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Who Pays When Tariffs Change?

“What a tariff hike could mean to your next order.”

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According to Mexico’s business publication Expansión, Economy Secretary Marcelo Ebrard said on November 4 that Mexico was waiting for a fourth round of trade talks with the United States following the U.S. midterm elections. The U.S. Trade Representative has said that the United States–Mexico–Canada Agreement remains in force while the countries work through their differences. For a business owner placing an order today, there’s a more immediate question. What happens to the price if the duty goes up before the goods clear customs?

Suppose you’ve accepted a quote from a supplier in Mexico and a higher U.S. duty takes effect before your order clears customs. According to the International Chamber of Commerce, the shipping terms agreed to by the buyer and seller can determine who is responsible for import duties. Under Delivered Duty Paid, for example, that responsibility falls to the seller. Whether the seller can pass an increase on to you through a higher invoice is a separate question to address in the sales contract.

The Takeaway:  Before you accept a cross-border quote, get two answers in writing. Who pays the import duty? If it goes up before the goods clear customs, can the agreed price change?


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About The Publisher

Jeff Corbett

As entrepreneur, author and magazine publisher with over 25 years’ experience in the global marketplace, I enjoy writing as an advocate for international business and personal freedoms. Thanks to my experiences building businesses I also have a tremendous interest in reading or writing about motivation and self-discipline.