Article by: Rick Walker, Vice President, LCB, CCS

Importing goods can be a complex process, and it’s easy for importers to make various mistakes along the way. We get asked this question often, so we compiled a list of common mistakes for your consideration, not in any particular order:

1. Incorrect HTS Classification: Classification can be very confusing to say the least. There are lots of rules and exceptions to rules to consider along the way. It’s not as simple as locating your item in the HS index. You must also look at chapter notes, section notes, etc. Importers may unintentionally classify their goods under the wrong Harmonized System (HS) code, which determines the applicable customs duties and regulations. It’s important to accurately classify goods to avoid potential penalties or delays in customs clearance, and there are tools and publications to help you. Maybe the classification of your product has been previously ruled upon by Customs. We can help you understand the classification process.
2. Inaccurate Valuation: Mis-declaring the value of imported goods can lead to customs valuation discrepancies. Understating the value may be seen as an attempt to evade duties, while overvaluing can result in higher customs duties. Importers should ensure they understand the appropriate valuation methods and accurately declare the value of their goods. Remember, it’s not always just what you paid for the goods that determines the value declared to Customs. Other factors might come in to play that effect the declared value.
3. Inadequate Documentation: Importers must provide accurate and complete documentation, including commercial invoices with good product descriptions, packing lists, bills of lading, and certificates of origin when required. Failing to provide the required documentation or providing incomplete or incorrect information can lead to customs delays or even seizure of goods.
4. Non-compliance with Import Regulations: Importers need to stay informed about import regulations, including product safety, country of origin labeling, and other agency requirements, such as FDA, EPA, etc. Failing to comply with these regulations can result in goods being denied entry or held by customs, leading to financial losses and delays.
5. Lack of Due Diligence: Importers should conduct proper due diligence with their suppliers, ensuring they are reliable and meet all legal and quality standards. This is of particular importance as it relates to goods possibly made with forced labor. This is a major focus area for Customs, who expects importers to validate and “map” their supply chains.
6. Inadequate Risk Assessment: Importers should assess and mitigate potential risks associated with their supply chain, including transportation, customs compliance, and regulatory requirements. Failing to identify and address potential risks can lead to delays, unexpected costs, or non-compliance issues.
7. Ignoring Free Trade Agreements: Free Trade Agreements (FTAs) can offer significant cost savings by reducing or eliminating customs duties. Importers should take advantage of applicable FTAs and ensure they meet all eligibility criteria to benefit from preferential tariff treatment.
8. Failing to Establish Written Procedures and Policies: Customs expects importers to document their procedures and practices. Often, one of the very first documents Customs asks to review in a focused assessment (audit) is the compliance manual. Every importer should have one. It’s critical to establish internal controls over your import transactions. Documenting these controls indicates to CBP that your company takes your compliance responsibilities seriously. A well-written compliance manual provides a blueprint to help your staff to understand each other’s roles and eliminate gaps in compliance.
9. Failing to Understand and Identify Antidumping/Countervailing Orders: This is an area of increased focus by CBP. Serious financial implications can be a result of not understanding these additional duties and declaring them at the time of entry. We know the issues and will help you understand them.
10. Not Conducting Post Entry Audits: Your company could be “at risk” if you don’t perform regular post entry audits. What are your areas of risk – classification, value, trade preference programs? Performing regular post entry audits is an indication to Customs that you are sincere in your efforts to operate your business in a compliance focused manner. Let us help you get started by establishing goals and objectives for a successful program and help you utilize “best practices” for your business.

So, these are just 10 of the common mistakes importers make. As you can imagine, there are others. Please contact your V. Alexander account team, or you may also contact our Trade Compliance team at tradeinsights@valexander.com with any questions.