TARIFF IMPLEMENTATION Tariffs are typically calculated as a percentage of the customs value of the goods, which includes the price paid by the importer plus certain additions and deductions. Te duty rate is fixed for all imports of a given classification from a given country, and each is assessed in addition to the others. Note that applying all of the recent additional tariffs requires a nuanced analysis regarding the product’s COO and HTS code when determining the tariff rate. Importantly, the importer of record is responsible for ensuring compliance with all applicable customs regulations.
CHALLENGES IN THE GAMING INDUSTRY For gaming companies, these tariffs present several challenges. Te increased costs associated with importing gaming machines, parts, FF&E, and other materials can strain budgets and disrupt supply chains. Additionally, gaming manufacturers and casino operators are not only focusing on the impact of the tariffs on gaming hardware and FF&E, but also the impact on their capital improvement cycles, as they consider expansions or renovations.
Te new tariff implications are highly complex, varying by country and industry. As a result, the first step companies need to take is to quantify impact by modelling their tariff exposure. Tese models can then be used to create mitigation plans and inform strategic decision-making. It will be critically important that the gaming industry navigate these tariffs while maintaining competitive pricing and ensuring the availability of products for business partners and customers.
MITIGATION STRATEGIES To manage these challenges, below are several strategies that companies could consider:
1. Valuation Planning: Companies can reduce duty obligations by exploring alternative customs valuation methods, excluding non-dutiable costs from the customs value. Additionally, they may evaluate transfer pricing to better optimise customs and tax requirements.
2. First Sale for Export: Tis strategy could allow importers to use the price paid in the first sale as the customs value, potentially reducing duty liabilities. It can be particularly beneficial for industries with multi-tiered sales structures.
3. Foreign Trade Zones (FTZs): Utilising FTZs can help reduce the landed costs of imported goods, offering cash flow benefits and duty savings. Tese zones act as a buffer, allowing companies to defer or eliminate tariffs on goods stored within them.
4. Duty Drawback Programmes: Participating in duty 96
drawback programs allows companies to reclaim duties paid on imported goods that are subsequently exported. Tis can be a valuable tool for gaming companies involved in international distribution; however, there may be limitations.
5. Evaluate Country of Origin and Tariff Classification: Ensuring accurate customs valuation and correctly determining the country of origin can help avoid overpayment of duties and penalties. Correct HTS codes will be essential for proper tariff classification and duty assessment.
CROSS-FUNCTIONAL CONSIDERATIONS Effective management of tariffs requires cross-functional collaboration within organisations. Teams spanning trade & customs, tax, and supply chain management must work together to assess the impact of tariffs and develop comprehensive mitigation strategies. Te cross-functional collaboration helps companies mitigate rising costs, source strategically, and negotiate effectively.
ACCURACY AND COMPLIANCE In navigating the tariff landscape, the accuracy and compliance of customs valuation, country of origin of products and materials, and accurate harmonised tariff codes (HTS) is paramount. Origin determination has specific rules depending on the country of import, and it is crucial that importers conduct their due diligence, as they will be responsible for justifying the origin to customs authorities. Ensuring precise customs valuation helps avoid overpayment of duties and penalties. Correctly determining the country of origin is crucial for compliance with trade agreements and tariff regulations. Accurate HTS codes are essential for proper tariff classification and duty assessment. Companies must invest in robust compliance programmes and training to maintain accuracy and avoid costly errors.
Te dynamic tariff landscape presents both challenges and opportunities for gaming companies. As a result, trade considerations are becoming an integral part of cost mitigation and strategic planning discussions, prompting businesses to adopt more resilient and adaptable approaches to navigate the complexities of international commerce. By implementing strategic mitigation measures and fostering cross-functional collaboration, gaming companies can navigate these complexities effectively and compliantly.
As the industry continues to adapt, staying informed about policy changes and leveraging duty savings programs will be crucial for maintaining competitiveness in the global market.
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