Written by Jamie Rodgers, CEO of J.M. Rodgers Co., Inc.
In just a few short weeks, new tariffs for all products out of China will be in place, likely leading Customs receipts for duties to new record heights. For nearly a decade prior to the 2018 imposition of new tariffs, the amount of duties that were collected by Treasury held steady in the range between $30-$40 billion annually.
Recently, according to the Wall Street Journal, the US Treasury has netted more than $63 billion in tariffs. In 2019, revenues that were collected from tariffs are up year-over-year more than 75% compared to the same time in 2019.
These increases are almost entirely driven by the China tariffs. The increases starting in September stand to bring in tens of billions more. These costs are borne by importers, retailers, and eventually consumers in the form of increased product prices. Because of this, any firm that can find ways to reduce the impact these duties have on their prices will be at an advantage.
Drawback is a major way to do that and is increasingly an option that companies are turning to. To give a sense of the increases that both increased duties and the new drawback laws have had on drawback, below are how much in refunds have been paid out in refunds over the last few years:
- 2016: $948 million
- 2017: $891 million
- 2018: $1.3 billion
- 2019: $1.125 billion (YTD through July)
We anticipate this number to keep climbing, and fast. There will be whole sectors of the economy like high tech and medical devices that were almost entirely duty-free prior to last year that will seek refunds through the drawback program. Given the volume and diversity of products that China was exporting to the USA, there is almost no industry that will go untouched by these next round of tariffs.
If you’d like to discuss the impacts the tariffs have had on your business and find out if duty drawback would be a good option for you, please contact our VP of Sales Andrew Galloway at firstname.lastname@example.org or 973-726-5340.