EPCES

Navigating US Tariffs: Strategic Insights for Indian Exporters & Importers

The seminar focused on the impact of U.S. tariffs on Indian exporters and importers.
Types of Tariffs: The discussion included country-specific reciprocal tariffs (currently 15% plus the MFN rate) and product-specific Section 232 tariffs, which apply to goods like steel, aluminium, and potentially pharmaceuticals. A "secondary tariff" concept was also introduced, where tariffs can apply to raw materials within a final product.
Mitigation Strategies: The speaker, Shri. Himanshu, provided strategies to mitigate tariff impacts. These included optimizing the origin of goods, leveraging the "first sale for export" concept, and refining transaction values.
First Sale for Export: This strategy allows for a lower customs duty tax base in the U.S. by using the earlier sale price from the manufacturer (e.g., an SEZ unit) to an intermediary entity, rather than the final sale price to the U.S. importer. This can result in a significant reduction in customs duty costs. Key conditions for this strategy include multiple sales before import into the U.S. and proving an arm's-length price.
Transshipment Penalties: The importance of avoiding transshipment penalties was highlighted, which can result in an additional 40% tariff if the origin of goods is misrepresented. Substantial transformation must occur in the intermediate country to legitimately change a product's origin.