Customs Compliance in a Changing World: Tariffs, Brexit and Managing Global Trade Risk

Customs regulations are constantly evolving, and for businesses involved in international trade, keeping up with those changes can be challenging.

From tariffs and commodity classifications to Incoterms, changing trade agreements and new technology, customs compliance is about far more than simply completing a declaration when goods cross a border. Getting it wrong can lead to unexpected costs, delays and unnecessary risk across the supply chain.

In this episode of The Cargo Couch, Logicom Hub’s Sam Stretton sits down with Leigh Trevis from Expeditors International to explore the world of customs and excise and discuss how businesses can better understand and manage their responsibilities when importing and exporting goods.

The conversation covers everything from the history of tariffs and the impact of Brexit to customs data, artificial intelligence and the future of global trade.

Why Does Customs Compliance Feel So Complicated?

For many businesses, customs can feel intimidating.

Most companies do not exist to complete customs declarations. Their expertise lies in manufacturing products, selling goods, serving customers or managing their supply chain. Customs is an additional responsibility that comes with trading internationally.

However, that does not make the responsibility any less important.

During the podcast, Leigh explains that customs compliance is not simply a matter of submitting information and assuming the job is complete.

Businesses need to be able to demonstrate how decisions have been made, maintain appropriate records and establish an audit trail behind their customs activity.

If a classification, customs value, origin decision or other piece of information is questioned, businesses may need to explain how they arrived at that decision.

This is one of the reasons customs can seem daunting. The rules can be complex, but they are also continually changing.

Tariffs Have Become a Global Talking Point

One area of customs that has received significantly more attention in recent years is tariffs.

Although tariffs have existed in various forms for centuries, recent international trade disputes have pushed them firmly into the public consciousness.

In the podcast, Sam and Leigh discuss how tariff changes can affect businesses while goods are already moving through the supply chain. A company may purchase goods based on one set of costs, only for the tariff environment to change before those goods reach their destination. For importers, that can have a direct impact on landed costs, margins and ultimately the price paid by the consumer.

What Is a Tariff?

In simple terms, a tariff is a duty applied to goods moving into, and in some circumstances out of, a country. Tariffs can be used for a number of reasons, including protecting domestic industries. For example, if a country has an important domestic industry, applying duties to competing imported products can affect the relative cost of those imports.

But tariffs do not exist in isolation. The amount payable depends partly on how the goods themselves are classified, which brings us to another fundamental area of customs compliance.

Getting the HS Classification Right

One of the most important pieces of information associated with an imported or exported product is its HS classification. A business may know its products by name, description, stock code or internal part number, but customs authorities need goods to be classified correctly under the applicable commodity coding system.

That classification can influence:

the rate of customs duty;
import and export requirements;
restrictions or controls;
applicable procedures; and
the information required on a customs declaration.

Something that appears to be a simple product can become much more complicated when its material, construction or intended use is considered.

Leigh gives the example of everyday products such as cups and shoes. A product made from one material may fall under a different classification from a similar-looking product manufactured from another material.

The important lesson for businesses is that knowing what you sell is not necessarily the same as knowing how customs classifies it. Classification should therefore be treated as an important compliance decision rather than simply another number to enter onto a declaration.

Understand Your Incoterms and Your Responsibilities

Another area that can create confusion is Incoterms. Incoterms, or International Commercial Terms, establish agreed responsibilities between buyers and sellers when goods are traded internationally.

They help determine areas such as:

who is responsible for particular transport costs;
where responsibility transfers from seller to buyer;
who assumes particular risks during the movement; and
which party may need to manage certain import or export responsibilities.

Problems can arise when businesses agree commercial terms without fully understanding what those terms mean operationally.

Goods may arrive at a port and the buyer suddenly discovers that they are responsible for arranging the import formalities. That is not the ideal time to begin asking who should be acting as the importer. Businesses should understand their responsibilities before the shipment begins its journey, not when the goods arrive at the border.

Brexit Changed the Customs Landscape for UK Businesses

Brexit created a major shift in the customs environment for companies trading between the UK and EU. Leigh discusses how his own involvement in customs developed around the changes introduced in 2021, when businesses and logistics providers had to adapt to a very different trading environment.

For many organisations, processes that previously involved relatively straightforward movement of goods suddenly required far greater consideration of customs declarations and responsibilities. But Brexit is not a single event that businesses have simply completed and moved on from. The wider trading environment continues to evolve.

Trade agreements, customs procedures, preferential arrangements and international trading relationships can all influence the decisions businesses make about where they buy, sell and manufacture their products. Businesses therefore need to continue reviewing their customs arrangements rather than assuming that a process created several years ago will remain appropriate indefinitely.

Customs Is Becoming Increasingly Data Driven

One of the strongest themes running through the conversation is data. Customs has moved a long way from the paper-driven processes many experienced earlier in their careers. Authorities increasingly rely on electronic information, while businesses and customs providers have access to far greater volumes of supply chain data. This creates both opportunities and responsibilities.

Better data can give businesses greater visibility over:

where goods are being imported from;
where goods are being exported to;
the declarations being submitted;
their customs duty exposure;
product classifications;
trading patterns; and
potential areas of compliance risk.

This visibility can also support better commercial decisions.

If tariffs, geopolitical events or regulatory changes make one sourcing route less attractive, understanding your data can help identify potential alternatives. Businesses that can clearly see their customs footprint are in a much stronger position to ask questions such as:

Where is our customs duty exposure highest?

Are we overly dependent on one country or supplier?

Could another sourcing route reduce cost or risk?

Are our classifications being applied consistently?

Are we making use of relevant trade agreements where appropriate?

Customs data should therefore not be viewed solely as compliance information. Used effectively, it can become valuable business intelligence.

What Role Will AI Play in Customs?

Artificial intelligence is changing almost every area of business, and customs is no exception. During the episode, Sam and Leigh discuss how automation is already reducing the amount of manual data entry involved in preparing customs declarations. Historically, customs professionals might manually take information from commercial invoices and enter each line into a system. Technology can increasingly extract and transfer that information automatically. That has the potential to reduce repetitive work and some forms of human error.

However, there is an important distinction between automating a task and making a compliance decision.

AI and automated systems can help analyse information, identify patterns, perform checks and support professionals, but customs rules still require knowledge, judgement and context. The role of the customs professional may therefore continue to evolve away from manual data entry and towards reviewing, managing and validating the information being used. The technology can support the decision-making process, but that does not remove the need for competent people who understand the rules.

New Regulations Will Continue to Affect International Trade

Technology is not the only change businesses need to prepare for. The podcast also discusses the growing connection between customs and wider areas of regulation, including decarbonisation. Governments are introducing measures designed to address the environmental impact of certain goods and manufacturing processes. This means customs teams and importers increasingly need to consider requirements that go beyond traditional customs duties.

Trade agreements are another important consideration.

As countries develop and renegotiate trading relationships, businesses may have opportunities to use preferential arrangements, but they need to understand the conditions that apply. At the same time, sanctions and other international controls can change rapidly. The result is a customs environment in which businesses cannot simply learn the rules once and assume they will remain unchanged.

How Can Businesses Reduce Customs Compliance Risk?

One of the key messages from the episode is the importance of being proactive.

Businesses involved in international trade should consider:

1. Know What You Are Importing and Exporting

Maintain accurate product information and ensure that customs classifications are properly considered rather than relying solely on internal product descriptions.

2. Understand Your Incoterms

Know exactly where responsibility, risk and costs transfer between the buyer and seller.

Do not wait until goods arrive at a port to establish who is responsible for the import.

3. Maintain Good Records

Customs compliance needs an audit trail.

Businesses should be able to demonstrate the information used and the reasoning behind important customs decisions.

4. Use Your Customs Data

Do not allow valuable customs information to sit unused.

Review import volumes, origins, duty exposure and other trends to identify both compliance risks and commercial opportunities.

5. Monitor Regulatory Change

Tariffs, sanctions, environmental measures and trade agreements can change the way businesses trade.

Having visibility of upcoming changes gives businesses more time to prepare.

6. Have the Right Expertise Around You

Not every organisation has the internal resources to monitor every change in customs regulation.

Working with knowledgeable customs professionals and partners can give businesses somewhere to ask questions, discuss upcoming changes and understand how new requirements could affect their operations.

Customs Compliance Is About More Than Completing a Declaration

Perhaps the biggest takeaway from this episode of The Cargo Couch is that customs should not be viewed as an isolated administrative task. Customs decisions influence costs, supply chain resilience, sourcing strategies and ultimately the ability of a business to trade efficiently across international borders. As Leigh highlights during the conversation, change is constant.

Tariffs change. Regulations change. Technology changes. Trading relationships change.

Businesses that understand their responsibilities, use their data effectively and prepare for regulatory developments will be far better positioned to respond when those changes occur. Rather than fearing customs, the goal should be to understand it. Because when businesses have the right information, expertise and visibility, customs compliance can become an integrated part of a stronger and more resilient international supply chain.

Listen to The Cargo Couch

In this episode of The Cargo Couch, Sam Stretton and Leigh Trevis explore customs compliance, tariffs, Brexit, technology and the changing world of international trade. Whether you’re an importer, exporter, freight forwarder or supply chain professional, the discussion provides practical insights into why customs matters and what businesses can do to better understand and manage their responsibilities.

Listen to the full episode of The Cargo Couch to hear the complete conversation.

Stay safe, stay compliant.

For more information on customs compliance, contact Logicom Hub:

Phone: 0330 912 5041 or 01608 692177
Email: [email protected]
Website: www.logicomhub.com