Platinum Equity agreed to acquire Livingston International for an undisclosed amount, the companies said in a Feb. 21 news release. Livingston, which is based in Toronto, Canada, "holds the distinction of being Canada’s largest customs broker and third-largest entry filer in the United States," the companies said. “With Platinum’s support, we will continue to execute on our customer-centric growth strategy, which focuses on offering best-in-class customs brokerage, trade compliance and logistics services to more than 30,000 businesses in the U.S., Canada and around the world,” Livingston CEO Dan McHugh said.
Trade is critical to manufacturing's success, because only 5 percent of the world population is in the United States, the head of the largest industrial trade group said Feb. 20. "If our economy is going to succeed, if we’re going to stay on top, we need to sell the things Americans make to those people [around the world] -- before someone else does," National Association of Manufacturers CEO Jay Timmons said in Houston on a speaking tour promoting manufacturing careers. "Being part of a strong world economy raises standards of living here at home and reduces poverty around the globe." He said manufacturers are counting on Congress to ratify the new NAFTA, known as the U.S.-Mexico-Canada Agreement, quickly, because Canada and Mexico are America's most important trading partners. And, he added, "we want to see the administration come to an agreement to hold China accountable. China cheats -- plain and simple. And it hurts us here in America. And the tariffs on their products and on ours? Well, they hurt manufacturers, too. China is the most challenging market in the world -- but it also has big opportunities. So, a trade agreement between the two countries would not only fix those problems and set new rules -- it would be historic."
The signals that tariffs will not go up on $200 billion worth of Chinese imports on March 2 is a small relief for businesses, according to Venable partner Lindsay Meyer, but they're still challenged by the difficulty "of forecasting what the second half of this year will present." Some importers that work with Venable are getting their suppliers to shoulder some of the additional tariff costs; others are declining to enter two-year contracts unless there's the ability to reopen the deals if tariffs increase. "The companies, they’re making their plans cautiously," she said. "I think the anxiety level isn’t at a level 10 that it was, but it certainly hasn’t dropped down below 5."
Bank of America Merrill Lynch research analysts take a "benign view" of the likelihood of new Section 232 tariffs on the auto sector and an increase to the Section 301 tariffs on goods from China, they said in a Feb. 15 report. Aditya Bhave and Ethan Harris, both global economists at the bank, said that while the Commerce Department seems likely to conclude that auto imports are a national security threat, "sustained auto tariffs" are not expected. "Reasons include delays in the release of the report, the extent of lobbying pressure against the tariffs, and the Trump administration’s hesitance to slap tariffs on consumer products, of which autos are among the most visible," the economists said.
Maersk has agreed to acquire the New Jersey-based customs brokerage Vandegrift, it said in a press release. The deal, which closed on Feb. 8, nets Maersk a nearly 70-year-old operation with 170 employees based in 12 offices. “Adding Vandegrift’s depth to our value proposition creates a game changer for our North America customers,” said Jeff Hammond, Maersk’s global head-customs brokerage. “Now we can offer significantly more Customs Broker expertise, capacity and wider scope of solutions to help our customers succeed,” he said. Maersk’s release says the price and terms of the deal were not disclosed.
Farrow and Shipware are partnering to provide customers one combined service for customs consulting and shipping solutions, the two companies announced in a Feb. 8 press release. Farrow, a customs broker, and Shipware, which helps businesses lower their shipping costs, said they “complement one another’s service” offerings and will provide clients with trade compliance and shipping experts in one place.
Universal Electronics Inc. is streamlining operations, the company said Feb. 6. In response to higher tariffs for its China-made products, the company is moving production to its UEM facility in Monterrey, Mexico, and to a newly assigned contract manufacturing partner in the Philippines. Dougherty & Co. analyst Steven Frankel said the moves “are designed to deliver on management's promise to hold expenses at 2018 levels through 2020.”
SanMar Corp., which imports T-shirts, sweatshirts and polo shirts that are used for fun runs, corporate logos and the like, hasn't been hit with Section 301 tariffs yet, but its executives are anxiously watching trade policy. Melissa Nelson, general counsel for SanMar, said she used to be able to stay away from Washington, D.C., but with the surge of tariffs in the last year, that's no longer true. Even Section 232 tariffs, which you would not think would affect an apparel importer, are increasing costs for them. Nelson explained that SanMar is buying clothes racks for a Jacksonville, Florida, warehouse; she said they're worried about the cost.
Descartes Systems Group will acquire a group of companies run by Management Systems Resources, including Visual Compliance and eCustoms, Descartes said in a news release. "Visual Compliance provides software solutions and services to automate customs, trade and fiscal compliance processes, with a focus on denied and restricted party screening processes and export licensing," Descartes said. Visual Compliance has more than 2,000 customers with more than 67,500 subscribers and, like Descartes, is based in Canada, Descartes said. Descartes will pay about $250 million, including working capital acquired, and the acquisition is structured as a combination of asset and share purchases, it said. “The penalties for doing business with sanctioned parties can be far reaching and severe,” said Ken Wood, Descartes executive vice president-product management. “By adding Visual Compliance’s solutions and domain expertise to our existing Descartes MK Data denied parties screening business and Global Logistics Network, we’re in an even stronger position to help our customers navigate the trade compliance landscape while managing the full lifecycle of their shipments.” The deal was brought to Descartes following the recent death of Visual Compliance's founder, Descartes CEO Ed Ryan said during an investor call about the transaction.
Apparel importers may still want to classify their hangers separately from apparel, but should take extra care in light of the potential application of Section 301 tariffs on the hangers, Sandler Travis said in a client alert. CBP has long held that some more substantial, reusable hangers are classifiable in subheading 3923.90.0080 as plastic articles for the conveyance or packing of goods, even when imported together with apparel. That subheading carries a 3% duty rate, though 10% Section 301 tariffs raise that to 13% if imported from China, and that could rise to 28% of no deal is reached on the tariffs by March 2 (see 1812140034). Nonetheless, importers should still perform an analysis on whether that rate would still be lower than the rate applicable to the garment itself if the hangers are less substantial and considered “packing material” not classified separately from the apparel, the alert said.