Goodbye Duty Free Shopping Hello Customs Entry Fees

A landmark Supreme Court decision on IEEPA has redefined the tariff landscape, ending broad emergency powers and forcing a shift to Section 122. For importers and manufacturers, this means a renewed focus on managing landed costs and navigating the legal scramble for tariff refunds.

In this episode, we break down:

• Tariff Refunds & Compliance: The complexity of passing savings to end-users and the critical need for a "paper trail" in trade finance.
• The End of De Minimis: How the removal of duty-free exemptions is reshaping e-commerce and small-parcel logistics.
• AI in Customs Enforcement: Using automation for supply chain mapping, valuation detection, and building an audit-ready "golden folder."
• Practical Defense: Why pairing AI with expert oversight is now essential for legal tariff engineering and HTS classification.

Stay ahead of 2026 trade turbulence. Subscribe for expert insights on scaling global operations and mastering customs compliance.

Transcript

Alex Romanovich 0:26

Hi, this is Alex Romanovich and welcome to Global Edge Talk. Today is March 13, 2026, and we're joined by our trade Sherpa Simms. Hello, Ala.

Ala Simms 0:37

Hello, Alex. Nice to be a guest again, and uh looking forward to our great conversation.

Alex Romanovich 0:42

You know, it's gonna be a quick one, although there's just so much to talk about. February 20th, the earthquake. We'll call it the earthquake. Supreme Court ruled that the International Emergency Economic Powers Act, as we know, is IEEE P A, does not authorize the president to impose broad, open-ended tariffs. What can you say about that? And what shall we expect? What are some of the ramifications for the industry, for the manufacturing sector, for the export-import sector? How is this earthquake being felt by everybody around us?

Ala Simms 1:16

Honestly, we've been looking forward to this decision for a long time. And uh honestly, in two words, we're relieved. We're relieved that there is a decision, there is a positive decision because it has been a period of uh instability, of we didn't know what the Supreme Court will decide. Will there be any refunds? Will not be any refunds, what the AIPA um president, or will the president be able to impose any more actions under AIPA? And it's been ruled out that the that his um powers have been kind of over uh the AIPA um provisions, and he could not have imposed um uh AIPA tariffs based on on this.

Alex Romanovich 2:03

Yeah. But the administration kind of pivoted fairly quickly and uh they invoked uh the section 122 that basically said um that hey, we can keep the 15% baseline tariff. I'm I'm not sure if they implemented 15% yet, but uh they certainly can do that. Does that um uh does that align with their revenue projections, if you will? And what about the refunds? Will the uh you know, will the federal expresses and targets and so forth and so on, will they be able to get the refunds back or will be will they be able to pass those refunds to the consumers?

Ala Simms 2:43

Absolutely. So 122 were very quickly implemented based on uh the AIPA abolished uh tariffs and projections for trade deficit have not been substantiated. Well, uh historically in the past year when they have been implemented. Um, and uh trade deficit itself, it's not the issue that we're facing economically. There's more underlying issues macroeconomic, um macroeconomically in the US, as inflation, instability, maybe some capital flows and gains and so on. So section 122 has been implemented as a response to the presidential powers are substantiate, or uh I uh the president says that he has other means or other tools of implementing any trade tariffs as he has done so. And uh to a question on AIPA refunds, yes, there's already has been a process initiated on refunding the importers, although there is a gray area how the end users will be refunded already. That, you know, tariffs have been passed to end users and it's kind of lost there, you know, where the refunds will go. But importers, yes, they will be refunded. And the process is being worked on.

Alex Romanovich 4:07

Let's talk a little bit about the uh de minimis exemption that was taken away in um uh 2024. Actually, it was uh 2025, but in 2024, um the United States received close to one point, you know, one and a half billion packages under the rule. Now, does this mean that small packages, small parcels, which are you know, sometimes $80 to $100? We we all know Timu, we all know Amazon, we all know any of those folks. So every e-commerce company is now impacted by this. And does this mean now that uh de minimis rule exemption now is going away? And that means that a hundred dollar package may be paying or importer of the hundred dollar package may be paying what? Some ridiculous amount of money on this, right? In terms of tariffs, right? So for um any of the e-commerce companies that are listening to this who used to ship duty-free uh overseas from overseas, you know, uh every $15, $20 shirt is gonna get a customs entry now. Is that is that the case? And what does that do to the e-commerce industry and export-import type of a situation?

Ala Simms 5:25

Yeah, so e-commerce definitely is being reshaped um with the within the US uh customs entries. And and to mention uh US had in the past the highest uh de minimis threshold, which was $800. Currently, nowhere in the world, maybe Australia only has uh a thousand Australian US dollars as de minimis, but and EU has 150, which is going away by seven. Um so the biggest concern with De Minimis was that there was a big, big influx of all the cheap and not so quite quality products to the US, which does not protect consumer, the end user, for um, you know, the quality and all other protections of end user. Um, and also indeed the revenue of the US was not quite substantiated of all those um inflows. That is one of the main reasons why uh the de minimis threshold was uh abolished in August of last year. And also it does impose uh administrative cost as each customs processing of even the smaller packages, and uh it creates um you know backlogs as well. And it does cause e-commerce, how it reshapes e-commerce is um that they now have to consolidate or store it in a warehouse somewhere in the US, either on the bonnet warehouse or any other FTZ or any other um, you know, any any other warehouse in the US and then consolidate and then sell it to the end user or process in bulk. And then this is the option to uh to reach the end user. Your microphone is not working.

Alex Romanovich 7:12

So the other option is to engage in something we call tariff engineering, which is I'm not sure if we can call it manipulation or if we're calling it optimization, but it's definitely a change in the way that the country of origin is being considered, that the supply chains are being considered, or reconfigured even. Or uh the way that the classifications are being um you know done and so forth. Tell us more about tariff engineering. What is it that uh what is it as a strategy? What can happen and what how can this can tariff engineering be helpful?

Ala Simms 7:46

Yeah, tariff engineering uh is a complete legal tool and it it has to be complete at the inception of the product or when at the design or at the very beginning of engineering, a product which we you ex intend to export to the US. And um it is it has to be commercially viable. If you're just manipulating a product just for for the sole sole goal to reduce the tariff, it's it's probably going to be looked not very good by customs. It has to be commercially viable and it has to be it has an idea just to um you know to position your product and you can benefit from tariff reduced tariff.

Alex Romanovich 8:26

So now let's talk about AI for a second. Obviously, AI is being considered for almost every segment in the industry, not just the supply chain or tariffs and so forth. Customs, for example, is using artificial intelligence to map supply chains in real time. So you cannot, you know, you cannot transship something and mask it and mask a Chinese product as a Vietnamese product. And uh 90% plus accuracy is now being observed by the customs. The penalty could be quite, you know, quite hefty, from what I understand, for misclassification. However, customers and you know, shippers and the importers, borders can create what what's called the golden folder. Tell us a little bit more about this and uh how defensible it is in terms of audits and and and so forth and so on, uh, only because um AI is being used on both sides. So tell us more about that.

Ala Simms 9:23

Right, right. So Customs and Border Protection has explicitly said they're using AI and to target different irregularities or noncompliance issues, or just to speed up um, you know, detecting all this avoid uh avoidance of tariffs or any other non-compliance issues. And in the brokerage world, we call it also census warning as well, which means that the value maybe before has been imported a certain product under certain value, and then the next time it's being imported under a diminished value or over a certain threshold. So this is being detected by AI tools and technology is moving fast in this direction. The good news is that the importer is implementing or can implement also these tools just to uh detect all these irregularities with their imports or with any other commercial activities, e-commerce or any other. So, yes, these tools can definitely shape and um help uh both sides to be compliant with all the trade environment current, which is shaping, which is very changing very fast.

Alex Romanovich 10:32

Right, right. So it's kind of interesting how if before the classification or reclassification was almost a manual process, you know, looking through spreadsheets and and uh documentation and so forth, now AI is uh sort of entering the space or has entered the space, and is um, you know, when you, for example, try to reclassify the ratio of materials in the product. Let's say it's an assembly panel or prefabricated panel or something like this, and all of a sudden you can reclassify it or almost uh you know repackage it or break it down so it doesn't look, you know, it doesn't look like a timber panel, it looks like something a lot more granular, if you will, and potentially moves it, you know, by by doing that, you're potentially moving into lower duty HTS category. Is that something that manufacturers and importers and exporters can do in terms of taking a look at their entire database uh of SKUs, database of products? Or is this something that you really need a um, you know, not just the AI tools, but also need an expert to kind of navigate this and almost uh you know conduct the the process, if you will.

Ala Simms 11:46

Yeah, sure. So AI tools are helpful in classification and reclassification or detecting maybe those classifications that have not been done correctly in the past. Uh and these tools are very valuable, yes, but you do need an expert who will overlook and uh kind of guide the process. The entire process can, of course, have some variations and errors by using AI tools, but there's there are some very valuable tools that can save you time and save you non-compliance issues that you might face. And of course it can lower the duties if um, you know, it can just signal that this has not been been classified correctly, or if you do any modifications to your product, like you mentioned, timber um and timber panels or any other, the two can flag that it would what if it will face potentially.

Alex Romanovich 12:38

Allah what is uh in conclusion, what is one advice you would give to any manufacturer who is looking at their bill of materials today um to kind of survive the rest of the 2026? And what do you anticipate is going to happen next? What is your prediction for the rest of the year?

Ala Simms 12:56

So for the rest of the year, the year will be interesting, like was 2025. We hope not as bad as 2025, but uh just to mention currently the Section 122 uh tariffs, they will they are being already challenged in court. There are 24 states that have filed against the tariffs, and we will hear back from the Supreme Court if they're valid or they will be refunded as well. So we're all looking forward to it. All the importers can do is comply with all the current uh regulations, use AI tools, they're very helpful. Look at your bombs and um uh look what tariff mitigation strategies you might have. Either it can be controversial, supply chain shifts, possibly uh consolidation, warehousing, uh, or any other tools you might might use. But yes, this is will be an interesting year for sure.

Alex Romanovich 13:53

Allah, thank you for being with us today. And let's chat quickly again, probably in the next couple of months, because things will change again, as we know.

Ala Simms 14:03

Absolutely. It was a pleasure.

Alex Romanovich 14:05

Thank you.