International Trade Strategies for the Trump ERA

International Trade
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“Uncertainty is the number one thing that keeps business people and lawyers up at night,” said Matthew Nis Leerberg, an attorney with Fox Rothschild LLP who recently moderated a CLE for the Research Triangle Area Chapter of the Association of Corporate Counsel. “The constantly shifting rules, regulations and policies governing the import and export of goods, services and intellectual property in the last couple of years are a major headache for in-house compliance lawyers. To help alleviate that pain, we have assembled a panel of our firm’s top import/export lawyers to present on ‘Trade, Tariff s and Sanctions Under the Trump Administration’ for the benefit of corporate counsel in the Triangle.”

The panelists included SAS Senior Legal Counsel Cassy Creekman and Fox Rothschild attorneys Lizbeth Levinson, Joseph Rohe and Nevena Simidjiyska, who spoke on strategy and tactics for international trade under the Trump administration. Here is a sampling of the insights offered by the panelists:

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JOSEPH ROHE, FOX ROTHSCHILD:

Tariff engineering is something we can do for clients who import or manufacture products in the United States. In doing so, we use the tariff schedule and regulations to mitigate the amount of duty exposure. For example, if we make a minor change to a product that doesn’t impact usability or contribute significantly to its cost, we can potentially shift it into a different product classification with a lower rate. Columbia sportswear did this when it added a veneer of textile material to the rubber soles of its shoes. Doing this allowed the company to reclassify the product and significantly trim the duty exposure.

LIZBETH LEVINSON, FOX ROTHSCHILD:

Because Trump is continually making such announcements as “We’re going to be putting duties into effect in the next 60 days or the next 120 days,” there has been a constant rush to beat the duties. Our trade deficit has ballooned and that is partly because everyone is trying to beat the deadlines.

NEVENA SIMIDJIYSKA, FOX ROTHSCHILD:

Never before have corporate and real estate transactions been so closely tied to U.S. policy. M&A, real estate investments and private equity deals that involve foreign parties may now be required to get approval from a U.S. government agency if they fall within certain industries. This is a very interesting development. More deals will be subject to this new level of scrutiny this year.

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LIZBETH LEVINSON, FOX ROTHSCHILD:

Section 301 of the Trade Act is the principal statutory authority under which the United States may impose trade sanctions on foreign countries that either violate trade agreements or engage in other unfair trade practices. The U.S. has established three lists of goods. Tariff s on two of the lists, which are relatively targeted and name specific products, were set at 25 percent.

The third list, which is much broader, affects anyone who imports a product on that list. The current duty for products on this third list is 10 percent, but it will rise to 25 percent within 60 days if there is no agreement with China.

My advice to clients is to bring in as many products as possible, as soon as possible, in advance of the increase to 25 percent. I have also talked to many clients about asking for an exclusion from the tariff s, if and when a process for requesting an exclusion is created. I do expect that there will be such a process in the future.

CASSY CREEKMAN, SAS INSTITUTE:

In recent years, the U.S. government has increasingly imposed sanctions against companies and individuals with global reach, resulting in significantly more sanctions impact to the average U.S. company’s supply chains, customers or other business operations. This trend appears to be continuing, and there are signs – such as the recent sanctioning of a Chinese semiconductor accused of intellectual property theft – that the administration may see sanctions as a tool to protect economic security or technological superiority. It will be interesting to see how the government approaches the tension between using sanctions to protect U.S. interests, without excessively burdening U.S. companies.

JOSEPH ROHE, FOX ROTHSCHILD:

The biggest issue I am watching in 2019 is the U.S.- China relationship. It’s so impactful and there are so many trickle-down issues that come out of it, including IP, tariffs, retaliatory tariffs and the impact on our clients and U.S. businesses.

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