Life has changed in relation to the way people go shopping. While the days of going to the grocery store or department store for essential household items or gifts are not over, you cannot ignore the rise of e-commerce. In fact, according to the United Nations Conference on Trade and Development, overall online retail sales have grown from 16% to 19% since 2020. For 2021, this trend doesn’t seem to be slowing down. Furthermore, healthy competition between brick-and-mortar and e-commerce intensified as businesses reopened and staff returned to work. While that’s great news for the economy overall, there’s one catch involving the supply chain and logistics — trade tariffs. Fortunately, there is an answer to this conundrum, and that is the law known as Article 321.
In 2019, customs duties on goods imported from China were increased from 10% to 25%. This has left companies scrambling for solutions ranging from finding alternative sources for parts and products to raising prices and passing the cost on to the consumer. While the latter option would not be good for business, and sourcing still proves to be a challenge, owners and operators can opt for Section 321 classification for all of their imported goods. Consequently, to simplify this process, they also seek the services of delivery companies to ensure compliance with all regulations and to manage logistics planning.
As mentioned, the Section 321 classification helps reduce costs for business owners and their clients. Initially, the classification favored companies whose shipments do not exceed the minimum limit of USD 800. However, e-commerce and other retailers that import their inventory from China invoke this law more broadly by engaging Canadian freight forwarding companies to oversee various aspects of shipping and receiving. This practice allows for multiple shipments that are strategically placed to reach their destination without paying expensive tariffs. If these shipments do not all arrive at once, they will qualify for Section 321 classification.
Furthermore, CBP has included a test for completing paperwork electronically. Testing this platform has enabled logistics managers to obtain faster approval via entry type 86 in an automated commercial environment with reduced potential for delays due to real-time responses. Also, this new procedure shows a significant improvement in efficiency as opposed to obtaining approval through a manifesto. Moreover, it reduces costs for both the delivery company and its customers.
And how does this implementation of Section 321 and the efficient process affect prices for consumers? Fortunately, the avoidance of tariffs and other duties along with the improved services of Canadian shipping companies translates into better prices for customers who will not have to bear the burden of compensating for high taxes and high shipping costs. In addition, products are more likely to be delivered on time to consumers. Optimal service consequently leads to increased sales and healthy business growth which ultimately benefits both the business owner and the client.
Likewise, there are a few things business owners need to remember about Section 321. First, as noted, multiple shipments that qualify for a Section 321 designation cannot be claimed on the same day by the same person or organization. Therefore, business owners and logistics professionals should plan a strategy for the timing of deliveries. Second, certain items will not qualify for the Section 321 category. These include cleaning products and other substances that require inspection, products subject to anti-dumping duties, most tobacco and alcohol products, and items regulated by multiple agencies such as the FDA and USDA, among others. Regarding shipments from China and Section 301, if the logistician stays within Section 321 limits in terms of value and delivery time, there is no need to worry since Section 321 takes precedence over Section 301.
In short, Section 321 counters the challenges posed by the trade war with China and subsequent tariffs on imports. At the same time, if your items are manufactured in China and therefore need to be imported into the US, Section 321 will still apply to shipments provided they comply with the above regulations and are not worth more than $800. Another benefit includes lower costs for the business owner if he or she partners with a third party, such as a Canadian dropshipping company, to receive, store and then ship items to customers. Even with this type of collaboration, the person in charge of eCommerce or physical retail will still do better without the cost of tariffs and other duties. In addition, he or she would not have to spend valuable time or more money filling out the paperwork accurately because it would be handled by an expert familiar with Section 321 and logistics planning. So the trade war could continue for the foreseeable future, but luckily, consumers won’t have to pay the price for it.
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Read more Author: Joseph Williams Writer
Categories: How to
Source: HIS Education