How to Mitigate Import Risks and Protect Your Bottom Line
Importing goods into the United States can be a complex endeavor, and many companies that import are not aware of the full scope of financial and reputational damage they could come up against in the process. Fortunately, there are strategies to mitigate the risks of importing into the United States and protect your bottom line. One of the most effective is a formal import risk assessment carried out with a subject matter expert such as a consultant. At Juno Customs Solutions, we fully comprehend the challenges faced by importers and are dedicated to assisting you in navigating the intricate regulatory landscape. With Juno’s guidance, effective import risk management, compliance awareness, and strategic planning, importing into the United States can be a highly profitable and rewarding business.
According to US Customs regulations, the importer of record bears the responsibility of exercising "reasonable care" when submitting their entry data to US Customs and Border Protection (CBP). Failing to exercise this due diligence can result in severe consequences, including monetary penalties, Customs holds and seizures, and even potential criminal charges.
In fact, since 2018, CBP has collected a staggering $106.6 million in trade-related penalties and liquidated damages. Furthermore, during the same period, CBP has amassed an impressive $339.8 million through importer audits alone.
If the monetary ramifications have not caught your attention, it is crucial to understand that neglecting to exercise reasonable care and control has extensive consequences that directly impact importers' ability to smoothly facilitate the movement of their import cargo and damage their reputation. For example, CBP Uyghur Forced Labor Prevention Act Enforcement Statistics reveal that they have utilized their enforcement authority to detain 4,269 shipments, valued at an astounding $1,395,000,000 (about $4 per person in the US), due to suspicions of violating the Uyghur Forced Labor Prevention Act. From a reputational and ethical perspective, no organization wants to be involved in forced labor. Well-known international nonprofits such as the International Labour Organization and Anti-Slavery International recognize forced labor as “modern slavery,” and consumer backlash against the use of forced labor is harsh, regardless of whether forced labor was used directly, indirectly, knowingly, or unknowingly by the importer.
For those who may dismiss these concerns by claiming, "I don't import goods made in China," it is essential to note that, according to the same CBP enforcement statistics, China accounts for only 11% of the reported monetary impact. CBP is also targeting goods made in many other countries as well as goods incorporating components made in China. This statistic serves as a bold reminder of the importance of continuously evaluating and assessing import risks throughout your supply chain. Identify your level of risk based on your business operations. Take our quiz now!
To effectively mitigate the potential impact on your import business, both in terms of finances and reputation, it is crucial to showcase a steadfast commitment to ethical business practices and maintain strict compliance with all relevant regulations, including those pertaining to forced labor. Gathering and analyzing data and resources is of utmost importance in evaluating the risks associated with importing goods. By conducting a thorough risk assessment, you can identify areas where additional training or resources may be required to enhance your import compliance program. This assessment will encompass various aspects such as documentation related to commodities, historical data, suppliers, manufacturers, logistics providers, transportation methods, and regulatory requirements, all aimed at minimizing potential risks in international trade.
Identifying import risks can be an intricate process due to the numerous factors at play. It demands substantial resources, unwavering commitment, transparency, extensive experience, and a deep understanding of current and evolving import regulations, as well as the ability to anticipate future developments. According to a recent survey conducted by KPMG in 2023, Chief Compliance Officers (CCOs) consider new regulatory requirements to be their most significant compliance challenge. Incorporating a trade specialist who actively stays abreast of pending regulatory changes and can interpret their potential impact on relevant industries is crucial for effective risk management in the import business.
In order to demonstrate a genuine dedication to ethical business practices and ensure compliance with applicable laws and regulations, importers must establish a robust compliance program that encompasses comprehensive guidelines and up-to-date regulatory policies and procedures. This program should extend to every aspect of their supply chain, ensuring that all activities are conducted in a controlled and responsible manner. A thorough risk assessment carried out by a subject matter expert should evaluate, assess, and prioritize all inherent, residual, and unknown risks to your organization. This assessment will then provide a strategic approach to effectively managing these risks.
Finally, executive commitment is essential when evaluating the risks associated with importing. It establishes the foundation for allocating resources, implementing policies and procedures, facilitating communication, and providing training, all of which are necessary for effectively managing any potential risks and driving continuous improvement. Additionally, employee development plans, meticulous documentation, record retention, classification determination, valuation determination, country of origin determination, and robust vendor onboarding and oversight programs are all examples of critical components of a successful importer's business practices. To ensure that your company's logistics risk management strategy is truly effective, efficient, and adaptable to evolving circumstances, it is imperative to establish a well-designed organizational structure. By adopting a bold and proactive approach, your company can confidently navigate the complexities of importing and safeguard its operations.
DO NOT LET YOUR COMPANY BE AT RISK!
Take our quiz now to determine if a risk assessment is the right choice for your business.
At Juno Customs Solutions, we are here to help you navigate the complexities of importing goods to ensure your success.