Podcast - Adapting to Tariffs and Other Trade Policy Shifts Under the Trump Administration

Andrew McAllister: Hi all, this is Andrew McAllister again, a partner at Holland & Knight. I just wanted to provide a quick update on the podcast we had recorded last week on January 30. As expected, things are moving quite quickly within the Trump Administration. So subsequent to our recording on February 1, which was this past Saturday, President Trump signed three executive orders related to tariffs, one with respect to Canada, one for Mexico and one for China. And so there was a flurry of activity, I would say, over the weekend amongst both the U.S. as well as all of those three countries, over the weekend and then into Monday. There were telephone conversations between Trump and some of the leaders of those other countries. And so just to paint the picture, the executive orders at least that were issued and the implementing customs changes would have caused an additional 25 percent duty on products from Canada as well as products from Mexico. The only exception to that was a small group of energy-related products that the Trump Administration would tariff at a lower rate of 10 percent. Again, those executive orders were set to go into effect on Tuesday, February 4, but pursuant to some negotiations, discussions between Trump and both the Canadian government and the Mexican government, those measures were halted essentially for a 30-day period. So there were certain measures that both Canada and Mexico took in order to address some of the problems outlined by the Trump Administration in those executive orders with respect to things like fentanyl and crime. And so those are halted, again, for a 30-day period. So that takes us into the beginning of March. Obviously, there will be a lot of jockeying and follow up there in terms of what ultimately is the resolution. So that's the status of things with respect to Canada and Mexico.

When we turn to China, the 10 percent duties that Trump issued and announced on February 1 have gone into effect as of February 4. So any products that are being imported into the U.S. on or after February 4 are generally subject to an additional 10 percent duty. And that's calculated typically based on the value of the good. And so those would be in addition to any other tariffs such as Section 301 tariffs. There is one small sort of exception for products that were on the water prior to the announcement on February 1. There is a period of time in which those shipments can still be made to the U.S. and entered without having to pay the additional 10 percent duty. But again, that's a pretty small category of sort of preexisting shipments before the executive order was announced.

Obviously, given the flurry over a few-day period, we have to expect that there are going to be lots of ups and downs, twists and turns, particularly over the next 30 days with respect to Canada and Mexico. On the China side, it has been reported that President Trump and the Chinese president are planning to meet and further discuss the tariffs. China has implemented some counter-measures in terms of further export restrictions on items that are produced within China, as well as some tariffs on incoming goods into China.

So we just wanted to make sure that the audience is up to speed on where things stand as of February 4. Obviously, there's going to be additional twists and turns in the coming days. And a lot of the issues that are discussed in the remainder of the podcast remain true. We just wanted to provide this so you had the latest and greatest information.

Susan Lafferty: Hello and welcome to "An Energized Exchange," where we dive deep into the critical issues shaping our energy landscape. Today we're exploring the complex world of energy, trade and tariffs under the new Trump Administration, from the imposition of tariffs on specific products and countries to the broader impacts on global energy markets. We'll impact how these policies will influence the energy sector today and over the next four years. I'm Susan Lafferty, a partner at the law firm Holland & Knight. And I'm joined by my two partners, Robbie Friedman and Andrew McAllister. Robbie is co-head of Holland & Knight's International Trade practice, and a leader of the firm's National Security & Defense Industry Group. Robbie deals with complex legal, regulatory and policy issues that involve international trade and investment, government regulation of cross-border transactions and compliance with U.S. laws based on foreign policy and national security. Prior to entering the private sector, Robbie served for six years in senior legal and policy positions in the U.S. government. Andrew is also a partner in Holland & Knight's International Trade practice and co-leader of the firm's Customs and Products Importation team. Andrew provides cross-cutting and strategic advice for international trade regulation matters on a wide range of issues, including export controls, sanctions, customs and cross-border investment. Prior to joining Holland & Knight, Andrew served for several years in an international trade capacity within the Department of Commerce. Welcome to you both. So, Robbie, I'm going to start with you. Could you give us an overview of what a tariff actually is and how it's implemented and how it is assessed?

Robbie Friedman: Sure. Well, first of all, thanks, Susan, for inviting me to join. Andrew and I are pleased to be with you today and to talk about what is on a lot of our clients minds — tariffs — which we've heard a lot about, obviously, in the press over the course of the last couple of months. So at bottom, the way to think about a tariff is when you have an import of a commodity of any kind, a tariff is what you're charged in order to import that into the United States. It is associated or attributable to the importer of record. So the importer of record is not always the same company as the manufacturer or even the customer. It could be a variety of different counterparties. So in order to kind of figure out who's responsible, or who's on the hook in the first instance, for a lot of these higher tariffs, it's important to identify the different counterparties in the supply chain and which entity is the importer of record. Now tariffs are applied to imports based on the classification of the product under the Harmonized Tariff Schedule or the HTS code, which is the numerical code that describes specific products and characteristics of specific products. And so the process of identifying the proper HTS code and applying the applicable duty rate is what importers are responsible for doing in declaring those imports during the process of importing their goods into the United States. Our team here works on a variety of import-related matters, including, you know, things like misclassification, valuation issues, prior disclosures where there might be mistakes when it comes to the proper classification or the accounting when it comes to the tariffs associated with imports. So it's a pretty complex system that's administered by the U.S. government, and it's one that is frequently the subject of political machinations. And this is no exception. Tariff rates can go up. They can go down, you know, depending on what goes on. And in the industry that's at issue.

Now, we've heard a lot about how those tariffs might be deployed under the Trump Administration. And we have some clues based on past practice, and we also have some clues based on what the president has said and preliminary steps that he's taken. I'm going to just go through a couple of the most frequently discussed legal vehicles for the imposition of tariffs. And keep in mind that a lot of these options are malleable, right. We don't exactly know what strategy the president will ultimately choose or whether he takes an "all of the above" approach and implements these in different industries or with regard to different countries. So the ones that some of our listeners might be familiar with were deployed during the first Trump Administration. The first is something called Section 301. Section 301 is an investigation — well, it follows an investigation, I should say — by the USTR, the U.S. Trade Representative, and tariffs may be imposed under the section of the Trade Act of 1974, which is Section 301. And in order to have a basis for deploying higher tariffs under Section 301, it requires an investigation. And that investigation must find that a foreign country has violated U.S. trade agreements or engaged in acts that are unjustifiable or unreasonable and burden U.S. commerce. Now, the length and the duration of that investigation can vary. It could be from a couple of months to up to nine months or a year. There's no predetermined period of time for that investigation, but it does provide some administrative process that is required in advance of the imposition of tariffs. And it does require a concrete finding that the acts of the foreign country met the criteria that I just mentioned. There is a track record of that. During the first Trump administration, Section 301 was imposed for both Chinese origin products as well as Vietnamese timber. In that instance, the tariffs imposed ranged from 7.5 percent to 25 percent across four different lists of items, and the total value was over $500 billion. So it was pretty substantial, pretty intense. The benefit for the business community in a Section 301 action is that there is an opportunity to participate in the proceeding to develop those lists that I mentioned for products that would be subject to higher tariffs. And during the first Trump Administration, there was an opportunity to seek product exclusions. And Andrew and I and the rest of our team worked with a lot of our clients to develop strategies to seek to have items removed from the list of higher tariffs and obtaining product exclusion. So that's an option in 301, which I'll come back to in a moment.

The next is Section 232. And that is an option that is available after an investigation by a different agency within the U.S. government. The U.S. Department of Commerce may impose tariffs pursuant to [Section] 232 of the Trade Expansion Act of 1962. In that investigation, that standard is a little bit different. Imports have to threaten to impair U.S. national security, similar to 301. An investigation could take a couple of months at minimum. And there's no limitation on the maximum tariff rate that could be applicable. And we saw, again, a history of that during the first Trump Administration with 232 being deployed with regard to imports of steel and aluminum on most U.S. trading partners in that context. Similar to 301, there is an administrative process, and so it is more, I would say, attractive for the business community to the extent that those are used here.

Now, I'm not going to go through every other option, but I will go lastly to what we've heard most frequently discussed as a potential avenue. And frankly, what we have already seen clues of what might be the chosen tool for President Trump. And that is a provision of law called the International Emergency [Economic] Powers Act. That is a tool that is favored by the president because it is relatively flexible and can be deployed merely by issuing an executive order that references a standard that is met that is pretty easy to declare a national emergency that's based on specific criteria that are cited by the president. That can be done relatively instantaneously. There's no administrative process that has to proceed the imposition or the utilization of IEEPA in order to deploy the executive order. The challenge there is that there's no track record of it being used in the tariff context. Most of our trade colleagues are familiar with IEEPA being used for things like economic sanctions or export controls. But it's not been used specifically in the tariff context. But most of us believe that there is a reason why it couldn't be and that it would be fairly insulated from legal challenge. And so it does give the president a lot of flexibility to impose tariffs on industries, on countries. And there's no limitation on the degree to which those tariffs could be imposed in terms of a value. The last thing I'll say about that, again, given recent news, is while there had been a lot of discussion about IEEPA being used for tariffs, we didn't have any evidence that it would be. And over the weekend, some of your listeners may have seen there was a dispute between the United States and Colombia that involved the receipt of the government of Colombia of military jets carrying a military aircraft, rather, transporting migrants back to Colombia based on deportation orders from the United States. And there was resistance from the president of Colombia to  transport of these migrants. And in response to that, the president announced that he was prepared to impose significant tariffs on all Colombian imports into the United States, utilizing IEEPA authorities, and went as far as to say that the executive order had been drafted and was basically awaiting his signature. So we now have sort of concrete evidence that that would be a favored tool that this administration might use going forward.

Susan Lafferty: That's a great summary, Robbie. And clearly, maybe even the most favorite tool is just the threat, right, of these tariffs, which, as you said, with Colombia's case in mind, got attention and got response pretty much immediately. Quick question on tariffs. When they're applied, is there generally a time frame for which they're imposed, or is it just ongoing until action is taken to revoke them?

Robbie Friedman: It's a great question. You know, assuming that the process that I laid out for each of those authorities is followed, they can be imposed relatively quickly. As long as it takes to sort of update the requisite features of the online system that's used for imports. There's no prescribed duration for the authorities that I mentioned. There are other authorities which do have durations. Some of the investigations that underpin some of the non-IEEPA-based authorities that I mentioned, require reviews to determine whether the conditions continue to be in existence. But under IEEPA, there's no specific requirement that the tariffs be sunset, for example. My recollection is that there is a time period that a new executive order needs to be issued. But it's a relatively administrative process.

Susan Lafferty: Interesting. That's helpful. So, Andrew, let's pull you in. At the time that we're talking now, we are all of 10 days into the Trump Administration, but things have been moving fast and furiously. So could you give us an overview of what Trump has done so far on trade matters?

Andrew McAllister: Great. And thanks again, Susan, for the opportunity to participate here. So looking forward to the discussion. So I guess sort of stepping back a half step, I would say is, as Robbie sort of outlined, a lot of trade policy really emanates from the executive branch. So I think that's an important initial point in that the president and executive agencies have been given quite a bit of latitude in how to contour trade policy. And so certainly with many prior administrations, as well as this one, it's the executive branch that is largely leading the effort here. And so I would say again, first 10 days have been busy. And I would say that there have been a number of documents that the Trump Administration has issued that sort of outline their priorities when it comes to both trade policy, but also energy policy. And so I would certainly point the listening audience to the "America First" Trade Policy, that was a memorandum issued by the Trump Administration, as well as an executive order on Unleashing American Energy. So I think those give us at least a view of where the Trump Administration's going to move, where it's going to prioritize things from a trade policy perspective. So obviously, there's quite a bit of uncertainty when a new administration comes into office. And so I would say this is no different in some respects.

The other point I would make is during sort of the lead-up and I would say the lame duck time period between the presidential election and Trump being inaugurated, that there were a number of statements made about across-the-board tariffs and, you know, applying to any and all sectors for many and all countries. And I would say over the past couple of months, as well as through some of the documents that have been issued, we're starting to narrow that lens a little bit, narrowing that focus. And so, again, I think over the next few months, those two documents that I referenced, particularly the America First Trade Policy agenda, has a number of reports that have to be generated by executive branch agencies. So that, again, is going to tell us more about where things are headed.

Just pulling a few examples from that, for instance, one of the areas that the administration is going to review is the WTO agreement on government procurement. And so why that's important is that often intersects with domestic preference laws. So there may be certain government contracts in the energy space that require an American-made item, right? An American-made battery, an American-made battery, energy storage system, etc. And so seeing how the administration moves in that area, is it going to allow a French battery to be used in the same way a U.S. battery can be used for government procurement processes? Other areas are, as Robbie mentioned, Section 232, again, the potential imposition of tariffs related to items that are impairing national security. And so there's sort of a broad mandate there for the executive branch agencies to assess are there any industrial or manufacturing bases that may require action under 232? The other piece, which I think we've heard a lot in the news, is there's going to be an assessment of unlawful migration and fentanyl flows from Canada, Mexico and the PRC to evaluate what the problems are, as well as potential remedies or measures.

And so I guess the other piece that I think is also important is we have sort of government-led trade policy and trade measures. We also have private trade litigation that can be brought in a sort of administrative capacity. And so some of the audience may be familiar with Section 201. Those are safeguard tariffs. A case was brought several years ago with respect to solar cells and solar panels. And another area is the so-called anti-dumping and countervailing duty cases. Again, we saw in the prior Trump Administration, many private actors were emboldened to seek remedies under these various laws, given sort of the pro-U.S. manufacturing belief of the administration. So I think in addition to those are government-led trade matters, trade policy, we're also going to see some additional actions under sort of the administrative laws.

Susan Lafferty: Great. That is great context for what is happening. I've recalled previously, when we've seen tariffs or other protectionist measures in the renewable fuel space, the question of whether a WTO action would be brought was a challenging one. Just because the time and the money needed to go through the challenge was pretty onerous. So it will be interesting to see what reaction industry and countries have to any of the steps that Trump may take.

Andrew McAllister: No, absolutely, Susan. And certainly, I mean, the disruption has been created. Even if there's ultimately some kind of WTO case or other court case, which we'll get into a little bit later, is that the very act, the very announcement of a particular trade measure is hugely changing to the business community, even if it's temporary.

Susan Lafferty: Yeah. So you mentioned Canada and Mexico, our two neighbors. And Trump has threatened tariffs on both of them. And this really could impact crude, which our refineries rely upon. Natural gas, we send a lot of gasoline to Mexico. There's also a lot of critical minerals that we get from Canada with regard to electric vehicles, which certainly are not favored by the Trump Administration, but nonetheless are being built in the U.S. We talk a lot about independence from sources that are controlled by China. And so securing critical minerals from Canada is a much more appealing alternative. But the prices of lithium, cobalt, nickel will all surge, especially if there's tariffs. So what is your thought on how immediate action might be by Trump or is there mostly saber-rattling going on now that is intended to get some action on, say, securing the border and immigrants coming across the border and perhaps some other issues that Trump is very focused on.

Andrew McAllister: We've had a U.S., Canada and Mexico trade agreement for decades at this point now, right. We previously had the NAFTA agreement, and then most recently that's been replaced by the U.S.-Mexico-Canada Agreement. And so there is a high level of interconnectedness. And we've certainly heard from lots of clients that have integrated operations that occur in U.S., Canada and Mexico. And so I think there is quite a bit of concern out there among businesses. And I would say to some degree the concerns are justified because it could be hugely disruptive. And with these types of measures, there are likely to be winners and losers. And so I think getting prepared, understanding different scenarios, is really helpful. Again, the USMCA is designed to create sort of a duty-free environment amongst the three countries. And so I would say that's sort of the default. However, there is at least a couple of provisions within that agreement that allow a party — meaning one of the three countries — to apply measures that it considers necessary for the fulfillment of its obligations with respect to maintenance or restoration of international peace or security, or the protection of its own essential security interests. And so, again, regardless of where you fall in party ideological perspective, I think we would all agree that it's at least an unanswered question at this point whether something like the imposition of tariffs to combat unlawful migration and fentanyl is that protection of the U.S.' essential security interests. There's probably arguments on both sides. And so I think that the concern is real. And yes, there are aspects of USMCA that have provisions like dispute resolution mechanisms, etc. But again, as we mentioned, that requires the action to be taken, the impact to be felt and then the sort of rebuttal or litigation.

Robbie Friedman: Yeah. And I would just say, Susan, kind of pull a couple of these different pieces together, while we can think about how, you know, certain policy issues might be the predicate for the imposition of tariffs in certain instances. I think what is clear is that this president is willing to utilize tariffs — and you alluded to this earlier — you know, as a threat or as a negotiating tactic for seemingly unrelated issues, right. We saw that with Colombia in combining tariff threats with migration and deportation issues. Similarly, you know, in the energy sector, right, we've got the potential tariffs on our neighbors to the north and on the south. But we can't divorce that from separate actions by the administration. For example, on the 20th, the first day in office, Trump issued an executive order declaring a national energy emergency, which was the first time that that's ever been done at the federal level. And, of course, that is in furtherance of the president's agenda of boosting domestic manufacturing and production, fast tracking energy infrastructure projects, bypassing environmental regulations and utilizing other tools at the federal level to support and provide, at the federal level, opportunities for further domestic energy production. And so when you think about that side by side with those industries that might potentially be subject to tariffs, you start to see some patterns emerging for which industries might be at most risk of higher tariffs.

Susan Lafferty: So to take that a little bit deeper for one industry. You know, as I said, U.S. refineries rely on Canadian oil. So putting a tariff there would lead to increased gasoline prices in the U.S., something that Trump has said he intends to bring down. Also, operational costs would be higher. It has been reported that API, the oil and gas trade association in the U.S., is already lobbying Trump for an exemption for its products. And Robbie, you mentioned earlier that there is, there are exemptions that can be sought for some or all of these tariff actions that Trump could take. Could you walk through, you know, how such exemptions are granted and just other strategies that you and Andrew are advising clients to explore?

Robbie Friedman: Yeah, that's a great question, Susan. So a lot of it will depend on the legal measure that is used. And we talked about some of those upfront. You know, we have a track record with Section 301, for example, of seeking product exclusions for certain HTS codes, right, certain products with certain codes that align with characteristics of the products could be sought. And, you know, the rationale we would use would range from there's no domestic equivalent available to the impact on the local economy, to the importance of a product for national security and foreign policy. So we use a lot of different bases to try to see exclusions, and that's really one process. But if the president uses IEEPA, which most people think he will use, there isn't a clear-cut regulatory process for seeking exemptions or exclusions from those tariffs. And so what it will likely mean in practice is companies approaching the administration, either individually or with consortia or with trade associations, to make the case for why either certain industries or certain products or certain countries of origin should be carved out from broad-based tariffs. And, you know, again, I think the rationale, if you try to create some compelling reasons that aligned with the president's agenda, you might advocate for certain carveouts based on Americans who are employed domestically. Or evidence that companies have domestic manufacturing or that are seeking to enhance domestic manufacturing. We don't exactly know what the most compelling rationale will be, but we are seeing clients already organizing themselves, figuring out where the touch points are in the administration, developing an advocacy campaign either individually or with like-minded companies, and trying to make the case that they should be spared from higher duties. The other thing that we're seeing, which I think is critically important that everyone can do, every business can do, regardless of whether you have a proactive strategy with the executive branch, is to engage in supply chain mapping, right. Figure out precisely where your imports are coming from, where your componentry is coming from, you know, where your raw materials are sourced, so you know where your pain points are. You can figure out if there are specific vulnerabilities where if there are higher tariffs in one area, it might be very costly to do business where, you know, in other areas it might not be quite as difficult to swallow. We have some clients, frankly, that are seeking higher tariffs from some jurisdictions in order to box out competitors in seeking lower tariffs from other jurisdictions that are main sources of input into their products. So having some fidelity around supply chain and then beginning to develop a strategy around really the costly parts of the business that might be scrutinized is something that we would recommend.

Susan Lafferty: Those are great strategies. And certainly advocacy is necessary because there's an old adage here in D.C. that if you're not sitting at the table, you're going to be the meal. So as you know, there are many out there who would love to see certain tariffs put in place and are advocating for tariffs along with other restrictions on foreign-sourced feedstocks or finished products. So getting your issue and educating your members of Congress and relevant folks in the agencies or in the White House, in the administration, really, really will be key. Andrew, so pivoting just a little bit, Trump has been here before. He's used tariffs before and we are all lawyers. So tell us about are there any notable legal challenges that have come up before with tariffs that might impact Trump's confidence in using one approach or the other. And obviously hearing pretty loud and clear from both of you that IEEPA is appearing to be the strong preference. But any thoughts you have on the legal challenges that are sure to come?

Andrew McAllister: Yeah. So Susan, I guess the short answer is there really haven't been any final decisions in trade-related cases on Trump measures that have gone adverse to the executive action. And so I think in some ways that likely emboldens Trump to point out, to continue to push the envelope, right. For instance, I think Robbie mentioned up front that the Section 301 measures were implemented against China and it was done through a series of lists and sort of order list one, list two, list three and then list four, which was actually broken up into four A and four B. There were some challenges, particularly on list three, as well as list four A, that the action was not taken in a timely manner pursuant to sort of the Section 301 authority, as well as the Section 301 report that was generated by the U.S. Trade Representative Office. So some plaintiffs, meaning the importers primarily, argued that it was untimely, it took too long, that in some ways the report had gone stale, and that the court system — and generally the courts that rule on these cases are the Court of International Trade, and then the appellate court is the Court of Appeals for the Federal Circuit. And then on occasion these get appealed to the Supreme Court, which generally has not heard any of these cases. They've turned down granting right of appeal. But so the 301, there's also, under Section 201, which was the safeguard case related to solar cells and solar modules, there was action taken that removed the so-called bifacial exclusion and also increased tariffs for a particular year. And again, there was an argument that at the time that those actions was taken, it could only be a more restrictive approach by the government rather than creating a higher set of duties, in a way more punitive. And again, the courts have said, yeah, the discretion that the president was able to modify those duties — he happened to modify them in an increased manner — that's OK. And so the short answer, Susan, is the executive branch has a lot of authority here.

Susan Lafferty: So it's a big stick. So, Andrew, one more question before we move to the final round. Contracts, contractual language is something that we always consider how to insulate our clients, right. And if you have a supply chain that you've evaluated and, as Robbie has suggested, and found that certain products or certain components or feedstocks are coming from a country that could be targeted or are in a category that could be targeted, is there any sort of best practice or standard market approach to allocating risk in these situations?

Andrew McAllister: I guess the quick answer is first, you want to be educated as to what your existing purchase orders and contracts state, right. Because often in instances, let's say, where a product has been duty-free for years upon years, the supply chain team, the legal team may not have been as focused on some of the trade terms. They may not have been of utmost concern. Maybe they were worried about other things, you know, warranties or something like that. But now we're in an environment where tariffs are more and more of a business risk. And so looking at those purchase orders, invoices, right, what are the trade terms? Oh, it's FOB Sellers Warehouse. OK, well the seller's in Canada and we're taking possession in Canada. Sounds an awful lot like we're the party responsible for customs duties. Then you have on the other end, you might have a term that delivered duties paid. Great. That risk is on the seller, clearly. And as a U.S. buyer we're, let's say, receiving the goods in Chicago, having already gone through customs clearance. So I think the first part is educating yourself

And then also, which again, we've seen in some of these trade measures is having explicit language around tariffs. We're past the point where we want to rely upon general language, you know, act of God-type language. And so we need something that's going to speak to tariffs. And then often there is a negotiation, right? We've seen in some of the China-related tariffs, some of the solar-related tariffs, is that the sellers are put in a position where maybe they're required to negotiate or else the buyer's going to break the contract and then that seller may not be able to sell to anyone else or it's already earmarked for the U.S. market. So it's not like the seller has the ability to divert it to a different place because it meets, you know, U.S. energy standards. It's certified by some U.S. government agency. So, yes, there are opportunities to negotiate. But again, we want to be fully educated on what our agreements say and make sure that we're moving towards explicit language to decide these matters in a way favorable to the company.

Susan Lafferty: That's exactly right. Most agreements that I at least look at, certainly have change in law provisions or regulatory event provisions, and often they exclude like if taxes are increased or change. But tariffs is not typically a word that's included in that language that at least I come across. So a review of what your existing supply contracts actually say and what is covered is very wise. So in wrapping up, that is one great and important suggestion to take even before the regulatory picture is clear. Robbie and Andrew, any one more thing that you would tell our audience?

Robbie Friedman: Sure. Yeah. I mean, I think Andrew's observations are very astute with regard to contracts and really studying them and seeing, you know, what's available to be renegotiated. We talked about, you know, federal advocacy and lobbying being a key component of the strategy. We talked about the possibility of supply chain mapping and figuring it out where there are vulnerabilities and trying to account for some of those with supply chain reconfigurations. I would offer two more quick strategies.

One is, we've heard a lot about nearshoring, which is basically the concept of reducing risk to your global supply chain by bringing the inputs into your items closer to home, reducing travel time, reducing geopolitical risk — even nearshoring is going to be difficult or more difficult in the Trump Administration given pressure on Mexico and Canada, for example. So I'm touting a new phrase, which is instead, use the ocean comparison, instead of nearshoring, beach fronting. And what I mean by that is creating domestic manufacturing capability, whether that's through investment in the United States for foreign companies, engaging in joint ventures or other measures to ramp up domestic manufacturing, that is really going to be incentivized in this administration. And we're already hearing for many international clients that are exploring those types of partnerships or domestic development given the threat from tariffs.

And then the last thing I would say — and these are going to be bespoke solutions for companies — but there are features of trade law that might be available, things like foreign trade zones or duty drawbacks, for example, if you're a company that brings items into the United States and immediately reexports them to third countries for sale and they're not sold on the local market here in the United States, you can avail yourself of something called a duty drawback, which is basically a refund for duties that you paid when those items were imported. So, you know, those are, those are more, I would say, technical aspects that are not going to be available for everybody. But it's worth really scrutinizing your supply chain and your customer base to figure out if any of these would be available for you.

Andrew McAllister: I feel like Robbie covered the waterfall, but I guess I got one or two other quick ones, which is, one is customs 101, which is there's generally three primary aspects of any import: country of origin, classification and valuation. So you want to look at all three of those, you want to make sure that you're comfortable with how each of those is determined. For example, customs valuation. You may have intracompany sale between Canada and the U.S. Are you valuing it correctly? Could you reduce that value for the transaction in a way that would lessen your duty amount to the U.S. government? The last piece, just building on one of the comments from Robbie, which is, for instance, a foreign trade zone may be a great holding place for merchandise, meaning you bring a bunch of merchandise physically to the U.S. so that it's very close to where it's needed. So it's physically within the territory of the U.S., but it hasn't been entered for customs purposes and so it sits there temporarily, and then you can make quicker decisions in terms of what's the current policy of today, is there a tariff today or is there not a tariff. And then you make those decisions on a much shorter timeline than a decision of, OK, should I export the product from China, which is a multi-week process.

Susan Lafferty: Well, I can tell that you two will have your hands full for the next four years and I'm sure beyond. We will probably need to revisit and see where things are in the next couple of months. This has been very informative and really helpful to understand what to expect next and what to do next. So many thanks, Robbie and Andrew, for walking us through this. Thank you to our audience for joining us. This is "An Energized Exchange," and we are signing off for now.