Renegotiating Selling Price in Response to Tariff Increases – How you can Minimize the Impact of Additional Tariffs
Due to recent increases in tariffs a number of foreign suppliers have been willing to renegotiate their selling price to at least partially compensate for the additional cost of the goods they manufacture. A reduction of the cost of goods translates into a reduction of duty you pay.
Depending on your relationship with your supplier, and the type and volume of goods you purchase from that supplier, it may be beneficial for you to request a lower purchase price.
With the next round of tariffs effective December 15 – and if your cargo has not sailed – you have a limited amount of time before cargo arrives to the U.S. to renegotiate your prices with your vendors/suppliers prior to that sailing.
If your cargo is currently on the water, you will have to pay the additional duties unless you can re-negotiate your prices with those suppliers. In order to be able to declare the lower cost of the goods after cargo sails, the following three criteria must be met:
- Negotiate the price / agree on the price adjustment prior to importation into the U.S. and
- Be able to present documentary evidence of that negotiation and
- The price adjustment is unconditional – however if it is conditional, those conditions must be met prior to importation.
In either case, if you re-negotiate prices with your supplier, remember the true and correct costs must be on the invoice, and the invoice must be presented at the time of entry. Therefore, the invoice must be in your Broker’s hands BEFORE the entry is submitted to CBP. It must also contain all the required information any commercial invoice for Customs entry purposes contains.
If you have any questions concerning this process, or any issue concerning CBP, please feel free to contact your regular C J representative or Mrs. Samya (Sam) Murray, C J’s Compliance Officer