Tariffs and Their Impact on Global Trade

FAQ Summary

Get a summary of tariff updates and impacts here.

What are tariffs and how do they work?

Tariffs are taxes levied by a government on imported goods, increasing their cost upon entry. These taxes serve various purposes, such as protecting domestic industries, generating government revenue, and balancing trade relations. When a tariff is applied, the importer pays the additional duty at customs before the goods are released. These costs often pass through the supply chain, often leading to higher prices for businesses and consumers.

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Who pays the tariffs?

While tariffs are imposed on foreign goods, the financial burden typically falls on domestic consumers. Importers pay tariffs to US Customs and Border Protection upon the goods' entry. These additional costs are typically passed along the supply chain, increasing prices for businesses and consumers.

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How will the new U.S. tariffs for China and Hong Kong SAR be applied?

Tariffs are applied to all goods originating from China and Hong Kong SAR per the Federal Register Notice.

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What are Rules of Origin and how are Rules of Origin applied?

Rules of Origin are the criteria used to determine a product's country of origin for trade and customs purposes. They are essential in applying tariffs, trade agreements and import restrictions. In this case, the Rules of Origin will ensure that all products from targeted countries are subject to tariffs, regardless of their routing to the US.

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With the new U.S. tariffs, can I still claim de minimis (below $800 USD per day)?

Yes, de minimis is currently allowed for US imports as a result of an amendment to the February 1, 2025 US Executive Order that suspended de minimus treatment of goods originating in China, including Hong Kong SAR.

Two additional US Executive Order amendments were published on March 2, 2024 also confirming de minimis remains in effect for goods originating in Canada and Mexico.

These amendments all note that the suspension of de minimis may reinstituted pending notification by the Secretary of Commerce that adequate systems are in place to fully and expeditiously process and collect tariff revenue.

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Are there exceptions to the 20% additional duties for China and Hong Kong SAR origin goods?

Some exemptions may exist for specific commodities as noted in the Cargo Systems Messaging Service (CSMS) bulletin # 63988468. Customers should seek guidance from a qualified professional to confirm if these apply to their products.

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Can I claim duty drawback on new U.S. tariffs for China, Mexico or Canada?

No. The additional duties imposed by the Executive Order are not eligible for duty drawback.

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How will the new U.S. tariffs impact my business and supply chain?

US trade policy changes will likely increase landed costs due to tariffs and require adjustments to import declarations. Businesses may need to adjust pricing or explore alternative supply chains to manage costs effectively.

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How are shipments subject to formal entry handled vs. informal entry?

Please be informed that non-de minimis shipments will be subjected to formal entry or informal entry depending on various circumstances.

For formal entry, Merchandise Processing Fee (MPF) and duties and taxes as imposed by the customs, as well as UPS customs brokerage fees will be billed to shipper or consignee depending on the shipment’s bill term.

For informal entry, UPS customs brokerage fees and applicable duties and taxes will be billed to shipper or consignee depending on the shipment’s bill term.

You may also visit here to identify the harmonized tariff code for your goods. If you are shipping a single commodity that is valued over $2,500 you will be required to fill out an Electronic Export Information (EEI) form. EEIs are filed electronically with ACE, either by you or UPS on your behalf.

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As a shipper, how should I prepare my clearance documents to be compliant with the new regulations?

All shippers are urged to ensure that all information on the commercial invoice is accurate and detailed to facilitate a more efficient customs clearance process and avoid potential delays.

Please click here to learn more about the respective entry type based on shipment value, requirements and applicable fees for goods originating from China or Hong Kong SAR origins.

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How can UPS help?

At UPS, we work regularly with our customers to assess new risks and opportunities in their supply chains based on the evolving regulatory landscape. Our priority is to minimize disruption to your business operations and provide the expertise you need to manage these changes confidently. We have various logistics solutions to minimize disruptions and ensure compliance with evolving regulations.

Please click here to learn more.

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What are the most common UPS Brokerage surcharges that I should be aware of?

Disbursement fee, Warehouse storage fee and Additional tariff lines surcharge are the most commonly billed brokerage surcharges. For these charges, the charge applicable in the destination country will be assessed. A Duty/Tax forwarding surcharge will be charged when the duties and/or taxes are billed outside the destination country. Please see the surcharge descriptions below and the corresponding fees referenced below are for shipments destined to the U.S.

Disbursement fee: A fee of the amount paid or processed by UPS on behalf of the customer will be charged. Shipments to U.S. destinations will incur a fee of 2% of duty/tax (minimum $14.00).

Warehouse storage fee: This will be assessed when shipments remain in the UPS warehouse in the U.S. after the two free days, regardless of the customs broker. A minimum of US $25 + US $0.05 per lb. per day will apply after two days. The rate of $0.10 per lb. per day will apply after 7 days.

Additional tariff lines surcharge: A fee of $3/line applies when more than three entry lines are entered for shipments destined to U.S. destinations. UPS is not responsible for consolidating entry lines for customs clearance, including lines containing the same Harmonized Tariff Code and Country of Origin.

Duty/Tax forwarding surcharge: When the “Duty/Tax Forwarding Surcharge” billing option is selected, a surcharge of MYR80.00 will be billed to the shipper.

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Will duties and taxes be incurred if I shipped before a regulatory update is made, but the shipment arrives after?

In light of potential changes announced by U.S. Customs and Border Protection (CBP), UPS may require additional time to ensure compliance with regulatory requirements. As a result, please note that some shipments may experience delays, and any new duties or taxes incurred during this period will fall under the responsibility of the customer. While UPS strives to minimise any impact on shipments, we are unable to assume liability for any duties or taxes that may arise, including those due to shipment holdovers. The UPS Service Guarantee does not apply where delays result from these regulatory requirements.

As per standard practice, if duties or taxes cannot be collected from the receiver, the charges may be billed to the shipper.

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