All right, hello, welcome everyone. Welcome to our second webinar for March. My name is Nick, and I am with Onyx. I'm a director with our Onyx group. I'll be hosting and moderating questions, and I'll also be presenting some slides in the middle of the webinar today. We have two other speakers that I'll introduce here shortly. Like I said, this is our second webinar this month. It's really meant to be a follow-up from a session we hosted a week ago. I imagine many of you joined that. Last week, we dove deeply into the concept of reciprocal tariffs, and we began to model what we're projecting, some economic implications there, but also just sort of the philosophy behind reciprocal tariffs. This session is kind of a continuation of that conversation. We are going to bring up some of the material from last week as background, especially for anyone who did not join last week. We are going to shift and talk a little bit more of a commercial field today on the services that a couple of our groups, Onyx and our partner, Tradewin, who I will introduce, offers to help clients navigate things like reciprocal tariffs and all the other tariffs and trade measures we are seeing. You will see kind of a three-part field today, and I will introduce speakers, like I said, here shortly. A couple of admin things here. About 45 minutes of content. Q&A, as usual, use the Q&A window of the webinar. Submit those. We will watch questions, and if we see a chance, we will field those during the presentation. Otherwise, we will save time at the end. If you want to get a copy of the slides and also the recording for the event, look for a survey sometime today within a couple of hours of the event. Once you fill that out, it takes about a minute or two. You'll get a link to a page where you can download the materials and watch the recording. You can share that with your colleagues as well. If you'd like to be notified of webinars and just be on our mailing list, for instance, we sent out our monthly email today. If you want to get that, then use that QR code, and you can sign up your email to get materials from Onyx. It's a great way to kind of keep up with our material that we publish. Also, you know, some of you may or may not know that we as Onyx and Tradewin are part of a broader professional services portfolio as part of Expeditors. We are here both as divisions of Expeditors. You probably know Expeditors as a global logistics company that handles Customs brokerage, order management, and other things. In addition, the company has developed groups that you are seeing here on screen over the last few decades. It is a combination of consultancy and advisory services, as well as a couple of software products. All of these services can be used independently of Expeditors, which is why we set them up as distinct. Today, we will be focusing just on Onyx and Tradewin, but it will be useful to kind of understand this broader professional services structure. Okay. All right. For speakers today, we have Adam Karson from Onyx, excuse me, Chief Economist. He has more than 20 years of experience as an economic advisor to global leaders across a number of industries. He's got experience in the U.S., Europe, Middle East. Before coming to Onyx a few years ago, he worked at Chevron as a senior economist. We also have with us Matthew Springate from Tradewin, U.S. Consulting Principal. He brings a lot of experience working with importers and exporters to perfect their compliance operations. He specializes in duty recovery programs, preferential trade agreement qualification, tariff classification, prior disclosures, and audit support. All right. We're going to start off with Adam. He'll give some background to the reciprocal tariffs, what we're seeing there, and then I'll come in after that. Right, Adam? All right. Thanks, Nick. I'll just kind of set the stage here. As Nick mentioned, if you joined our webinars last week, this might be a little repetitive, but it's also a very fast-changing environment. Just in the past, really the past two or three days, we've seen a number of changes in Trump administration policies in terms of 25% tariff on autos yesterday, in addition to some potential changes in the way reciprocal tariffs could be applied. Yesterday, the implication was that these will now be applied to all countries versus earlier in the week where reciprocal tariffs might be only applied to a certain percentage of U.S. trade partners. It goes without saying here that we're in an era of rising protectionism and policy uncertainty. Ultimately, what we think, we think the Trump administration is really trying to redraw the global trade map through the use of tariffs to sort of "level the playing field" with major trading partners, but ultimately try to force trading partners to knock down their trade barriers. Tariffs are kind of being used, there's a bit of a carrot and stick here to force other countries to lower trade barriers unilaterally and reduce regulations and other types of fees and things that the administration views as obstacles to U.S. market access. There are, of course, a number of risks associated with this approach, including how other countries respond. Many are in a wait-and-see mode. Some will negotiate, others will retaliate. We'll talk a little bit more about that. There will be some economic pain associated with tariffs, both in the U.S. and abroad. That is going to test policymakers' commitment to this strategy. A good place to start here is to talk about reciprocal tariffs. As I mentioned, ultimately, the U.S. is looking for other countries to reduce tariffs, taxes, fees, non-tariff barriers, any kind of currency manipulation that they may be engaged in, and any other barriers that are put up that block U.S. market access. This includes things like VAT, subsidies, wage support, a number of other kind of measures that the Trump administration thinks are adverse to trade. If we take a crack at quantifying these different factors, of course, there is a lot of variability across different countries and sectors and products, but they average out to about 22%, say 20%-25%. That would be sort of an across-the-board average across all U.S. trading partners. If that were sort of the place we land as for reciprocal tariffs, that would be pretty significant. We've done a lot of modeling, and really anything above 20%, you start to see more significant economic fallout. While some countries will negotiate on wherever the U.S. administration starts, others will not be able to do so. Fundamentally, we don't think the Trump administration is bluffing here. We think tariffs will be implemented. There is going to be a higher level of tariffs and protectionism overall, and there will be some negative economic impacts as a result. On the next slide, we could turn to the timeline of how these things will be implemented. Of course, we're all watching the April 2nd sort of announcement next week of what reciprocal tariffs could be. There are other kind of factors and possibilities in this timeline. First and foremost is the immediate implementation of tariffs starting next week, perhaps. April 3rd is when the auto sector tariffs will go into effect. The reciprocal tariffs could be implemented also pretty immediately by using IEEPA, I double E PA, to place broad tariffs across countries. This could be anything from a very complex product-specific tariff structure. It seems like the administration has moved away from that. The more likely scenario is a single number for each country, possibly the same number for all countries as a starting point. Beyond that, there are other possibilities a little further out. There's going to be, there are short investigations on particular issues that the U.S. believes are sort of apparent violations of free trade. There are signals that the administration is even trying to eliminate comment periods on some of those investigations to try to kind of fast-track kind of their response. We also believe that there will be ongoing investigations, bilateral, trilateral investigations are going to take time, and that creates a risk for kind of a tit-for-tat escalation going through 2025 and even into 2026. Consider like a staged kind of approach where you have some immediate and then kind of ongoing points of escalation or de-escalation throughout this year. In terms of policy tools, if we go to the next slide, IEEPA is at the top of the list here for fairly immediate implementation. This gives the president broad powers because it's essentially based on national security, national security foundation. It's less likely that that would be challenged, certainly by Congress. The legal foundation is a little bit untested, but that national security umbrella gives the president a lot of powers. We could also see a 15% across-the-board tariff on countries with which the U.S. has a trade deficit. Through like Section 122, that could last for 150 days before Congress needs to ratify those tariffs. That could be used as a negotiating tool to put pressure on countries to kind of drop their trade barriers. As I mentioned before, we could see a number of investigations through Section 302, Section 232 that could be ongoing. That's a little bit more medium to long term. On the next slide, so when we think about the U.S. and China, up until now, there's been kind of caution on both sides. Now, you may push back on that and say, "Wow, the Trump administration has already ramped up tariffs 20% on China, on top of the existing 25% from 301. So we're at 45% right now. How is that cautious?" Compared to the alternative, it is kind of an incremental approach. It seems as though the Trump administration has recognized that there is a, the scale of the impact of rapid escalation with China could be quite severe and cause a lot of disruption to supply chains, among other consequences, economically, politically. We've seen this 20% ramp up just in the past few months, but this is short of a sort of maximum pressure approach. Meanwhile, China is also looking to prevent a full rupture with the U.S. China's export engine is really its major source of growth right now. They have to be careful in how they respond to the U.S. The Chinese government is really applying very acute pressure, but focused pressure through export limitations, targeting specific firms or products, all with the goal of applying kind of very specific focused economic or political pressure on the U.S. There is a risk of escalating here. Most notably, the addition of potentially another 25% tariff on countries that buy Venezuelan oil. That would include China, India, among other countries. That would take China tariffs from 45%- 70%. Our understanding is these would all be additive. On the other hand, yesterday, during a press conference, President Trump suggested that maybe China could get some relief on tariffs if they're a sort of a proactive, constructive partner in the U.S. trying to acquire TikTok. There's a bit of give and take here and a lot of uncertainty in how this is going to play out. While all that's happening, it's also really important to focus on the EU. The U.S. is really targeting the EU, and policy is going to remain front and center with some pretty serious disagreements dominating the headlines on things like the Digital Markets Act and CBAM, the Carbon Border Adjustment Mechanism. The EU is quite concerned about this and the scale of the changes that the U.S. is trying to push for and the sort of like take it or leave it approach of either you agree to our U.S. demands or you're going to face a ramp-up of tariffs and trade obstacles. This one's kind of difficult to call how this is going to play out. We think there are a couple of options how it could go. In the immediate term, it does look like there will be escalation over the next several months in ramping up the rhetoric, potentially ramping up tariffs, not unlike what the U.S. has done with Canada and Mexico. Throughout the year, we're likely to see some negotiation, delays, pauses, retaliation. There's also a de-escalation pathway here where the EU would agree to some or all of the changes that the U.S. is pursuing. If not, I think the U.S. may also not be willing to necessarily pursue a maximum pressure, in particular, if the U.S. economy looks like it's in trouble. On the macro side, the U.S. economy is looking a little bit shaky at the moment. That'll be something to really watch as a signpost for maybe U.S. negotiating power going forward. I'll wrap up with one more slide here, just kind of quickly taking a look at the rest of the world. We talked about China and Europe, but really the rest of the world is kind of mostly in a wait-and-see mode. Some countries, I think, are standing out as having a more or less assertive response to U.S. policy. The results have been kind of mixed in general. One interesting kind of case study is to look at Canada and Mexico, where they've been faced with the same circumstances, but have responded very differently. Canada has been quite assertive. Mexico has been more intentional in delaying its retaliation. Yet both countries have ended in the same place with the same tariff treatment. That has sent a mixed message to other countries on how to approach negotiating or dealing with the U.S. You also have India, which provides another signal that perhaps a bilateral negotiation is actually possible with the U.S. India has been able to kind of succeed in that vein by more unilaterally removing some of its barriers or dealing with some of the issues that the U.S. has identified on their own before coming to the negotiating table. You have a host of countries that just aren't responding yet. For example, they haven't responded to steel tariffs. They're kind of waiting and seeing what happens next week with reciprocal tariffs. This is because a lot of these countries have very different exposure to trade, generally very different exposure to the U.S. specifically. They all have their own set of leverage and tools that they could use. Some have a lot of leverage, some have very little. Really, one of our big roles going forward is to help clients stay on top of these changing dynamics, monitor what's happening in real time, and then have an eye to the future of where kind of each individual country might land in terms of their, let's call it the tariff relationship with the U.S.. With that context in mind, let me hand it back to Nick and dive into the TRM. Thanks, Adam. There's one quick question about where Mexico falls here in dependence on exports to the U.S., because I know we're not showing it. I imagine it's close to Canada. It's in that range. Do you happen to know offhand, like kind of where you position this on this graph? Mexico is quite dependent on the U.S.. Mexico is now the U.S.'s largest trading partner, especially when you strip out energy. The relationship between Mexico and the U.S. is one of mutual dependence. Mexico really depends on the U.S. as its number one export market. Okay. Awesome. Thank you. All right. Let's move forward here. Now I'd like to really talk about what we do in Onyx in more detail. Given the reciprocal tariffs or other tariffs and just really broader trade measures in general, these could be anti-dumping, anti-subsidy, quotas, licenses, just things that pop up that really can be difficult to track, especially if you have a company that's sourcing from many origins, importing to many countries. Often, kind of the responsibility for these geographies falls on a singular person or singular team located in one place. You have global responsibility, and you're trying to keep track of all the news. You're subscribed to many newsletters. You're Googling things. You're talking to your peers. You're talking to your providers. It becomes really a messy process to try to keep up with all the trade regulations that get introduced. Because of that, last year, Onyx, we introduced a new trade regulatory monitoring service because we saw the need out there that people were spending an inordinate amount of time trying to keep up, but still feeling that they did not quite get there. It is just a struggle. I would like to just walk you through how this service looks like. Really quickly, I think probably if you have attended our webinars, you know about Onyx. We are an advisory firm. We help clients navigate risks, pursue opportunities around your supply chain. We focus on a lot of geopolitical, trade, economic, and other disruptors. That is who we are. We offer different service lines. The one I am going to talk about here is this trade policy forecasting and regulatory monitoring service. As you can see, it is positioned towards the trade and compliance function. Again, it tends to be the people who are responsible for keeping tabs on regulations as they are introduced or even higher-level trade policy, some of those kind of slower-moving legislation, elections, things that precede regulations. We really try to get at that too, be very forward-looking. We offer other service lines I won't get into today, but you can kind of get a sense of those there on screen. To get into the regulatory monitoring, it's essentially this three-step approach. What we do is when we work with a client, we need to understand more about you. What are the products you're shipping and where are you shipping from and to? Origin and destination. With the products, we use naturally HS codes for that. We do it at a six-digit level so that it can be generally globally applicable, whichever country or geography. We take your list of HS codes, and then we understand your geographies, and we build a, or we plug that into our model that we've built, which is our continuous monitoring. That is that step two there. We have built this service where we're checking online as new regulations are announced. Think Federal Register notices in the U.S. or Gazette publications in Mexico, things like that in the EU. As these things are published online across a number of websites, we're tracking that. We're pulling that down into our database. Then we tag it to a product by HS code and geography. With that in mind, and when we have your information, we can correlate the two things together. We can kind of pull out what are the things that matter to you so that it's not this tidal wave of information you're trying to sift through and figure out what does it affect my goods? Does it affect my lanes? We do that work for you. We identify that, and then we serve it up to you in an alert. These alerts are delivered via email. I'll show you an example here in a couple of slides. Essentially, it's a table that lays out the impact of countries, products, timing. We get these out within 24 hours of a regulation that's issued. Those can go on throughout the week, throughout the month. Also, at the end of the month, we offer a trade policy digest, essentially looking at sort of the major things going on for that month and what we see looking forward over the next month, month plus. That is more of a narrative form. I'll also show you an example of that. That complements the alerts. Also, in the monthly cadence, we compile all the alerts that we have produced for the month. If it's helpful to have that all in one place once per month, you get a repeat of all the alerts, but more packaged up for you. That is the essence of the service. We have an optional add-on where if you want a monthly briefing, you want to talk to our Onyx team, our analysts, ask them questions. That is something we found people are interested in, but not always. It's really an optional component of this. Okay. Just to give you a sense, kind of paint the picture of what we cover, we divide this between our baseline service and a broader coverage. We found that the baseline service is mostly what people in a trade compliance role are the kinds of things that they need to cover. We've also found that there's some things in the broad service that we can pick and choose and add those into the service as well. As you can see on screen, things in the baseline include tariffs, quota, anti-dumping, countervailing, anti-subsidy measures, and taxes, licenses, etc. Broader service components include things that are kind of larger corporate concerns, typically like foreign direct investment measures, capital controls, other types of financial instruments that maybe aren't classically trade compliance, but could affect your overall supply chain. Some options there for you. We would talk through that with you if you're looking at that. This is an example of an alert. When we say we correlate your products and your geographies to the regulations and then serve that up, this is how that looks. You'll get a table of information. You'll get the name of the regulation that was issued, which, as you can see, is a link to a web page. It explains everything about it. You want to read more details there. What country has issued the regulation? A couple here from Brazil, one from Mexico. What other countries does it affect? Like Adam was talking about, the measures on China. If that was here, you'd see U.S. as the country. Affected countries would be China in that case for those IEEPA tariffs. The policy type just categorizes it really simply. Like on that previous slide, you saw those bullet points. This will be the category that you'll see that applies. The products would be only your products. These measures could affect many HS codes, but we'll only show you your HS codes so that you can do what you need to. If you have a parts database or other systems, trade management systems that you're using, you can correlate what that looks like on your internal data. Timing is usually announced within 24 hours or so of the alert. The implementation date can be right away. It can be future-dated, sometime 30-60 days out. You get a sense of timing when this takes effect. That's the essence of it. Just an example of the alert. I mentioned also the monthly digest. This is a bit more of a narrative form. We really want to be forward-looking on this. We're looking more to trade policy here than trade regulations. We make that distinction. Policies precede regulations. It's kind of an early warning to see what's coming, what's brewing in the background. We take great care to make these brief. These are not meant to be long-written digests. The point here is to save you time so you're not reading a ton of material. We do provide links so that if you want to know more, you know where to go, and you can read more in depth on that. That's the essence of the service. If you're interested, reach out to us. We really just kind of wanted you to know, given all the tariff activity going on right now, how we in Onyx approach it and what we can offer. And then a bit of a handoff to Matt next is, in talking to clients, we often get questions about, "Okay, you've alerted me. Well, now what? How do I get through this? What are my options? Are there ways to mitigate these tariffs, for example?" Matt's really here to help talk you through that. With that, I'll hand it over to Matthew. Thanks, Nick. It's good to speak to everybody. Brief introduction to me and Tradewin as we move to the next slide. Tradewin is part of the Global Professional Services umbrella with Onyx and Cargo Signal and Tradeflow and some other partners of ours. What we do is we specialize in customs and trade compliance consulting solutions here in the United States and then around the world, focusing on really kind of three different discrete functional areas. One would be advisory consultant, where we're doing regulatory reviews. We're looking at program setup. We're helping companies build compliance programs through risk assessments or manuals or things like that. We provide certain functions around filings to Customs around reconciliation and duty drawback, and then assisting with duty recovery opportunities through protest as an example. We do a lot of work around managed service for companies where we're repetitively doing classification or auditing or USMCA solicitation and qualification, supporting on export control programs, things like that. The last few weeks have been busy for us, as it has been for everybody on this call, as we really work with companies to adapt to some of the changes in these tariffs and look at from a tactical execution perspective, what do we need to be focusing on as we work through the tariff action that has happened and then what we think will happen over the next several weeks and months. We have pulled out a few different highlighted in yellow, but we will talk about them a little bit more through the presentation, kind of functional focus areas that we really think that everybody in the trade should be looking at, thinking about, and talking about as you work to adapt to these changes to maintain your compliance program and then focus on mitigation strategies. As we move to the next slide and we think about what are kind of two different facets of how we should be approaching these things, we can take some lessons from the first Trump administration and some of the activity that we saw around 232 duties on steel and aluminum and then 301 duties on product coming from China and apply them to this situation, understanding that the environment today is very different from what it was in 2018 and 2019. When we worked through mitigation programs and strategies with customers during the first Trump administration, there were more levers of things that companies could do to save duty as part of those programs. There was also a lot of learned experience that companies had where they really looked at some of those kind of root fundamentals of their trade compliance program, classification, value, country of origin. If those data elements were not correct at the time that the tariffs were implemented, there was a lot of work that needed to be done on the front end to correct and confirm those things in order to take proper advantage of those mitigation strategies. We want to really focus on, and we really think companies should focus on, a two-pronged approach to working through this environment. One is looking at and focusing on trade compliance fundamentals. The other one is looking towards mitigation strategies that may be available to you as part of the structure of the tariffs as they sit today. Moving to the next slide, we think a little bit about classification. And for those of you that are involved in classification in your company, you know that it can be very tedious and detail-oriented. For those that aren't, trust the people that are when they say it can be very tedious and detail-oriented. It is really more of a technical expertise level than a lot of people that don't do it every day, give it credit for. But effectively, the classification is the 10-digit code that you use to apply to your goods to import them into the United States. And that is going to be a significant driver along with the country of origin and the value for how much normal duty you're going to pay on the product and then if there are any additional duties that are owed on the products as well. Taking Section 232 as an example and the steel and aluminum tariffs that we're seeing on foreign products for steel and aluminum and then derivative products, those duties are all driven by how the product is classified. What's interesting in the way that the executive order and subsequent Federal Register is structured around imposition of these 232 duties in March is the executive is really pushing Customs to say, "Look at companies and make sure that they are classifying their products correctly in order to ensure they're paying the right amount of duty. You are allowed to enforce maximum penalties permitted by law if you see scenarios where companies are not classifying their products correctly." Right? I put to the right, and we won't go through them, the kind of levels of duty and penalty that can happen if you are subject to an investigation from CBP for misclassification as part of that process. In general, everybody who imports product that is currently paying Section 232 duties or may not be paying Section 232 duties needs to look at the classification structure of what they're bringing in for anything that contains metal and aluminum and make sure that it's classified appropriately to ensure that a follow-on penalty might not happen due to a Customs inspection through a CF-28 or a broader focused assessment. These tariffs are heavily weighted towards goods that are classified in Chapter 73 and 76, which deal with steel and aluminum products. There are also other classifications for derivative items that contain a portion of steel and aluminum within them that are subject to them. Our recommendation would really be for companies to look at classifications in those named tariff categories, but also classifications that are not in those named classification categories that maybe an argument can be made should be put in those named classification categories. A great example of these are companies that are heavily involved in the automotive or in the aerospace industry. The tariff structure gives you some options to classify things as parts of aircraft or parts of automobiles or parts of a certain finished good that might go into another finished good. Those parameters and those provisions are very specific to items that can have no other commercial operative function than to go into that finished item. We see a lot of misclassification through trade of people putting classifications into other classification categories versus their raw form categories that may be subject to the tariff. Again, something to look forward to as part of that process. An interesting thing as we move to the next slide is thinking about that section of mitigation not allowed by law. There's a little bit of push and pull between the executive order, the way it's written, and then the way that the statutes are written for Customs that would allow mitigating factors in the event that you self-discover a compliance issue through classification or what have you, and you want to disclose it to CBP. What we want to make sure that everybody knows is that if you are doing this kind of review and you've got options to self-correct and mitigate some of these potential classifications or misclassifications, you should take advantage of those opportunities. You have normal tariff change or entry change processes like post-summary corrections for when entries are not yet liquidated or protests if you want to change entries within 180 days after they're liquidated. Really what I want to focus on here for everybody is this concept of a prior disclosure. A prior disclosure is a program that CBP allows through the regulations where if you have found a compliance issue through misclassification of an article or other scenarios, value issues, country of origin issues, you've got the right to go back to CBP through that prior disclosure across your statutory period, which is five years, to self-disclose some of those issues to them. Through that statute, they can't levy you penalties as written by the law. Right? You would be subject to any loss of revenue for duties that weren't paid, but you would not be subject to penalties as part of that self-disclosure. An important point to note on prior disclosures is that you can't get refunds through prior disclosures, but you can net overpayments with underpayments through the prior disclosure program if you're working to correct an entry structure. As we move on to the next slide and we start thinking about mitigation strategies, I want to kind of pause and talk about what's different in 2024, excuse me, 2025 as compared to 2018 and 2019 when we were dealing with 301 and 232. I think the more important things to look at is there are a few more outs in the first Trump administration where you might pay additional duties and you have opportunities to reclaim those. The first thing would be on exclusions. In 2018 and 2019, as a lot of us know, there were procedures where you could ask the U.S. Trade Representative for temporary stays of not paying 301 duties because you could not source product from a country other than China in a sufficient quantity in the time period necessary to change your supply chain. Those exclusions do not exist under the existing IEEPA tool that is being used for China, Canada, and Mexico imports. In addition to that, those exclusions have all expired and are not being renewed under the existing 232 and 301 protocols. That is a loop that has been closed, so to speak, for trade when they look at duty recovery opportunities. The other big adjustment with the IEEPA duties is duty drawback. Duty drawback, for those unfamiliar, is a duty recovery program if you are importing product into the U.S. and then you are turning around and exporting it either in the same form or after a manufacturing process here in the United States. Drawback programs exploded during the first Trump administration because the 301 duties on products from China were eligible for drawback purposes. These IEEPA duties, however, are not. You cannot reclaim these IEEPA duties through the drawback provision. That is explicitly noted in the executive orders and Federal Registers that announced them. What are you left with? Right? I have a few things that we have been having a lot of conversations with customers about over the last couple of weeks. We will look a little bit more at USMCA and value reduction programs. Really specifically, it may be worthwhile to look at, in particular, Section 232 scenarios, a concept called tariff engineering where you actually sit down and you do product design based on what that finished good classification is going to be. You design your product in order to fit the classification that you want that may fall out of a high normal duty rate or a Section 232 duty rate. That is something that you can look at for tariff savings. The other three parameters I would say that companies should be looking at are use of USMCA with a big caveat on that that I'll talk about in a second, and then value deduction programs like Chapter 98 provisions and First Sale for Export. As it stands today, companies that are importing into the U.S. from Canada and Mexico do not pay the IEEPA duties of 25% when the product qualifies for USMCA, meaning—and I'll talk about that in a second—meaning it's been made and substantially transformed in those countries. That is subject to review on April 2nd with a broader reciprocal tariff announcement. We hope that, obviously, is going to stay in place. This is something that I think the whole industry needs to be looking at to make sure that's still a viable pathway and next step for duty savings. As we move on to the next slide and we talk a little bit about USMCA more specifically, if you make product in the U.S., Canada, or Mexico, that product may qualify for reduced duty on reduced or free duty on normal duties and then reduced or free duty on IEEPA duties as it stands today. Again, we will see again what that changes, what happens on April 2nd. In order to validate whether or not a product qualifies for USMCA—a lot of companies are looking at this new with fresh eyes now because they may have had products that, even though they're manufactured in Canada or Mexico, were duty-free anyway based on the HTS code they were using. They have never fooled with the program. Now they're looking at it with the lens of IEEPA as a duty savings program. At a very basic level, the way you look and see if a product can qualify for USMCA is you have to look at what are called the rules of origin or the USMCA rules of origin for the product. Those rules of origin are going to be dictated specifically by the finished good classification of the item. Once you have the finished good classification of the item, you can look in the tariff schedule and the USMCA provisions to see specifically what rules apply to that product to determine if it can come into the U.S. duty-free. There are typically three different ways that you can qualify a product for USMCA. All of them require a review of a bill of material for the product, which incorporates all of the different components used to manufacture the product, where they're sourced, what the value of those components are, and real specifics around the country of origin of those source components. The three different methods are tariff shift. You're looking at a comparative difference between the tariff of the finished good and the tariff of the raw materials to see if they are different. The rules for that are specific to the finished good classification. You're looking at regional value content, so comparing the value of originating material components that were made in Canada, Mexico, or the United States as compared to non-originating material. Those thresholds are set based on the finished good classification. Or you're looking at de minimis, where you're looking at this: does less than 10% of the value of the product contain components that are non-originating? Right? All those things need to be reviewed at a bill of material level and on a product level for you in order to certify and confirm that you have product that can be imported under the USMCA provision. How do you get certificates and how do you prove it? You have to have a—you have to have a document. It's called a USMCA cert that you provide to your broker in order to complete that. Real quickly, these can be provided by the importer, the producer of the goods, or the exporter. It's got to be done at a product level that you can group multiple products onto one certificate. They can cover a blanket period of no more than one year. Right? One of the things that's important to note through the IEEPA duties for everybody to understand is that in years past, if you had duties that you were paying under the USMCA program and you got a certificate after you imported the product, you could go back and you could recover those duty through what's called a 520(d) or an FTA reconciliation filing. We don't know yet from Customs whether or not those IEEPA duties would be available for recovery under the law as it's stating. We're still pending that guidance. Still an open question to customers. Moving on quickly to value deduction programs. I'll talk really quickly about Chapter 98, and then we'll get into First Sale a little bit more. When we move to the next slide, Chapter 98 is a provision that is really defined around U.S. goods returned either not advanced in value outside of the country or advanced in value outside of the country. The whole Chapter 98 in the tariff is really driving around special trade programs that have reduced or free duty. Right? The two kind of key categories are 9801, which are U.S. articles that are exported and re-imported within a certain period of time or maybe re-exported and re-imported for repair. There are other provisions around 9802 where articles can be exported and returned when they've been advanced in value. There has been further processing or rework done outside of the United States. In those scenarios, you can deduct the value of the goods exported versus the value that was added to the goods outside of the U.S. to reduce some of the duty exposure. There are some restrictions in the 232 provisions for 9802.00.60, which covers metals exported for processing and re-imported for further processing. It is really important to make sure that you're looking at value traceability through that and the way that that's structured so that you can reap those benefits. Important to look too at the structure of the export on those because there typically are provisions where if you export something and you claim drawback on it, you can't then bring it back in under a Chapter 98 provision. Again, some significant constraints to that program that you need to look at. As we move to the next slide, we have a lot of customers that are looking at and speaking with us about a program called First Sale for Export. The First Sale for Export program has been around since the 1990s. It was established by a court ruling about subway cars coming from Japan, actually. It's been something that's been used very heavily in the wearing apparel industry for years based on the high duty rates and the structure of transactions in that industry. More and more companies are looking towards their supply chain to see if this is something that they can leverage to reduce their duty exposure by reducing their value based on these higher duty rates. At a really high level, conceptually, the idea is if you are an importer in the United States and you have a multi-tier transaction prior to that import, meaning you buy product from a vendor and that product then turns around and buys product from a manufacturer, and then that manufacturer ships product directly to you in the United States, you may have the opportunity to declare to Customs not the price you paid your vendor for the merchandise, but the price the vendor paid their factory for the merchandise. You're effectively not paying duty on the value that was added by the vendor, the markup by the vendor. By reducing your value, you're reducing your duty exposure. Now, there's some significant constraints to that program, and you have to make sure that certain parameters of the transaction are accounted for in order to use that type of valuation analysis. The first thing you want to look at is something called bona fide sale. That's the idea that you've got two discrete separate transactions where you've got a purchase order, a commercial invoice, a proof of payment. There's consideration in place for the goods. That vendor isn't acting as an arbitrary buying agent or selling agent on commission. They're truly acting as a buyer and seller where they have title and risk of loss for the merchandise at some point in that transaction structure. You're looking at arm's length relationships, so making sure that if any of those three companies that are in the chain are related to one another, that that relationship does not have an impact on the price of the goods. You're looking at order information to show that when the importer places the order on the vendor, the intent is for that manufacturer to sell goods to the United States. You can't have scenarios where manufacturers are bringing goods into a third country in their own inventory and then calling them off to the U.S. or other jurisdictions based on order status. The fourth thing that we look at is all cost incurred. Making sure that if there are scenarios where the importer or the vendor are providing design assists or material assists to that manufacturer, those values are included as part of that process. Once all those qualification requirements are met and you've proven that that transaction structure is in place, you can work with your Customs broker to start filing for First Sale for Export, presuming you can get a First Sale invoice with the manufacturer value included. How do you do this in practice? You don't have to apply for approval from Customs prior to completing it. You can start using the program once you've done that feasibility review and you've got written documentation to prove that those transactions meet that structure. Those are called case studies. They're something that we do for customers all the time. In addition to that, it's important to look at, from a management perspective, significant vendor training and understanding of how you're going to get that First Sale invoice and the documents that you need to make the entry and provide that to your Customs broker on a replicable basis. Some things in the program to keep in mind, it's not an all-or-nothing provision. Most companies look at their highest duty items or their highest volume vendor manufacturer pairs and focus on those first so they can reap the highest benefits and they can activate First Sale based on bid when they manage the import process with their broker. In addition, you can use some of those vehicles that we talked about earlier, PSC and protest, where if you can show at time of doing that case study that the goods have met those transaction structures for the past year and a half, approximately, you can go back and request duty refunds from CBP via a PSC or a protest to fall on that. I would say the two biggest things that are driving customer conversations with us at the moment are USMCA qualification to reduce duty exposure and First Sale for Export programs to reduce value. Moving to the next slide and just kind of wrapping up, thinking about what do we do now? A great question that we always get is, how do we stay informed about the pace of this change at a real practitioner level? There seems to be a chain of notification where you go from either media announcement or social media announcement, and then you go to executive orders. WhiteHouse.gov is a great resource for pulling those up and reading them and seeing what the structure of these tariff actions are going to be. We all have to keep in mind that that executive order isn't live and in force until it gets published in the Federal Register, which is the next sort of document. That will really be what contains the specifics in terms of how a trade action is going to be implemented by Customs and the bureaucracy. Following on from that, there's what's called CSMS or Customs Service Messaging System, where they will publish more formal notices around implementation and next steps. If anybody on this call is managing trade compliance on behalf of their company, I would really recommend that as we move through this period of tumult, spend a little bit of time every day checking the Federal Register, checking the CSMS, get subscribed to them, they come into your email, and then managing change from there. We talked about fundamentals, but it's really important to, if you're looking for mitigation strategies, don't fall down on fundamentals. Make sure those classifications, those values, and those country of origins that you use are right. Then build on top of them to make sure that if you are pursuing savings through a program that's done so compliantly. Again, a lot of you may be importing from Canada or Mexico and have not looked at USMCA in the past. I would look. There might be some opportunities for duty savings now and then in the future through those programs. Again, look and see what kind of opportunities that you have for value deduction programs through First Sale or Chapter 98. As always, reach out to help. We are here to help companies at Tradewin navigate some of these changes and provide advice and guidance around how we can pull some of these levers to help. Thank you. With that, I will push it back to Nick. Great. Yeah. Thanks, Matt. We have a few minutes here for questions. Adam, I see you coming back. I think you might want to answer a couple of these. You want to go ahead and pick from the list? Yeah. There were a couple of questions on kind of in the vein of what countries are going to be hit with reciprocal tariffs. We've done a lot of analysis on sort of which countries are sort of on the radar or not. Based on a combination of different factors, how large is the trade deficit, the goods trade deficit with the United States? If you add up the different factors included in the reciprocal tariff executive memo, what does that add up to? How big would the discrepancy or reciprocal tariff be? The Trump administration was initially kind of talking about, I don't like this term, but the so-called Dirty 15, of 15% of U.S. trading partners would be sort of targeted with reciprocal tariffs. The implication from yesterday's press conference with President Trump was that it would not just be this 15% of countries, but it would be all countries. It kind of depends on the scenario. There were specific questions around Costa Rica and EU. If we stick to the sort of 15% of "worst offenders" or Dirty 15, I don't see Costa Rica in that tranche or that group. EU would be. The question is whether the EU would be treated as a bloc or if individual countries within the EU would be singled out and treated differently in some way. Certainly, in some fashion, the major economies in the EU, either as a bloc or individually, would be included in the reciprocal tariffs on the second. Countries like Costa Rica, I don't see those in the top 15, but if it's a broad sweeping tariff applied to all countries, then of course, yes, it would be. Great. Thank you. Matt, I want to make sure I answered this one question right about FTZ. I don't think you covered it, at least not in a lot of depth, but I'm pretty sure FTZ with IEEPA is not available, correct? Or to mitigate duties at least, right? It's complicated. Activating an FTZ is not a short initiative. It can take a year, maybe a little bit less, maybe a little bit more through activation, through grantee authorization, and then through implementation of the systems. We do that work for customers through our affiliate company, FTZ World Services, all the time. What's important to look at is how the FTZ is going to be used. If you're just using distributing in the U.S., there may be more value to it because you're moving your point of sale and your payment of duty closer to when the goods are called off and exported. You have both a cash flow advantage for domestic distribution, and then you have tariff advantage for doing that. When it looks at manufacturing, that can be a little bit more complicated because those goods have to come in under what's called a Privileged Foreign status. The extra duties actually may carry through through the manufacturing process to the finished product. It is important to do a feasibility analysis to make sure that the FTZ makes sense for you, and that's something where we can help. All right. Thank you for clarifying that. You covered the topic of tariff engineering, which I think is super interesting. Do you have any examples that come to mind, something you could share generally or? Yeah. I mean, really high level, we talked about parts of general use versus specially designed. If you are an aircraft manufacturer and you're manufacturing titanium nuts and bolts and washers and screws and things like that, or actuators or fasteners, you can look at the way that you manufacture that. You can make an argument if the way that manufactured product is set up, that it could not be used in any other commercial application than as part of an aircraft, that it could be classified as a part. You have to be really careful, though, to make sure that Customs is going to agree with you on that. What's really involved in doing that is getting your product teams, getting your engineers, looking at the tariff structure. It may be worthwhile to just submit a ruling, what's called a binding ruling, to U.S. Customs to make sure that they agree with your interpretation of what that tariff is going to be before you make that move into production. Again, it's all about looking at the structure of the product and designing it in such a way so that it will meet the tariff that you want. Okay. Yeah. Thank you for that. Okay. I think we're just about out of time. Anything else from either of you before we call it for the day? One quick answer. I can talk faster than I can type. The question on Southeast Asia reciprocal tariffs depends on the approach. It could be a flat tariff across all countries, somewhere like 15%. If each country is treated differently, our math suggests Southeast Asia would be somewhere, each country would be somewhere in the range of 10%-25%, Vietnam maybe on the high end, a country like Thailand on the low end as a starting point. We will see who's willing to negotiate down from there. Okay. All right. Great. Thank you, Matt, for joining us. It was great to offer this content with you and Adam for the background. Just a reminder, everyone, to get the content, you'll see a survey today. If you don't get the survey link, feel free to reach out to me. That way, you can get the material and we can get some feedback. Thank you, everyone, for joining. Adam and Matt, thanks for the time today. Thank you. Good luck, everyone. Thanks. Take care. Take care. Bye.