The Impact of Reciprocal Tariffs on Foreign-Trade Zones

As reciprocal tariffs are set to take effect on or around April 2, 2025, businesses relying on Foreign-Trade Zones (FTZs) must prepare for potential disruptions and compliance challenges. The application of these tariffs, targeted at trading partners imposing substantial trade barriers to U.S. goods, will have far-reaching implications for businesses involved in manufacturing, distribution, and logistics.

What Are Reciprocal Tariffs?

Reciprocal tariffs are a trade remedy mechanism intended to balance the playing field by imposing tariffs on imported goods from countries that have levied significant trade barriers against U.S. goods. Starting on April 2, 2025, certain trading partners will face blanket tariff rates on all imported goods originating from their countries, potentially impacting the cost structures and operations of U.S.-based businesses, including those operating within FTZs.

The Uncertainty Surrounding FTZ Admission Requirements

One of the primary questions surrounding the introduction of reciprocal tariffs is whether merchandise originating from countries subject to the new tariffs will be required to enter FTZs under “Privileged Foreign” (PF) status. This status restricts certain merchandise, which could result in changes to how businesses manage inventory and imported goods.

The Potential Effects on Manufacturers

If FTZ merchandise from reciprocal tariff countries is required to be admitted under PF status, the effective date of the tariffs will lock in the tariff rates at the time of admission. For manufacturers who rely on parts, components, or raw materials from these countries, the elimination of benefits like the inverted Most-Favored-Nation (MFN) duty rate could result in increased costs. This means that manufacturers might face higher duties when withdrawing goods from the FTZ for U.S. consumption, including any additional trade remedy tariffs in place.

On the other hand, if PF status admission is not required, manufacturers could face two distinct risks:

Risk of Overpayment: Goods made from parts or components that don’t enter under PF status might end up being subject to reciprocal tariffs on the total value of the finished goods when they are withdrawn.
Risk of Inconsistent Application: If the PF status rule is not applied, manufacturers may inadvertently avoid tariffs on certain materials, creating compliance risks and complications when reporting and calculating duties.

At this stage, it’s unclear which route will be taken, and businesses must stay alert to official guidance as new policies unfold. This uncertainty underscores the need for proactive monitoring of developments and a readiness to adapt operational processes quickly.

Managing On-Hand FTZ Inventory

Another critical area of concern for FTZ operators and businesses utilizing FTZ services is how on-hand inventory will be affected by the reciprocal tariffs. Specifically, businesses will need to determine whether goods admitted before the tariff’s effective date can still avoid the new tariff rates when they are withdrawn from the FTZ after April 2, 2025.

Just as with other trade remedy actions (e.g., Section 301 or Section 232 tariffs), past inventory might be grandfathered in under the previous tariff structures. However, there is still a possibility that the new tariffs will apply retroactively, similar to the treatment of steel under Section 232 tariffs. This potential change could require businesses to reassess their inventory strategy and consider actions like filing Zone Status Change admissions or paying duties on inventory before the tariff implementation date.

The Role of FTZ Operators

FTZ operators, especially third-party logistics (3PL) providers, will have a significant role to play in helping businesses navigate these changes. While the ultimate responsibility for tariff compliance typically rests with the business using the FTZ, operators should be ready to assist with tasks such as filing customs entries, helping with inventory adjustments, and ensuring that the correct tariff classifications are applied.

3PL providers may also need to review their contracts with FTZ customers to clarify roles and responsibilities when it comes to compliance with new tariffs. Ensuring that customers are aware of their obligations and deadlines will be crucial to maintaining smooth operations in the face of regulatory shifts.

Increased CBP/ICE Enforcement and Compliance

In addition to the changes related to tariffs, businesses should also be aware of increased enforcement activities by U.S. Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE). Recent inspections at bonded warehouses have led to heightened scrutiny, and FTZ operators are being reminded of their responsibilities to ensure employment eligibility verification for all personnel working within CBP-supervised facilities. Ensuring compliance with these regulations will be critical to avoiding potential penalties.

Preparing for the Future

In light of the uncertainty surrounding the implementation of reciprocal tariffs, FTZ operators and businesses should:

Monitor Regulatory Changes: Stay informed on updates regarding the application of reciprocal tariffs to understand whether PF status will be required for merchandise from impacted countries.
Review FTZ Inventory: Consider filing necessary Zone Status Change admissions to align with potential new tariff classifications before the effective date.
Prepare for Compliance: Ensure that all required customs transactions are in place to mitigate potential disruptions to business operations.
Collaborate with FTZ Operators: Engage FTZ operators early to clarify roles and responsibilities under the new tariff structures.

By taking these proactive steps, businesses can minimize the impact of reciprocal tariffs and continue to operate efficiently within FTZs, maintaining compliance and avoiding costly errors. Have questions? Reach out to your Future Forwarding representative for further guidance.

Heathrow Airport Closure Impact on Freight Movements

21 March 2025

Note Heathrow Airport is closed today, Friday, March 21, 2025, due to a fire at an electrical substation in Hayes, West London, which has caused a major power outage. Emergency crews are working to resolve the situation, but there is no confirmed timeline for power restoration. This disruption is significantly impacting air freight movements, leading to delays for both imports and exports.

Our team is actively reviewing all affected shipments and exploring alternative solutions where possible. If your consignments are impacted, we will reach out to you directly with updates and contingency plans.

Please do not hesitate to contact us if you have any urgent concerns. We appreciate your patience and will continue to provide updates as the situation develops. +44 161 436 8181

Notice: Tariff Surcharge

As you may know, recently announced tariffs on various goods imported into the United States from China and Canada, and all imports of iron and steel, have now gone into effect, and more rounds of tariffs are forthcoming this week and possibly again in April. US Customs & Border Protection (CBP) manages these additional tariffs by assigning an additional HTS for each 301, 232 or IEEPA Tariff, plus an additional HTS for any applicable exclusions or quotas. Some items often require up to 5 unique HTS.

Effective immediately, the following surcharge will be effective for all imports to the United States cleared by Future Forwarding Company.

Tariff Surcharge: $3.00 per HTS after 5 HTS free per entry.

Note that this surcharge is in addition to existing entry fees, ISF, and any other handling fees.

As always, we will continue to evaluate our position as this dynamic situation continues to evolve and keep you informed of any changes. We are also committed to continuing to explore strategies to minimize the impact for your organization.

We thank you for choosing to do business with Future Forwarding Company and we value your partnership and continued support.

Future Forwarding Upgrades with CargoWise NEO

In February 2025 Future Forwarding successfully converted our View360 business intelligence portal from a third-party publisher to a self-published site using CargoWise NEO.

The transition has had a beneficial effect for our customers, allowing them to focus on their business rather than conform to shipping industry norms. Through our self-published portal, Future Forwarding is able to provide customers with real-time information based on the customer’s specific drivers. The days of scanning through e-mails for container numbers are over.

Track by your PO, done.

Track by supplier, easy.

Get a look at traffic on a specific trade lane, send it.

Get a look at traffic on a specific trade lane, arriving after duties are in force.

Access shipping documents from a historical file, it is at your fingertips.

The latest improvements in our View360 portal demonstrate Future Forwarding’s commitment to stay at the forefront of technological innovation in the logistics industry. However you want to search, start with a call to learn how Future Forwarding can help you improve your supply chain performance.

Implementation of Section 232 Tariffs on Steel and Aluminum Derivative Articles

As of March 11, 2025, the U.S. government has enforced Section 232 tariffs on certain derivative articles of steel and aluminum, expanding the scope of duties beyond primary metal imports. These measures aim to protect national security interests by mitigating circumvention risks associated with modified steel and aluminum products.

Understanding Derivative Articles and Their Impact

Derivative articles refer to goods that incorporate steel or aluminum as a primary component and have undergone limited processing or modification to evade direct tariff application. Common examples include:

Steel nails, tacks, and fasteners
Aluminum stranded wire, cables, and conductors
Certain types of tubing, piping, and mechanical components

The extension of tariffs to these products ensures that manufacturers and importers cannot sidestep Section 232 duties by making minor modifications to raw materials.

Compliance Challenges for Importers

The expansion of Section 232 tariffs presents challenges for importers, particularly in properly declaring derivative value for customs entry. Many derivative articles involve multi-component goods, where steel and aluminum may account for only a portion of the overall product value.

Customs valuation for these products must align with reasonable allocation of dutiable value while ensuring compliance with CBP regulations. Failure to declare accurate values may result in penalties, audits, or import delays.

Reconciliation Entry as a Temporary Reporting Mechanism

To address the complexity of derivative value reporting, importers may consider using reconciliation entry as a temporary solution. The CBP Reconciliation Program allows importers to file estimated values at the time of entry and later submit a final value adjustment. This approach provides:

Flexibility in determining the steel/aluminum proportion of a derivative article
Compliance assurance while adjusting declared values post-import
Reduced risk of penalties due to inadvertent undervaluation

Steps for Importers to Implement Reconciliation

Flag Entries for Reconciliation – When filing an entry, importers should flag it for value reconciliation in ACE (Automated Commercial Environment).
Estimate Dutiable Value – Report a preliminary steel/aluminum content value, subject to later verification.
Monitor Adjustments – Gather supporting data post-import to determine accurate derivative value.
File the Reconciliation Entry – Submit the final reconciled value within the allowed CBP timeframe to adjust Section 232 tariff obligations accordingly.

Looking Ahead

With the Section 232 tariff enforcement on derivative articles now in effect, importers should ensure proper classification of derivative articles, assess their supply chains, and utilize reconciliation entry as a strategic compliance tool.

Future regulatory developments may further refine the valuation process, but in the interim, proactive planning will help mitigate risk and ensure uninterrupted trade operations.

For more guidance on Section 232 tariff compliance and reconciliation strategies, reach out to Future Forwarding today.

Shipping Alliances Reshape Trade Routes: Delays, Blank Sailings, and Vessel Diversions Expected to Continue

March 2025

The global shipping industry is undergoing a significant transformation as major alliances restructure their operations, leading to widespread disruptions on key trade routes. This restructuring is causing delays, blank sailings, and vessel diversions, leaving both shippers and consumers grappling with uncertainty.

The most notable shift has been the dissolution of the long-standing 2M alliance between MSC Mediterranean Shipping Company (MSC) and A.P. Moller-Maersk, which is set to end in 2025. In its place, new alliances such as the Gemini Cooperation, formed between Maersk and Hapag-Lloyd, are taking center stage. While these changes are intended to streamline operations, they have resulted in a slew of scheduling adjustments, causing confusion and congestion.

Scheduling Chaos and Port Congestion

As shipping alliances realign their schedules, shippers have reported discrepancies in arrival times, leading to confusion across the industry. Some carriers, even within the same alliance, are listing different transit times for the same vessel, contributing to widespread scheduling confusion. Ports, especially in Asia, are experiencing severe congestion, with ships waiting up to three days for a berth, exacerbating the backlog of containers.

The result? Delayed shipments, longer waiting times at major ports like Shanghai, and disrupted schedules that have left many vessels stranded at terminals.

Blank Sailings and Diversions

Another side effect of the alliance shifts has been the rise in blank sailings and diversions. Blank sailings, where a scheduled voyage is canceled due to insufficient cargo or other operational reasons, have increased across the Asia-Europe route, further straining supply chains.

The geopolitical instability in the Red Sea has also prompted several shipping companies to divert vessels around the Cape of Good Hope instead of passing through the Suez Canal, resulting in longer transit times and increased freight rates. Attacks in the region, particularly by Iran-backed Houthi rebels, have heightened concerns over vessel safety, prompting carriers to adopt this detour as a precautionary measure.

Declining Service Reliability

As a result of these scheduling changes, the shipping industry has seen a significant decline in service reliability. On-time performance, which was once a benchmark for efficiency, has plummeted for many carriers. Some are reporting on-time rates as low as 55%, a far cry from the 90% reliability target that many had been able to achieve in the past.

To combat this, the Gemini Cooperation aims to improve on-time reliability by reducing port calls and utilizing larger vessels on key trade routes. The new alliance is targeting a return to 90% on-time performance by optimizing operations and adapting to current market conditions.

The Road Ahead

With these ongoing disruptions, stakeholders across the shipping industry are bracing for continued challenges. While the restructuring of alliances is seen as a necessary step to adapt to evolving market demands, businesses and consumers must prepare for fluctuating schedules and unpredictable freight rates.

As shipping companies continue to adapt to these changes, flexibility and vigilance will be key for those relying on global trade networks. With ongoing geopolitical uncertainties and shifting market strategies, the next few months will likely be marked by further disruptions, and companies must remain agile to navigate the changing landscape.

USTR Seeks Public Input on Trade Measures Against China’s Maritime Dominance

The Office of the United States Trade Representative (USTR) is requesting public comments on proposed trade actions in response to China’s growing control over the global maritime, logistics, and shipbuilding industries. Following a Section 301 investigation, USTR determined that China’s policies have disadvantaged U.S. businesses and workers, prompting potential countermeasures.

Background of the Investigation

The investigation began in April 2024 after several U.S. labor unions filed a petition citing China’s long-standing efforts to dominate the shipbuilding and logistics sectors. Over the past three decades, China has significantly expanded its control, increasing its global shipbuilding market share from under 5% in 1999 to over 50% in 2023. Additionally, China now produces 95% of the world’s shipping containers and 86% of intermodal chassis, strengthening its influence over global trade logistics.

According to the USTR’s findings, China’s industrial policies have created unfair competitive conditions by displacing foreign businesses, limiting commercial opportunities, and posing economic security risks. As a result, USTR has determined that action is necessary under Section 301 of the Trade Act of 1974.

Proposed Trade Actions

To address China’s competitive advantage, the USTR is considering several measures:

Service Fees on Chinese Shipping Operators – A fee of up to $1,000,000 per vessel entry into U.S. ports for operators with Chinese-built vessels.
Tariffs on Operators Using Chinese-Built Ships – Additional fees for companies that operate or have pending orders for Chinese-manufactured vessels.
Incentives for U.S.-Built Vessels – A system of fee reimbursements for operators using U.S.-manufactured ships.
Shipping Restrictions on U.S. Exports – A phased-in requirement that a portion of U.S. goods be transported on U.S.-flagged and U.S.-built vessels.
Security Measures Against Chinese Logistics Platforms – Possible restrictions on the use of LOGINK, a Chinese-developed logistics data platform, due to security concerns.

Public Comment Period and Hearing Details

The USTR is encouraging stakeholders to provide feedback on these proposed actions. The key deadlines are as follows:

February 21, 2025 – Public comment period opens.
March 10, 2025 – Deadline to request participation in the public hearing.
March 24, 2025 – Deadline to submit written comments.
March 24, 2025 – Public hearing at the U.S. International Trade Commission in Washington, D.C.
Seven days after the hearing – Deadline for post-hearing rebuttal comments.

Comments and requests to participate in the hearing can be submitted via USTR’s online portal at https://comments.ustr.gov/s/ using docket numbers USTR–2025–0002 (for written comments) and USTR–2025–0003(for hearing requests).

Adapting to the New US Aluminum and Steel Tariffs

The logistics and trade sectors are in constant flux, and the latest escalation in tariffs exemplifies this dynamic landscape. President Trump’s recent decision to elevate aluminum and steel tariffs from 10% to 25% on all imports, without exceptions for any country, necessitates that businesses remain vigilant and adaptable. This significant policy change—removing exemptions previously granted to key partners such as Canada, Mexico, and the European Union—requires strategic planning from importers and supply chain managers.

Understanding the New Tariffs

The hike to a 25% tariff on aluminum imports represents a substantial shift in U.S. trade policy. Earlier, certain nations had secured exemptions or quota-based allowances, but these have now been rescinded. Additionally, new requirements concerning the processing origins of North American aluminum aim to prevent tariff circumvention by countries like China and Russia.

The U.S. government justifies these measures under Section 232 of the Trade Expansion Act, citing national security concerns and the need to bolster domestic aluminum production. However, the repercussions for the global supply chain are expected to be considerable.

Implications for Importers and Supply Chains

With the removal of exclusions, importers who previously benefited from duty-free aluminum must now account for increased costs and heightened compliance requirements. Manufacturers in industries such as automotive, aerospace, and construction, which rely heavily on aluminum, may face cost fluctuations as suppliers adjust their pricing structures.

Beyond financial impacts, logistics professionals should anticipate potential delays, challenges in customs processing, and the need to reassess sourcing strategies. For instance, foreign producers that had shifted operations to Mexico and Canada in recent years may now find their supply chains disrupted by the new restrictions, compelling importers to seek alternative solutions.

Strategies for Businesses

Evaluate Supplier Relationships: If the new tariffs affect your aluminum sourcing, it’s crucial to review existing contracts and explore alternative suppliers.
Incorporate Tariff Costs: Collaborate with financial and logistics partners to integrate the new tariff rates into your budgeting and pricing models.
Stay Abreast of Compliance Requirements: The updated processing origin requirements for North American aluminum will lead to more stringent customs inspections; ensuring thorough and accurate documentation is essential.
Partner with Experienced Logistics Providers: In times of regulatory change, having a knowledgeable freight forwarder is vital for navigating customs procedures, managing duties, and maintaining efficient cargo movement.

Future Forwarding: Guiding Your Cargo Through Change

At Future Forwarding, we recognize that change brings both challenges and opportunities. Our commitment to understanding each client’s unique needs allows us to offer tailored solutions that keep your supply chain resilient amidst evolving regulations.

Our comprehensive services include freight forwarding, customs brokerage, warehousing, and compliance consulting, all designed to ensure your cargo moves seamlessly, regardless of policy shifts.

If you have questions about how the new aluminum tariffs may affect your supply chain, contact Future Forwarding today. We’re here to help you plan proactively, mitigate disruptions, and keep your operations running smoothly.

Know Your Cargo: Strengthening Compliance in Maritime and Transportation Logistics

The complexities of global supply chains present both opportunities and risks for entities involved in the movement of goods. The Quint-Seal Compliance Note—issued by the Departments of Commerce, Treasury, Justice, State, and Homeland Security—emphasizes the importance of powerful compliance measures to prevent sanctions and export control violations. Companies operating within maritime and broader transportation industries must proactively mitigate the risk of facilitating illicit activities.

Understanding Sanctions and Compliance Risks

The global trade network involves multiple stakeholders, including vessel owners, exporters, brokers, freight forwarders, insurers, and financial institutions. However, this intricate ecosystem is vulnerable to exploitation by malign actors seeking to bypass U.S. sanctions. These actors employ various deceptive practices, including:

Manipulating vessel location and identification data (e.g., disabling or falsifying Automatic Identification System (AIS) signals).
Falsifying cargo documentation to obscure a shipment’s true origin or destination.
Engaging in ship-to-ship transfers to disguise illicit cargo movement.
Using abnormal shipping routes and frequent vessel re-registrations (“flag hopping”) to evade scrutiny.
Operating through opaque ownership structures to conceal beneficial ownership.

Failure to detect and prevent these activities can expose companies to severe legal, financial, and reputational consequences.

Best Practices for Strengthening Compliance

To ensure adherence to U.S. export controls and sanctions regulations, industry participants should implement a risk-based compliance framework, including:

Developing Comprehensive Compliance Programs
- Establish written policies and procedures aligned with U.S. government guidance.
- Communicate compliance expectations to all business partners.
Enhancing Location and Shipment Monitoring
- Conduct due diligence on vessel movement histories to detect irregularities.
- Investigate gaps in AIS data and implement contractual clauses prohibiting illicit activities.
Strengthening Due Diligence on Counterparties
- Conduct Know Your Customer (KYC) screenings and vet counterparties using government lists like the U.S. Consolidated Screening List.
- Verify the accuracy of bills of lading, licenses, and other shipping documents.
Improving Supply Chain Oversight
- Monitor cargo flow to prevent unauthorized diversions.
- Use open-source intelligence and commercial satellite imagery to verify reported shipment routes.
Industry-Wide Information Sharing
- Participate in industry forums to exchange risk intelligence and compliance best practices.
- Report suspicious activities to relevant U.S. authorities.

Enforcement Actions and Legal Consequences

The Department of Justice (DOJ) and other enforcement agencies have aggressively pursued civil and criminal actions against companies and individuals attempting to evade U.S. sanctions and export controls. Recent cases have targeted networks tied to sanctioned entities in Iran, Russia, North Korea, and China, demonstrating that non-compliance can result in asset seizures, financial penalties, and criminal prosecution.

By institutionalizing compliance measures and actively monitoring cargo movements, companies can safeguard their operations, ensure regulatory compliance, and contribute to a more secure global trade environment.

Want to know more? Reach out to us today.

Category: News

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