just be a waste 00:10:36.774 --> 00:10:42.655 of their time doing it now, like too soon, before there is real clarity? 00:10:42.974 --> 00:10:46.015 And, um, you know, let's go to Jeremy for that. 00:10:47.524 --> 00:10:50.304 Yeah, I think the thing that I am recommending to my clients 00:10:50.305 --> 00:10:53.834 that they do not do is, you know, don't overreact at this moment. 00:10:54.694 --> 00:10:58.935 Um, I've already had some clients who've already started purchasing materials in 00:10:58.944 --> 00:11:00.885 mass quantities to try to get ahead of it. 00:11:01.405 --> 00:11:05.635 And we're really telling them that, you know, it might not be the best practice. 00:11:06.255 --> 00:11:08.915 You know, first and foremost, uh, it's very disruptive to 00:11:08.915 --> 00:11:10.204 your manufacturing supply chain. 00:11:10.754 --> 00:11:12.774 You know, you're having, you're ordering larger quantities than 00:11:12.774 --> 00:11:16.254 normal, which then leads to storage issues in your warehouses. 00:11:16.714 --> 00:11:20.714 It leads to manufacturing production plan issues and just a lot of excess inventory. 00:11:21.305 --> 00:11:23.364 Um, you know, that's very costly, obviously. 00:11:23.865 --> 00:11:28.474 This is the second kind of effect we have on that is with already people 00:11:28.474 --> 00:11:31.795 reacting and buying more from overseas in anticipation of this taxes. 00:11:32.210 --> 00:11:34.879 What we're already starting to see is transportation costs go up. 00:11:35.769 --> 00:11:39.689 All the disruptions the last few years in supply chains, as this has happened, 00:11:39.729 --> 00:11:43.959 capacity for shipping containers, tractors and trailers in the U. 00:11:43.959 --> 00:11:44.129 S. 00:11:44.129 --> 00:11:47.859 here domestically, you know, when there's those spikes, we see the prices surge. 00:11:48.299 --> 00:11:52.510 So even ordering ahead, any savings you could see getting ahead of some of 00:11:52.510 --> 00:11:56.560 these tariffs, you could be offsetting those by higher transportation costs. 00:11:57.020 --> 00:12:00.319 So until there's more clarity on certain areas and tariffs, Um, you 00:12:00.319 --> 00:12:03.160 know, we're recommending for your, your everyday type of materials and 00:12:03.160 --> 00:12:07.230 ingredients to potentially hold off a little bit on those large pre orders. 00:12:08.169 --> 00:12:12.670 So just to be clear, so you said they're having a tendency to overreact. 00:12:12.680 --> 00:12:15.650 So are you telling them just to maintain the status quo 00:12:15.650 --> 00:12:17.199 at the moment, more or less? 00:12:17.814 --> 00:12:19.545 Yeah, I'm on certain materials that they use. 00:12:19.545 --> 00:12:22.954 They're highly consumable that they have a lot of, um, that they order 00:12:22.954 --> 00:12:27.045 large quantities of because they're going to be paying more a premium 00:12:27.045 --> 00:12:29.975 on the shipping containers and transportation costs right now because 00:12:29.975 --> 00:12:33.185 we are seeing that already starting to spike in anticipation of those tariffs. 00:12:33.814 --> 00:12:37.469 So to save money on the tariffs, they're just paying higher transportation costs. 00:12:37.880 --> 00:12:41.640 And it can end up being kind of a net, um, financially for their supply chains. 00:12:42.820 --> 00:12:43.180 Okay. 00:12:43.460 --> 00:12:44.400 How about you, Dan? 00:12:44.410 --> 00:12:48.309 Anything you're telling manufacturers or supply chain participants 00:12:48.320 --> 00:12:49.610 not to do at this point? 00:12:50.140 --> 00:12:54.869 Well, we have a lot of experience from 2018 and what a lot of manufacturers did 00:12:54.879 --> 00:12:57.560 back then to get themselves into trouble. 00:12:58.120 --> 00:13:01.610 Uh, If it's too good to be true, it probably is. 00:13:02.000 --> 00:13:05.720 If you see companies advertising that they can take your cargo 00:13:05.760 --> 00:13:10.260 through an intermediate country and slap a made in Malaysia sticker on 00:13:10.260 --> 00:13:15.270 it, when it was actually produced in China, not a good route to go. 00:13:15.619 --> 00:13:21.300 Um, we also saw companies who were kidding product out of China into 00:13:21.380 --> 00:13:25.869 third countries, like the Philippines and doing simple assembly there. 00:13:25.870 --> 00:13:28.000 But when you really look at the bill materials. 00:13:28.435 --> 00:13:32.925 Uh, it didn't result in a substantial transformation of the goods. 00:13:32.925 --> 00:13:37.304 It still remained a product of China, uh, despite their best efforts. 00:13:37.644 --> 00:13:41.925 So my caution is this, there's going to be a lot of people out there with 00:13:41.934 --> 00:13:46.964 differing ideas on how to try to navigate around the tariffs, be skeptical, look 00:13:46.964 --> 00:13:48.755 out for your company's best interest. 00:13:48.755 --> 00:13:53.455 And, uh, don't take flyers on some of these ideas are just too good to be true. 00:13:54.635 --> 00:13:56.655 Yeah, I would 100 percent agree with that. 00:13:56.655 --> 00:14:03.285 We've seen too many situations where people have either adopted like middleman 00:14:03.405 --> 00:14:08.215 pricing, um, which, which was kind of a hot topic when 301 came out saying 00:14:08.215 --> 00:14:12.075 that that could minimize the entered value and often they weren't doing it. 00:14:12.250 --> 00:14:15.750 According to customs rules or where they've just moved like kind of 00:14:15.750 --> 00:14:19.790 the final assembly of the product abroad Which customs is not going to 00:14:19.790 --> 00:14:23.950 buy as a substantial transformation because you're not doing that much 00:14:23.950 --> 00:14:27.620 and not really in you're taking inputs with a predetermined use. 00:14:28.070 --> 00:14:31.350 But stepping back, there's, there's kind of two import areas that 00:14:31.350 --> 00:14:35.459 are very important and you can't lose sight of, of either of them. 00:14:35.460 --> 00:14:37.690 One is the tariffs and how to cope with that. 00:14:38.030 --> 00:14:41.789 And in that section, people right now should be focusing on identifying 00:14:41.790 --> 00:14:46.610 their risk exposure, understanding the risk exposure and, and game planning. 00:14:46.870 --> 00:14:49.090 But the second piece, which they probably should be working 00:14:49.090 --> 00:14:51.040 on now is customs has a huge. 00:14:51.454 --> 00:14:57.345 Um, focus on supply chain integrity, um, particularly with regard to China, 00:14:57.355 --> 00:14:59.335 forced labor, human trafficking, U. 00:14:59.335 --> 00:14:59.495 F. 00:14:59.495 --> 00:14:59.675 L. 00:14:59.675 --> 00:14:59.934 P. 00:14:59.934 --> 00:15:00.234 A. 00:15:00.595 --> 00:15:01.565 Things like that. 00:15:01.594 --> 00:15:07.145 And we're seeing such a huge ramp up in customs, um, detentions for U. 00:15:07.145 --> 00:15:07.294 F. 00:15:07.294 --> 00:15:07.444 L. 00:15:07.445 --> 00:15:07.655 P. 00:15:07.655 --> 00:15:07.754 A. 00:15:07.754 --> 00:15:12.195 As well as forced labor that people should be looking at that as well, because that's 00:15:12.195 --> 00:15:14.575 going to be wrapped up it, um, with it. 00:15:14.575 --> 00:15:19.825 Because again, there's that bipartisan consensus that that China, it's okay 00:15:19.825 --> 00:15:23.685 to beat up on China, and a lot of those concerns arise with that as well. 00:15:23.685 --> 00:15:28.464 So, while people need to be thinking about how they're going to cope with the higher 00:15:28.465 --> 00:15:33.094 tariffs, they also need to be coping with the reality of the supply chain integrity 00:15:33.094 --> 00:15:39.184 being a huge focus, and that can disrupt your operations even more, potentially, 00:15:39.184 --> 00:15:41.784 than the higher tariffs if your goods are being detained at the border. 00:15:45.380 --> 00:15:45.740 Okay. 00:15:45.740 --> 00:15:46.190 Terrific. 00:15:46.420 --> 00:15:51.640 You know, I was thinking as you were talking, um, you know, we're talking 00:15:51.640 --> 00:15:53.270 about coping with the tariffs. 00:15:54.360 --> 00:15:57.969 You know, is there an equal percentage of people that are 00:15:57.969 --> 00:16:00.289 just how do I avoid the tariffs? 00:16:00.330 --> 00:16:06.310 You know, um, altogether, what can I do to avoid, um, getting, getting tariffed? 00:16:07.035 --> 00:16:08.135 hit by the tariffs. 00:16:08.185 --> 00:16:12.055 That's probably part of some folks scenario planning, I would expect. 00:16:12.814 --> 00:16:16.064 Yeah, I mean, usually that's going to, well, first of all, we don't know if 00:16:16.064 --> 00:16:19.564 the, if the tariffs go up, if there's going to be an exclusion process and 00:16:19.564 --> 00:16:22.795 whether it will be a good exclusions process, because there's a lot of 00:16:22.795 --> 00:16:25.835 problems with the section 301 process. 00:16:25.835 --> 00:16:28.125 They were very difficult to come by and kind of random 00:16:28.125 --> 00:16:29.565 in terms of what was granted. 00:16:30.105 --> 00:16:34.535 Um, so that's, that's a big unknown, but in general. 00:16:35.160 --> 00:16:39.620 The biggest tariff savings, whether it's like for anti dumping duties or 00:16:39.620 --> 00:16:43.729 for tariffs going high on one country, is to move out of that country. 00:16:44.030 --> 00:16:47.799 And that means understanding thoroughly the, you know, the substantial 00:16:47.799 --> 00:16:53.509 transformation or the free trade agreement rules, if they apply, as well. 00:16:53.750 --> 00:16:59.134 But, you know, because the goods, the basically the, Tariff is determined by the 00:16:59.134 --> 00:17:02.854 value of the goods, plus the country of origin of goods, plus the classification. 00:17:03.395 --> 00:17:09.365 Um, the classification and the entered value can be pretty much fixed by 00:17:09.375 --> 00:17:14.875 the reality of what they are, so that leaves kind of changing the, um, You 00:17:14.875 --> 00:17:16.685 know, the country, country of origin. 00:17:17.045 --> 00:17:20.885 And other than we know that China is going to be, um, in the crosshairs, 00:17:20.915 --> 00:17:25.264 we don't quite know what's going to happen to, um, other countries. 00:17:25.264 --> 00:17:28.684 Maybe President Trump will decide to target countries. 00:17:28.684 --> 00:17:31.474 They have like a big trade surplus with the United States, 00:17:31.475 --> 00:17:32.904 which would include like Germany. 00:17:33.305 --> 00:17:37.975 Um, maybe, maybe he's going to look at, at, at issues like that. 00:17:37.975 --> 00:17:44.065 We don't know what's coming in, but we do know that at the, um, Lighthizer is likely 00:17:44.095 --> 00:17:46.995 to be in charge of the trade policy again. 00:17:47.025 --> 00:17:51.605 And this is a very experienced trade lawyer who, who knows all the 00:17:51.605 --> 00:17:56.385 levers that can be pulled and is strongly in favor of using tariffs 00:17:56.385 --> 00:17:58.144 as a way to protect us industry. 00:17:58.154 --> 00:18:02.615 So we know that something is going to be done because this occurred before it and 00:18:02.615 --> 00:18:06.245 president Trump views it as one of the big successes of his first administration. 00:18:07.855 --> 00:18:08.715 Okay, great. 00:18:09.045 --> 00:18:10.175 I'm going to stick with you. 00:18:10.205 --> 00:18:16.680 Um, Uh, Greg, and then jump over to you, Dan, for, uh, I guess 00:18:16.680 --> 00:18:18.120 a logical follow up question. 00:18:19.000 --> 00:18:24.550 In terms of tariffs, what kind of hurdles Or steps does any president 00:18:24.590 --> 00:18:26.310 face and imposing new tariffs. 00:18:26.940 --> 00:18:32.949 And as I mentioned before, just doesn't declare a tariff and it exists, do they? 00:18:34.220 --> 00:18:39.820 Well, I would have agreed with you a few years ago because, um, under the 00:18:39.830 --> 00:18:46.275 tariff programs like Section 232 or 301 or, um, The the International Emergency 00:18:46.285 --> 00:18:50.235 Economic Powers Act, they all have conditions like it needs to be national 00:18:50.245 --> 00:18:55.685 security, um, or there needs to be an unfair trade practice like section 301. 00:18:56.014 --> 00:19:00.744 But what we saw in the first Trump administration was that, um, you 00:19:00.745 --> 00:19:05.685 know, the president directed the USTR to basically find that there, 00:19:05.715 --> 00:19:07.845 that these, um, conditions were met. 00:19:08.335 --> 00:19:11.215 And when they were challenged at the Court of International Trade, 00:19:11.244 --> 00:19:13.449 the Court of International Trade was, was very, very aggressive. 00:19:13.640 --> 00:19:14.730 deferential. 00:19:15.160 --> 00:19:19.650 Um, and so those precedents would, would help as well, especially with regard to 00:19:19.650 --> 00:19:24.959 section 301, where there is, there was a settlement of the list four B tariffs 00:19:25.360 --> 00:19:29.239 that said that China would increase their imports from the United States 00:19:29.239 --> 00:19:31.639 by 200 billion, which they didn't do. 00:19:31.970 --> 00:19:36.450 So using that existing trade authority, President Trump could on 00:19:36.460 --> 00:19:41.290 day one Direct the USTR to find that they're not in compliance and use 00:19:41.290 --> 00:19:46.120 that pre existing investigation to increase the China tariffs We also 00:19:46.120 --> 00:19:49.710 have the 2026 Um, renegotiation of U. 00:19:49.710 --> 00:19:49.890 S. 00:19:49.890 --> 00:19:50.060 M. 00:19:50.060 --> 00:19:50.300 C. 00:19:50.300 --> 00:19:50.510 A. 00:19:50.510 --> 00:19:54.400 That gives a lot of leeway there to potentially do things. 00:19:54.720 --> 00:19:58.860 And the reality is, is even if the courts were to eventually say that 00:19:58.860 --> 00:20:03.220 President Trump was acting precipitously and didn't have the authority to say 00:20:03.220 --> 00:20:07.860 increased tariffs across the board, we saw with the section 301 litigation 00:20:07.860 --> 00:20:10.310 that that takes years to work through. 00:20:10.679 --> 00:20:10.990 W. 00:20:10.990 --> 00:20:11.250 T. 00:20:11.250 --> 00:20:11.590 O. 00:20:11.639 --> 00:20:15.990 Challenges are even slower and our perspective only. 00:20:16.320 --> 00:20:20.470 So by the time, um, you know, the courts would take action to 00:20:20.470 --> 00:20:22.060 potentially strike these things down. 00:20:22.060 --> 00:20:26.030 It could be 34 years in the future and President Trump is at the end of his term. 00:20:29.169 --> 00:20:30.689 And Dan, would you like to weigh in on that? 00:20:31.300 --> 00:20:35.450 Well, I agree with everything Greg said, and just would add that we're only two 00:20:35.450 --> 00:20:37.470 years away from a midterm election. 00:20:37.480 --> 00:20:44.000 So whatever is imposed by president Trump, um, and even if Congress is involved 00:20:44.000 --> 00:20:46.670 here at some point as well, it may. 00:20:47.210 --> 00:20:48.740 Be temporarily. 00:20:49.100 --> 00:20:53.400 Um, so going back to your earlier question, Jill, what 00:20:53.590 --> 00:20:55.420 manufacturers can do today? 00:20:55.659 --> 00:20:58.880 One of the other recommendations I would have is for them to reach out 00:20:58.880 --> 00:21:02.430 to their congressional delegation and invite them into your factory. 00:21:03.090 --> 00:21:04.799 Uh, let them know that you exist. 00:21:04.809 --> 00:21:08.799 Let them know how many people you employ in your area, how many 00:21:08.820 --> 00:21:13.110 downstream vendors, uh, you're providing jobs to in your community. 00:21:13.590 --> 00:21:18.250 Um, and let them know how important international trade is to your business. 00:21:18.570 --> 00:21:25.580 We did see rather large carve outs with section 301, uh, for 00:21:25.590 --> 00:21:27.629 certain companies and industries. 00:21:28.004 --> 00:21:32.665 Uh, so, you know, lobbying does go a long way up front, but on the back 00:21:32.665 --> 00:21:36.355 end, yeah, I expect that there's going to be a lot of exclusions or 00:21:36.355 --> 00:21:38.595 exemptions available for companies. 00:21:39.145 --> 00:21:43.625 Um, and so having a trusted advisor who's helping you navigate around these 00:21:43.634 --> 00:21:45.864 exclusions and submitting petitions. 00:21:46.290 --> 00:21:47.790 It's probably gonna be invaluable. 00:21:51.480 --> 00:21:52.080 Okay. 00:21:52.080 --> 00:21:55.080 Does anybody have any last words before we wrap up today? 00:21:55.080 --> 00:21:59.130 Any final pieces of advice that they can share with our, our audience? 00:22:00.850 --> 00:22:05.950 Uh, I would say if you haven't done like a, a customs review or, or a 00:22:05.950 --> 00:22:09.850 supply chain check to be certain that you're, you know, you're up to speed. 00:22:09.850 --> 00:22:13.510 If you haven't done, you know, something like that, maybe taking like 40 or 50 of 00:22:13.510 --> 00:22:18.360 your key, um, skews and, and be certain that you're handling things properly. 00:22:18.360 --> 00:22:19.140 This would be. 00:22:19.865 --> 00:22:21.105 a good time to do that. 00:22:21.115 --> 00:22:24.865 You not only may find that there's areas where you're underpaying your tariffs, but 00:22:24.865 --> 00:22:28.545 you may find that there's tariff saving opportunities, like you could use duty 00:22:28.545 --> 00:22:31.054 drawback or FTCs or something like that. 00:22:31.414 --> 00:22:38.195 Um, getting your import position on the right posture with customs is important, 00:22:38.225 --> 00:22:44.965 not only because customs is using all that ACE data to, um, See if there's issues and 00:22:44.965 --> 00:22:48.125 they're reaching out to people shooting out those form 28th to see if people 00:22:48.125 --> 00:22:52.384 have problems, but it's going to become even more important in a higher tariff 00:22:52.384 --> 00:22:58.745 environment because the potential loss to the company of overpaying your tariffs. 00:22:59.195 --> 00:23:03.025 um, will become greater and the potential risk exposure for underpaying 00:23:03.025 --> 00:23:06.105 your tariffs and and the potential penalties becomes much greater. 00:23:06.415 --> 00:23:11.225 So this this to me is a wake up call to say, you need to be doing um, a 00:23:11.225 --> 00:23:15.314 check on on both your supply chain integrity and to be certain that you're 00:23:15.314 --> 00:23:17.274 sourcing your materials ethically. 00:23:17.275 --> 00:23:19.414 So your goods don't get detained, but also to be. 00:23:19.780 --> 00:23:24.020 Doing some kind of, um, audit on your customs operations to be certain that 00:23:24.020 --> 00:23:28.010 your, your import posture is in good shape because in the end it's the 00:23:28.010 --> 00:23:32.329 importer of record who's responsible for any, um, shortfalls in compliance, 00:23:32.329 --> 00:23:35.340 not the customs broker, who's just basically acting as your agent. 00:23:37.990 --> 00:23:39.159 Yeah, I, I agree with all that. 00:23:39.160 --> 00:23:43.410 And I would definitely double down on the, the notion to, to map your suppliers. 00:23:43.760 --> 00:23:47.350 You know, as I mentioned earlier, it's, it's easy to focus on your tier ones, but. 00:23:47.860 --> 00:23:50.450 Uh, if there's tariffs on your tier two suppliers, tier three 00:23:50.450 --> 00:23:54.040 suppliers and components that go into some of your parts that you're 00:23:54.040 --> 00:23:57.149 manufacturing, you know, that cost is going to be passed along somewhere. 00:23:57.149 --> 00:23:57.439 So. 00:23:57.800 --> 00:24:00.140 Make sure that you're fully aware of all that and what that impact 00:24:00.190 --> 00:24:02.200 has on your financial supply chain. 00:24:04.670 --> 00:24:05.970 Okay, terrific. 00:24:06.629 --> 00:24:06.960 Okay. 00:24:06.960 --> 00:24:09.040 Sounds like good words to wrap up on. 00:24:09.090 --> 00:24:14.240 So with that, I would like to thank you Dan Swartz from Crow for participating. 00:24:14.250 --> 00:24:17.649 Thank you Greg Houssissian with Foley and Lardner and thank you 00:24:17.649 --> 00:24:21.440 Jeremy Tancredi with Met West Monroe. 00:24:22.129 --> 00:24:28.130 And thank you all and Thank you also to our audience and everybody. 00:24:28.160 --> 00:24:30.280 Have a great remainder of your day. 00:24:32.180 --> 00:24:33.099 Thank you, Jill. 00:24:33.100 --> 00:24:33.420 Thank you.