Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Hello, and thank you for joining us for this U.S. Customs Market Update webinar. We appreciate you jumping on. My name is Samantha Hurst, and I'm one of our marketing and sales operations managers for the Americas region of Expeditors Again, we appreciate you joining today. We see a lot of numbers still jumping in, but it is the top of the hour, so we want to get started. We have a lot of content to cover today and want to be obviously respectful of your time and make sure that we can get to questions. So we'll go over just a few housekeeping items before I introduce our speakers, and then I'll turn it over for the content. One of the things we want to just make sure you understand if you've not joined one of our Expeditors webinars in the past, we do typically go over about 45 minutes of content and have about 15 minutes at the end for questions and answers. We do ask that as we go throughout the content, you are welcome to drop your questions into the Q&A box. And as you place them there, our speakers and support personnel will answer them to the best of their ability or we will save them for the Q&A session that I mentioned at the end. One of the questions we always get during these webinars, of course, is how do I receive the slides. So we will send you a short feedback survey that we request that you fill out. And typically, you'll get that about an hour after the webinar has ended via e-mail. Now once you fill that out, you should be directed to a landing page where you can find the recording as well as the presentation slides. And if you have any trouble with that, you are welcome to e-mail me and I can support. The other thing we want to let you know is that you can get information on all of our webinars, invites to those events as well as global market updates by hovering over this QR code and scanning it. It will take you to, again, a landing page form where you can complete that information and get signed up. So now let me introduce our speakers so that we can get started. So we have quite a few experts here with us today. We have Brenda Smith, who's our Global Director of Government Outreach. We have Madeleine Veigel, who's our Senior Director of Customs for the Americas; Rick Catalani, who's our Director of Customs; Ted Henderson is our Senior Advisor; Stephanie Holloway is our Regional Manager for Customs in the Americas; and Kelsay Calvaruso, who's our analyst of Customs for the Americas. Now Ted, I think you've come on camera here. So we'll let you take it away from here.

Well, there we go. That's the secret. Jump on camera and you get to speak next. So I remind my colleagues of that opportunity. So thank you, everyone, for joining our discussion today. I do appreciate that you're spending 60 minutes of your day with us right now. And my colleagues and I certainly hope this is worthwhile for you. Recognizing the gravity of these topics, so we just want to remind you that we're not a law firm nor a consultancy. Our intention today really is just to educate and inform and provide information for you that you can take with to manage your business. So let's take a look at the agenda, and I'll give you a quick view as to how this -- the webinar is going to flow. We're going to lead off with really what is in place right now and what is planned that we are confident will be in place in 2025. Part of that discussion we're going to cover some commentary on major U.S. trade compliance initiatives like you see on the screen, the bullets there, forced labor, antidumping. For those of you who have joined our webinars in the past, you know that we typically devote a full webinar to any one of these subjects, and we certainly intend to do so in 2025. Today, it's really just a quick update. After that, we're going to devote a fair amount of time to really review the public statements on tariff and trade actions from the incoming administration of President-elect Trump. And following that, we will be doing some Q&A discussion. We will be answering questions as you pose them in the inbox as quickly as we can in the Q&A box. So feel free please to pile your questions in. And between the 6 of us, we will do our best to manage that as we're going and then certainly again touch on things at the end. Again, I just want to remind you that really the information we're speaking to is based on public announcements from government agencies, from President Biden's administration or from President-elect Trump. We're not here to offer a lot of opinion or speculation. We're really just going to focus on the facts in front of us. So the other thing I'd say is based on the facts in front of us, we believe this is the first of what will be many webinars in the months ahead. Again, our goal is to inform you with facts, so you can make decisions on how your business perhaps should be managed in the year and years ahead. Today's discussion is really U.S.-centric. It's based on our experiences from 2018 forward under the first President Trump administration. Based on what we saw during that time, we do expect that countries outside of the U.S. will react with their own trade actions at some point if actions are taken here in the U.S. And if things do progress in that manner, then we'll bring in more of our colleagues from around the global network to provide information about their specific regions on future webinars. Again, questions in the Q&A, please, as we go. And just as we're not doing any political commentary today, we ask that you do the same as we move along. And one more reminder for everybody. We will provide the slides. There's a protocol for that. So don't frantically screen print as we're going. All right. Let's dig into what's currently planned and get rolling here. So the thing that, again, we are going to talk about potential future actions with the new administration, the new Congress here in the U.S. But right now, there are things that are already tapped on task for 2025, 2026 based on existing actions taken within the President Biden's administration or government agency actions as well. So let's take a quick look at things. For those of you who deal with wood products or anything remotely related to wood product imports here in the United States, we are kicking off Lacey Act implementation Phase 7 this month, in fact, as it's going. So that's one of the first key things on your slide that you're looking at. January kicks off a couple of different things. Just a quick reminder, and Kelsay will spend some time on this. President Biden's administration and the current U.S. trade rep have Section 301 actions that are scheduled to take effect -- that are taking effect this year, next year and the year following. So we will see some things kick in starting in January for new 301 tariffs that are coming in. The continuing education requirement for licensed customs brokers kicks here in the U.S. kicks in, in the new year. Also, let's not forget that the ILA contract extension, that's the longshoreman who cover the Eastern U.S. and Gulf Coast ports. That extension will be running out here shortly as well. And then later throughout the course of the year, we're going to see a couple of things. Many of you are very much aware that the Generalized System of Preferences, GSP has long been expired. We will potentially see the expiration of AGOA, the African Growth Opportunity Act. We'll potentially see the expiration of the 3 acts that were developed for Haiti, HOPE, HOPE II and HELP. So those are scheduled to expire in 2025. We're also looking at another free trade agreement, which is the USMCA. And on that, we're coming up on the mandatory 6-year review cycle. So later this year in October, that will kick off, and Brenda is going to spend some time talking about that. That is certainly a very important thing to think about for those of us who are engaged in imports or exports within the 3 countries of North America. And again, beyond that, we're going to see additional actions in 2026 and further. And just finally, we note, don't forget a long time ago, we had a Section 301 investigation and actions related to large civil aircraft, and that was suspended for a number of years, obviously, because that was brought on under the previous administration. And that suspension period is going to end as well. So definitely, things are already in place. And as we note on the bottom, we're going to see continued action around forced labor enforcement, antidumping enforcement, de minimis enforcement, and we're going to touch on that a little bit. So I'm going to lead off with a quick conversation about forced labor as we move through this. Again, this is a topic that gets its own webinar with us. Hopefully, some of you have joined our past webinars. We tend to do at least one annually, sometimes 2 on this topic, and we're going to continue to do that in 2025. But -- so some of you may be really deeply familiar with this. Some of you are just peripherally aware. So I just want to give you a quick high-level overview of what's going on with respect to forced labor enforcement here in the United States. So U.S. Customs and Border Protection, CBP is really the only border agency around the globe with statutory authority to keep goods connected to forced labor from entering the country. And that authority dates back to the Tariff Act of 1930, which a lot of our actions around imports are based on. But Section 307 or 19 USC 1307 of the Tariff Act, that's the legal basis that CBP has to deny entry of goods into the U.S. if they are connected to forced labor. Historically, CBP has used 2 provisions related to that original act to deal with forced labor. One is to issue withhold release orders on specific goods from specific countries that are suspected to be tied to forced labor somehow or to issue a finding which definitively states that, yes, these certain specific goods from certain countries are subject to forced labor. So before the Uyghur Forced Labor Prevention Act was put in place several years ago, this is really the activity -- the way that we saw customs take enforcement actions related to forced labor. There are currently 51 active withhold release orders and 9 findings across 13 countries around the globe. So understand this. This isn't China specific. This covers a broad range of countries, including countries here in North America that might have a connection to forced labor or have been definitively found to have a connection to forced labor on certain goods. So hopefully, I realize over the last 2 years, our focus really has been all hands on deck about UFLPA and goods coming from certain regions in China, but do understand that this is the core enforcement mechanism that customs uses to actually implement UFLPA as well. And customs has clearly stated they're going to put more emphasis back on these areas of WROs and findings. In fact, we saw a new finding release yesterday from customs. So on the -- from certain goods from Dominican Republic. The big thing that we really have been looking at for the last couple of years is the Uyghur Forced Labor Prevention Act, UFLPA, UFLPA, however you prefer to go with this. But that act specifically addresses goods that somehow are connected to the Xinjiang Uyghur Autonomous Region in China. There are multiple provisions of the act and requirements on how that was to be implemented. Quite frankly, it took CBP, U.S. Customs and Department of Homeland Security a little time to get their feet underneath them and implement the act. They now are really firmly set with how they're managing this act as it goes. So we're seeing continued enforcement actions related to UFLPA. We're going to see -- we're seeing customs revisit the traditional WRO and finding mechanisms. The key on all of this is no question, forced labor enforcement is not going away in the United States. When it comes to the actual actions themselves related to the UFLPA, customs maintains a dashboard. We have a link on this slide. The slide -- again, you're going to get this. We'll give you a quick view of what that looks like on the next slide. But the key to understand, you can actually track and see how customs is taking action related to UFLPA. And then the final thing I just -- that we really want to emphasize in this conversation about forced labor. You really -- we're -- we have to -- we absolutely are urging you to understand the importance of knowing not just the seller and the manufacturer of your goods that you're importing. It really is absolutely important that you know the full value chain of those goods, that you know the full bill of material and where those -- all of those components are connected to. Upstream traceability is becoming increasingly essential for all of us in the U.S. trade compliance environment. And that's not just for forced labor. You're going to find that it's going to be similar for antidumping countervailing duty. And Madeleine is going to talk a little bit about that as she moves through it. But really, the key point here, forced labor enforcement is not going away regardless of what happens from any upcoming presidential congressional actions. And really, we just expect it to intensify. So Madeleine, antidumping to you, please.

Okay. Thank you, Ted. Hello, everybody. So as Ted mentioned, we can do a whole -- and we have done a whole webinar before on antidumping countervailing duty. We can do a whole bunch more. And we will host an antidumping countervailing duty webinar for sure next year. So that will contain a lot of details. But right now, really, all I'm going to touch on is just the changing AD, antidumping countervailing duty landscape. And what I mean by that is the increase in the number of cases that we're seeing and also the new layers of complexity that have been added to managing antidumping countervailing duty. And just real quickly, to remind everyone, every antidumping countervailing duties are additional duties, right, that are assessed on a product because the same product is -- or that product is being actually dumped in the U.S. for less than fair market value. Government has done an investigation. And so the government says, hey, in order to set a level playing field here in the U.S., we need to assess additional duties on these products. So anyway, what's interesting is we put some stats together, and that's what you're seeing here on this slide. And you'll see back in 2004, 20 years ago, there were only 150 antidumping countervailing duty cases. And remember, the cases are attached as flags to HTS numbers. And now fast forward 20 years later, we have 903 active antidumping countervailing duty cases. So it's a big increase. And what that means is just a lot more management, right, on all of our sites to ensure that the product we're importing into the United States, if antidumping countervailing duty applies that we're paying the correct duties. So it's a lot more management all the way around. And there are some additional layers to antidumping countervailing duty that have made it even more complex. One of those are is the active third country cases. There were none. No active third country cases back in 2004. Today, there are 163. And when we say active third country cases, a very high-level example might be, hey, I'm importing some raw material out of China that's normally subject to AD/CVD. I'm importing it into Mexico. I'm remanufacturing using those raw components, remanufacturing that into a whole new product with a country of origin of Mexico, and then I import it into the U.S. Well, there are cases out there where if that raw -- those raw components, raw material were subject to dumping, you would still need to pay the dumping on that product even though the country of origin is Mexico into the U.S. So these are cases that you have to actively manage. And again, it goes back to the importance and the point that Ted made earlier that upstream tracking, tracing, knowing where your raw -- where the raw components of the products that you import, where those are sourced from, where they're coming from. And then the other layer of complexity is we're seeing many more cases that require certification. So back in 2004, you hardly heard about this because there were only 2 cases that required certification. But today, in 2024, we've been seeing more and more cases that require a certificate. So again, it's another piece that you have to validate as part of antidumping countervailing duty. An example might be there was a more recent case on wooden cabinets from Thailand and Malaysia. And that case has a certification requirement, meaning that you have to certify that the wood that makes up the cabinet or any of the wood components were actually sourced either in Malaysia or Vietnam and not China in order to avoid paying antidumping countervailing duty. Otherwise, you would because the government is assuming if you're bringing the wood in from China or wood component that is subject -- it would be subject to dumping. So these are just other layers of antidumping countervailing duty that make it more difficult or a challenge to manage in today's trade world. And then you can also see just the number of AD/CVD lines. Of course, this goes -- this is connected, obviously, to the number of cases. But this is Expeditors data for our brokerage customers in the U.S. And back in 2004, between January -- from January through September, we had 122,000 lines that flagged HTS lines that flagged for antidumping countervailing duty. Today, for 2024, based on the same time parameter, over 2.2 million HTS lines flagged for dumping or countervailing duty or both. So that's a big increase. What's interesting too is how many of those lines were claiming as antidumping countervailing duty back in 2004, 40% of those lines were claimed as antidumping countervailing duty. Today or this year, it's from January through September, it's 10%. We think the reason that's dropped is because in 2004, the cases more strongly correlated to an exact HTS number, which was yes, the case associated directly with an HTS number, a lot more so than today where you have a lot of HTS numbers that don't necessarily correlate exactly, but they possibly -- the HTS number could possibly be subject to dumping. So anyway, different environment, but a lot more to manage because as those lines are flagging, we need to validate with you as the importer whether we need to claim dumping -- antidumping or countervailing duty. So anyway, we can go to the next slide. And really, this is the same numbers but displayed differently as the previous slide, but it just shows again the growth of antidumping countervailing duty cases in the pinkish red color, the active growth of third country cases in yellow and in green, the additional certification cases. And all of those are growing. And then you see the number of HTS lines, at least that we process, how many of those are flagging and the increase in the lines flagging over the years. So in general, just a lot more management around this area is required. And I just want to -- I have one more piece of information that I want to touch on in terms of antidumping countervailing duty, and that is on the next slide in terms of certification, just because we've seen a lot more of that over this past year. And so many members of the trade, including us, have been providing feedback to U.S. customs and to the Department of Commerce, asking for more visibility and transparency on certification requirements. It's a difficult thing to manage, and we just want better visibility because that will ultimately drive better compliance. So there have been requests to add ABI messaging anytime an AD/CVD case is subject to a certification requirement that would be very helpful to brokers or to self-filers. Posting, if CBP and Commerce could post all the cases that are subject to a certification requirement, including more information on the CBP AD/CVD FAQ page. Customs may be issuing a message. We hope that they will begin doing that, a CSMS message when there is a case that requires certification. And then in general, more certification information on the Department of Commerce and ITA's website. So again, more transparency is what we're asking for. So again, a lot of things going on in this world, but we will get into a lot more detail in our webinar starting next year, specifically dedicated to this. So Kelsay, I will pass the baton to you.

Thanks, Madeleine. Okay. So I'm going to briefly go over what is currently slated under Section 301. As Ted said earlier -- Steph, can you go to the next slide, please? Thank you. As Ted said earlier, we do expect these to continue. Earlier this year, new Section 301 tariffs were announced with implementation scheduled to be phased in through 2026. So the first round took effect at the end of September, and the next 2 rounds are scheduled for January 1, 2025 and January 1, 2026. That list of affected products and rates is over on the right for reference. And then last month, the USTR issued a request for comments on increasing tariffs on tungsten products, wafers and polysilicon. So there are a couple of open actions where we don't yet know what the final decision will be. The first is whether tariffs will actually be imposed on those tungsten products, wafers and polysilicon after they've reviewed the comments. And the second is whether the EU's large civil aircraft tariffs will be imposed in July 2026. Those were initially postponed in 2021 for 5 years. Products from the U.K. were also included in the investigation, but they'll be considered separately in light of Brexit. So whether those will be implemented or postponed again is yet to be determined. So Steph, I'll pass it off to you now.

Thank you, Kelsay, for covering the Section 301. So I'm going to touch on PGA updates. So 2024 was a really active year for PGAs. We introduced actually 2 new data sets, work to add in the additional phase of Lacey Act that I'll touch on and then also did a lot of work in the CPSC beta pilot. So with that said, these are the 2 that we see being worked on in the near future. CPSC, of course, stands for Consumer Product Safety Commission. So this agency, many of us are aware of, even if you don't do imports, right, they regulate children's goods and other products such as lawnmowers, mattresses, other things I'm not thinking of right now. But they cover a huge swath of products. And I see somebody in the comment saying that's a big item for my company. And absolutely, if you're a retailer or just import really any consumer products, you likely have -- they likely have jurisdiction over your products. So they just right before Thanksgiving, November 22, put out their draft final rule, okay? So a big thing that many importers kept asking us is what is the time line for this to be incorporated into the import process. So we're seeing from the draft, they're recommending a 12-month effective period. So that would put us roughly December of 2025 for implementation. And then for FTZ goods, it will actually be 2 years, so 24 months. We'll kind of know the fate of this in a couple of weeks. So the CPSC Commission is going to meet on December 18 for a bit of a no or no-go situation, and then we'll have more of a firmed up time line. So once again, this is just the draft, but I encourage you to look at it. It's like 216 pages or something, 245. I don't know, it's 200 some pages, just some light reading for you if you would like to get caught up. CPSC is a little bit unique. They actually are providing for 2 different ways to provide them the data through your import process. So the first one is what they're calling their CPSC registry. So this is an online registry that they are maintaining. It's a website that you can go to. And folks can store their CPSC certificate data in that tool. And then the brokers, as we do entries, will actually reference essentially the listing number, I'll say, for lack of better words to say it, and that will attach to the entry. The other way is that brokers will be able to file all of the data at one time, very similar to what we do for FDA as just part of the entry process. So I would say this is really what's causing the most churn for importers as they try to figure out where is the best place to store the data. Are you going to have your labs involved in this process and really starting to partner with their product safety counterparts within their own organizations to understand the best way to do this. So Expeditors is very active in the beta pilot. We are happy to chat with you further about CPSC. We did a webinar a couple of months on it actually. So if you want that recording, feel free to reach out to Samantha or myself, and I'm happy to give that to you. Lacey Act is the other kind of one floating out there. So Ted said December 1, so just a few days ago, they implemented Phase 7. USDA themselves called this the junk drawer of HTS codes. So I am not -- I'm stealing their words there. So this was kitchenwares, housewares, vehicles, sunglasses, umbrellas, just a whole bunch of things that may have wood involved. So some of you guys may never have had to declare Lacey Act and all of a sudden, now your broker is going to be asking you for Lacey Act declarations, okay? The other thing to keep in mind is there is still one more phase for Lacey Act and they're calling it Phase 8. So we've gone through 7. We have 1 left, and they're going to be working on this next year. And this is something to really pay attention to because it's actually going to be looking at composites. There is no time line, but just kind of keep your ear out because a big thing that USDA has said and they've said this publicly, is that they're going to be really looking to see how far back along the manufacturing process they should go to determine whether or not an item was derived from plant material. So just like Ted touched on with forced labor, we're seeing this with different antidumping cases that tracking and understanding really where your parts are coming from, who's making them, who's touching them, what are the components of them. This is going to get a little bit into that section as well. So more to come. That's all we have so far, but these are going to be pretty heavy hitters for all of us. So with that said, I'll turn it over to you, Rick.

All right. Thanks, Stephanie. I've got the last item that we know will happen. It's planned. We know it's going to happen. And I know we have a lot of license brokers on this call. So I want to make sure we get the information out. And so this next piece is the U.S. Customs continuing education program. So this has now been finalized. It was published in the Federal Register last month, early November. So it is now mandatory starting in January that all license brokers need to report training hours during each triennial in order to sustain their license. So if you do not meet the training hours requirement, your license will be suspended and could be revoked if you fail to meet the standard. So the good news is Customs have put together a great website. We spent a lot of time on this site, and it has all the ins and outs, all the background, all the information that we could come up with or could ask for as well as a great FAQ section that individual brokers from across the country have submitted questions, and CBP has spent the time to very thoroughly answer each question that has been posted. So a big recommendation from us is to book mark this website and take a look and be fully aware of what the expectations are on you as an individual. And the other reason to have this website bookmarked is this is where they will publish all the conferences, seminars, webinars that will be offered to meet the training requirement. So a one-stop shop of all the background around the program as well as all the future calendar dates that you should have marked to make sure you meet those training hours. Training hours will be offered by customs as well as the partner government agencies as well as parts of the private sector. So trade associations will be offering accredited classes. Expeditors will be offering classes as well as other private companies. And all will be accredited to ensure that they meet the continuing education requirement. CBP has spent a lot of time working with the trade on this program for years to make it as straightforward and as simple and as easy for each individual to meet the objectives as possible, and we think they've done a great job with it. So here's what everybody's got to do next if you are a licensed broker in the U.S. Starting next month, so in January, it begins that you must start tracking those hours and counting those hours. So as we're in the midst of a triennial, CBP has prorated the amount of hours that will be required. For a full triennial, it's going to be 36 hours. So 36 credits over that 3-year period. Since we're in the midst of one now, there will only be 20 credits required over the next 25 months, so January 2025 to end of January 2027. And so those hours need to be achieved, accumulated during that time period within that time frame. Customs has been very committed to not only making sure there's enough offerings of classes, but they are also offered free. They didn't want this to be a financial impact for brokers to continue their license. And so they've done their best as well as the partner government agencies to put out enough classes in the future so that everyone can meet the standard without having any additional expense. For those individuals that are licensed, you do have some work to do, which is everyone does need to individually record their training hours during the triennial. It can be as simple as a spreadsheet showing the details of the classes as well as some type of evidence that you did attend, whether it'd be a copy of the registration or a copy of the class certificate. Customs hasn't asked for too much detail around this, but they call it just a simple spreadsheet. So at the end of the triennial, so come January 2027, when you're filing your triennial status report and you have to pay your fees, there will also be a certification that you did meet the minimum required hours of training for the continuing education program. As you check that box to certify that, Customs does have the option to come back and request backup or evidence to support the claim. So at the time of submission, no need to submit anything. But on the website, they do say they plan to go back and investigate 5% to 10% of all the licensed brokers just to show that the records are being kept and that individuals are holding themselves to that standard. So very clear information out there, no need for interpretation. We think this one is pretty straightforward. Feel free to reach out if you have any questions around it for us. And again, please take a look at the website at your convenience. It's got everything you want to see -- to make sure your license is continued. So without further ado, I will turn over for the meet of our presentation today to Brenda Smith.

Thanks very much, Rick, and greetings, everybody. So it's been certainly a busy time. I'm sure everybody woke up that first week of November, and we're looking at the press and thinking back to what we all went through 4 years ago. We expect an even more disruptive time coming over the next 4 years. We are watching really 3 areas. The first area are the people that the President-elect has nominated for key trade roles. We are looking at the data, and we are also looking at the messaging. So let's dive a little bit deeper into each of those areas. So in terms of the people, you read the press as well as I do, but the key players that we are interested in are the ones listed on the screen. Interesting that the nominee for Secretary of Commerce, the nominee for the Secretary of Treasury and the nominee for the Director of the National Economic Council, all have traditional Republican backgrounds. They are all Wall Street guys and are likely to talk the talk on tariffs, but also potentially to show the downsides of tariffs. So it should be a very active discussion within the administration. Jamieson Greer has been nominated as the United States trade rep, which is interesting that he will take over his previous boss's job. He was the Chief of Staff for Bob Lighthizer, who has not been nominated to a trade role, which is interesting. We just found out about 2 hours ago that Peter Navarro, who I worked with very closely during the last Trump administration will also be participating at the White House in a key trade role as an overseer of trade and manufacturing issues. So it's shaping up to be an interesting group that will be sitting around the table making -- or providing advice, I should say, on trade discussions because the President really is the one who has a very clear vision of what he expects and where he wants trade to go. The other thing that we're looking at is the data. And so if we can go to the next slide. So we, just for fun, pulled up the countries with the greatest trade deficits experienced with the U.S. So to understand this chart, we've got the top 15 most active trading partners listed on the left-hand side. Those countries that have the most active relationship are those with a red bar on the right-hand side. So China, Mexico and Canada. Those countries with a trade deficit, all of which have one with the U.S. -- sorry, the U.S. has a trade deficit with these trading partners is represented by the length of the red bar. So the greatest trade deficits are China, Mexico and Vietnam, with Germany and Japan, Canada and Ireland not too far behind. These are not necessarily countries that you may expect an administration to take trade action on, but they should definitely be on your radar screen. If you have further interest in doing some data crunching, what you might pull up are the deficit numbers for specific industrial sectors with these countries. We saw the Trump administration 1.0 take targeted action on things like solar panels, washing machines and steel and aluminum. And I would expect more of the same as we go into Trump administration 2.0. So let's talk about the issues. Let's go to the next slide. So clearly, China is top of mind for the Trump administration as it has been for Trump 1.0 and the Biden administration. There's a couple of areas that I would expect to see action in the next 12 to 18 months. The very first area, and I know of major concern for many of you are duties. During the campaign, the candidate Trump called for duties of up to 60% on China. And most recently, he talked about applying a 10% duty because of China's role in the fentanyl crisis. He also against that backdrop, talked about levying duties of up to 20% on the rest of the world, though didn't cite any specific justification. There's a couple of ways new duties on China can be implemented, and I'd like to walk you through them now. The first one, just in terms of timing, could be through a declaration of an emergency related to China's role in the fentanyl crisis. This -- the statutory authority that would allow the President to do this is called the International Economic Emergency Powers Act, or IEEPA. That could be used on day 1 as the President has communicated through social media that he will act. It will not be taken with notice, and it will not receive a comment period. It has not been used to levy duties in the past, though -- so he will be breaking somewhat new ground, though, to be honest, President Nixon used it in a similar piece of legislation nearly 50 years ago. The second option for applying new duties could be through the use of the more traditional statutory authorities under 201, 232 and 301 trade remedies. The President would have to issue a presidential proclamation for executive order. These processes generally require some sort of an investigation and particularly in the 301 case, a notice and comment process before implementation. This process is certainly a lot cleaner than issuing an emergency proclamation, but it would not be as fast. The third option is for Congress to take action. And there's been a lot of discussion there with the Republican majorities in both the House and Senate. It's likely that there could be some consensus around where to -- where and how to raise tariffs. But we have not seen specific legislation, except in the case of China, calling for targeted tariffs. But we -- that should be an area that will be fairly active in the coming months. The last option, and this is sort of the nuclear option, would be to suspend what's known as China's permanent normal trade relation status or PNTR, which would result in new tariffs starting at a minimum of a 35% increase up to 100% increase for specific articles, which would be phased in over 5 years. There is already legislation calling for that, that has been proposed and introduced, and it is likely to continue to be a topic of conversation over the next 12 months. Another area that would significantly impact trade with China would be a restructuring of the de minimis privilege. The fastest way to change which goods are eligible for de minimis privileges would be to -- for the President to issue an executive order or a presidential proclamation. He could do that fairly quickly, but I would not expect that on day 1. And I think it's most likely that any changes would apply directly to those goods already falling under the China 301 remedy. The second option for taking action, and it is certainly cleaner and wouldn't take too long if the Biden administration issues the expected proposed regulations on de minimis transactions in the -- before the end of the Biden administration. The Trump administration could finalize those proposed rules, which you would have opportunity to comment on and have those be the law of the land going forward. That would require additional data elements and the removal of de minimis privileges for all goods that fall under a trade remedy. The last option and the one would probably take the longest time, though there is proposed legislation for removing de minimis would be to have congressional action occur. There is already legislation out there. We'll see if that gets reintroduced into the next Congress, though I would expect it to happen. Finally, the last factor to take into account is whether the Congress and the administration decides that the revenues that would result from increased tariffs on China, either through a trade remedy or a de minimis change are needed to offset the extension of tax cuts, which is a big legislative priority across the board in 2025. If that's the case, then those tariff changes would need to happen closer to the end of 2025 as part of a reconciliation process. So let's talk also about North America. Stephanie, can you move on to the next slide, please? So a lot of conversation here for 2 reasons. One, I would say the top policy priority for incoming President Trump is to focus on the border and to get what he sees as illegal immigration under control. That will require a significant amount of cooperation from Mexico, primarily and to a lesser degree, to Canada. President Trump has threatened tariffs up to 25% on Canada and Mexico starting on day 1, unless there is an offer of additional cooperation. He also has noted that they both play a role in the fentanyl crisis. And as we talked about earlier, it is possible he will use his statutory authority under IEEPA to issue an emergency and raise tariffs on day 1. The second reason we are focused on North America is because of the upcoming review of USMCA, which is scheduled to start in October of 2025. There's a lot of issues on the table to be discussed between Canada, Mexico and the United States. Most recently, President Trump has not -- has indicated a lot of areas that he sees for improvement, though he was very proud of USMCA when it was negotiated during his first administration. But there are a lot of new issues such as Chinese investment in Mexico, the production of electric vehicles, the promotion of nearshore critical minerals and digital trade. So a lot of fodder for conversation. This will not necessarily be followed by a renegotiation, but actually, President Trump had already put on the table that he is very interested in a sooner rather than later renegotiation of USMCA. And the final slide. There are a number of issues that we are all watching that don't rise to the level of the focus on China or the focus on North America. Just to take -- to give you kind of my assessment of where we think these issues will go, trade agreements, trade partnerships such as we saw during the Biden administration, such as IPEF and APEP are unlikely to continue during the Trump administration. But he does see himself as a deal maker and was fairly active in negotiating new trade agreements. I do believe that Trump 2.0 will engage more closely with Congress on any new agreement because they have learned that congressional engagement ratification does lead to a more robust approach to trade partnerships. I don't believe we're going to see a lot of interest in extending trade preference programs like GSP or AGOA. He is not looking to give away reciprocal favorable -- sorry, he is not looking to give away favorable treatment and so is more likely to provide market access or preferential duty rates if he gets something specific in return. That horse trading is going on as we speak. During the campaign, we also heard a lot of chat about the Trump Reciprocal Trade Act which was proposed legislation that would allow the President to levy tariffs that would reciprocate tariff levels from other countries. I do expect we're going to see very active both in issuance and enforcement of export controls, particularly those targeting China and Iran. We've seen a significant increase in export controls in both Trump 1.0 and the Biden administration, and it's likely to continue for the next 4 years. What I don't think we'll see is significant change in the U.S. trade measures around decarbonization. And I expect that we will push back on what other countries, particularly the European Union, are putting in place. And also, the final issue that is a bit unclear to me is what is likely to happen to the priority the Biden administration has put on industrial policy, particularly that found in the investments motivated through the IRA and the CHIPS Act. It's a lot of things, a lot of balls to keep up in the air. We're reading. We're watching. We encourage you to do the same. And with that, I'm going to turn it back to you, Ted.

Thank you, Brenda. All right. So we're winding down with the content portion of this discussion today. But one of the things that we have been doing over the last several years is working with the National Customs Broker Freight Forward Association Educational Institute to gain accreditation for our webinars. If you are a participant in the NCBFAA Educational Institute Certified Custom Specialist program, this webinar has been accredited by NEI. So you can use this as part of your continuing education credit requirements for this year and to sustain your existing certification. As Rick spoke earlier, there will be a continuing education requirement for licensed customs brokers, U.S. licensed customs brokers going into effect in the new year. This certification doesn't -- the accreditation doesn't account for that. Only training that begins in the New Year will count towards that continuing education requirement for licensed customs brokers. We will continue to gain accreditation under the NCBFAA programs for certified custom specialists and certified export specialists. And we will also work to get accreditation for our webinars in the future for licensed customs broker continuing education. So hopefully, this will help the licensed brokers in the future as we continue to do more webinars and seminars on this topic or on a whole bunch of topics. And as I said, we do certainly anticipate that the discussion we're having today will continue. We have already penciled in webinars for the first several months of the year and anticipate we will have dedicated discussions on really the trade actions as we move forward. So Stephanie, at this point, if you want to take a review of some of the questions, our team has been frantically typing and what we've got 33 answered, but I think we've got a couple of things we could probably discuss here.

We do, we do. So I want to first just ask, Ted, I'll direct this one to you. What can importers do right now? We do think tariffs are coming. We don't exactly know when. What are some tangible things that folks can do?

So really, the thing that we talk about and things we've seen with some of our customers, and we're seeing really across the U.S. import environment are people are trying to front-load right now. People are trying to move things into the U.S. in advance of the 20th of January of 2025. That's certainly one way that you can guarantee you're not going to pay any potential tariffs. Now I realize that's easier said than done. That depends on your supply chains. If you have just-in-time manufacturing situations, you may not have facilities to store, et cetera, et cetera. But if possible, yes, if you can import goods in the United States now, that's probably a good idea if you are concerned about the potential for tariffs. The other thing, keep in mind, not just importing into the territory of the U.S., you can utilize foreign trade zones. So you could admit goods into a foreign trade zone and then potentially pull them out later. The key is understanding the rules around foreign trade zones. You specifically have to use privileged foreign status when you admit to the zone. If you're going to follow this path, please talk to us or another foreign trade zone expert to make sure you're doing the right thing. Beyond that, there are duty mitigation strategies that you can use out there. Some of you are familiar with the U.S. program related around first sale. So if you have a multi-tiered sale with your goods, it's possible that maybe you can go back to the value used in the original sale, not the middle man or later as it goes. So think about that. Maybe you're bringing goods into the U.S. and really, it's just kind of a distribution center you have here for the rest of North America. So think about drawback. That's another program you can use. There are several -- those are some of the duty mitigation strategies that you can think about. There's other stuff. If you work with us currently, please reach out to us, your local representatives, and we'll certainly try to get to the specifics that might work for you.

Thank you, Ted. Okay, Brenda, I see you're typing an answer. Now I'm going to ask you a question. So I'm giving you a slight heads up. But what is the lead time that importers can expect? Will they get a 30-day window? Will there always be a public comment and a public hearing?

That's a great question, Stephanie. I would not expect a great deal of notice if what we saw in Trump 1.0 is, in fact, the way that things operate in Trump 2.0. I worked fairly closely with Peter Navarro while he was in the White House, and he always referred to Trump time, which essentially meant yesterday. And so he was always looking for things to happen. But what I would suggest is that there are -- that we differentiate between what comes across on social media and what is more formally published or discussed in -- with a significant amount of detail. The ones that are -- come out formally in a Federal Register notice or a presidential proclamation are the ones that you can expect to implement and sometimes they implement tomorrow and others do have a 30- to 60-day notice and comment period, along with the analysis of those comments and then implementation. We did not see a lot of use of extended notice and comment periods during the last Trump administration. And I'm not sure that 201 and 232 requires those notice and comment periods, though 301 definitely do. I think we're going to have to see how this rolls. My recommendation is keep your eyes very closely on the news or on our news flashes and make sure that you have a sense of what's coming at you, whether they're talking about a particular country, whether they are talking about a particular industrial sector that, that should give you a little bit of heads up.

Thank you, Brenda. Yes, a huge part is just the mechanism that's used and with that mechanism, what the rules are around it. So it will be interesting to see. I don't think we've gotten a lot of indication on what they're looking to use. This one actually came up within our team as well. And Madeleine, I can't remember if you or Brenda did the research on it, but can those List 4B, that never got implemented. It was the Section 301 List 4B. Can that just be resurrected? What did you guys find on that?

I think it can be resurrected. It can come back.

It could. Though the characterization, if you look at the Internet, is that during the Biden administration, that investigation was finalized. So it's final. And so we have what we have. I think the other interesting thing to keep an eye on is the court -- is the case that's currently in front of the Court of International Trade on the 3B and 4A List that have a tremendous number of importers associated with that particular court case that if things don't go the way the government is looking, could be a pretty significant change in how those tranches are applied. So keep an eye on that. I think oral arguments are scheduled to be the first or second week of January. So there should be some press in the trade.

Thank you. And thank you for using the word tranche. I think it just set to shiver down many of spines giving flash back to 2018, Brenda. Thank you for that. Okay. We have a whole bunch more questions coming in, but I think we need to actually wrap up. So Samantha, I'm going to hand it back to you so people can get re-reminded how to get slides in the recording.

Absolutely. Thank you, Stephanie, and thank you all for your great questions. We are able to pull those, and we'll do our best to try to get answers where appropriate. If you have a very specific question related to your business or specific product, we do ask that you work with your local account management team with Expeditors. And if you don't have someone specific you can talk to, you're welcome to reach out and we'll get you connected with someone. Otherwise, just a reminder, we will provide the slides and the recording back to you all. All we ask is that you complete a short survey that will be sent to you via e-mail from myself here within the next hour. And once you complete that survey, you will be redirected to another page with a link to a landing page for the recording and the presentation slides. Again, if you have any questions or problems with that, you're welcome to reach out to me after you receive that survey. We appreciate all of you joining. To all of our speakers, thank you so much for covering so much information in a quick amount of time. We hope you all have found what we talked about today valuable. So thank you for joining, and have a great day.

Thank you.

Thank you all. Take care, please. We'll be talking more soon.