Global trade is transforming businesses large and small. Today, more than 400,000 U.S. companies are doing business abroad; of those, 98 percent are small and medium-sized organizations.
While cross-border trade provides access to vast new audiences of potential customers, it also brings some challenges – specifically when it comes to understanding the border clearance process, and understanding when and how duties and taxes will be levied on imported and exported goods.
A strong example of the challenges companies face can be found in the following questions: What happens to goods that originate in the U.S. and are exported abroad, but are then returned from a different country? Are these goods subject to duties upon entry to the United States? The answer depends on some very specific conditions.
Goods made in the United States
Goods that were made in the United States and are returned at any point after the original export are often exempt from duties. Even so, if your company is taking back U.S.-made products, you need to make sure that you are complying with some very clear requirements in order to avoid paying duties.
First, you must be able to provide proof of U.S. origin, in the form of a country of origin marking or a certificate of origin from the manufacturer. Second, you must be able to show that the value of the goods has not increased, and that the condition has not improved, while outside the United States.
In other words, duty may be required if an item was repaired or enhanced. U.S. Customs and Border Protection (CBP) offers the following guidance: “When clearing returning U.S. goods through CBP, the importer should file the CBP Form 311 Declaration for Free Entry of American Goods Returned.”
Goods with non-U.S. country of origin
If your company is bringing back goods exported from the United States but made elsewhere, those products also may be eligible for duty-free treatment. The CBP issued guidance clarifying that foreign-origin goods exported from and returned to the U.S. – and whose value hasn’t been increased or their condition improved – will be exempt from duty, as long as the return occurs within three years of export.
So if your company has imported a product from another country and then sold it to a customer abroad, if that customer returns the item, its entry back into the United States is duty-free. For retailers selling goods abroad to consumers who may want to return or exchange a product, this is an important point.
Ultimately, the work of exporting and importing goods requires an attention to detail and an understanding of the process. If your company is growing through trade, or if you are considering your global options, there are resources and experts available to help.
Logistics experts and international specialists like those at DHL can provide guidance and advanced tools to make the export/import process faster and easier.
For instance, the DHL Trade Automation Service can help you understand and calculate duties, taxes and other fees, while helping you ensure that your shipments comply with each country’s import and export regulations. In addition, the International Trade Administration and Export.gov offer guidance and support.
Has your company encountered any difficult issues related to duties and taxes? Let us know on Twitter @DHLUS.