An Overview of the U.S. Trade Systems and Trade Agreements Through the Years

Close up of businessmen shaking hands. Global network and a world map in the foreground. block chain concept.

As you sit in front of a screen and read these words, there are millions of goods and products being transported across borders. Many of the products we encounter every day have a long and arduous journey from where they are manufactured to the shelves of our stores. Trade impacts our economy in a significant way, and it’s why over the years we have seen changes to the way the country approaches its trade policies and why it has become a hot-button issue in elections and during difficult economic times. 

The U.S Constitution grants Congress the power of trade activities between foreign countries. Trade within states is regulated and overseen by the states themselves. Over the decades, the United States went from a far more protectionist nation to one that embraced free trade and emphasized its benefits. 

From Protectionism to Expansion of Imports and Exports

The state of U.S. trade policy has evolved since the Great Depression. The country’s views and needs have grown and shifted dramatically since then. Tariffs and dutiable imports reached 60%. There was no central organization that oversaw the changes that occurred in trade across the globe, so many local laws were shielded from understanding the bigger picture.

Before the Great Depression, the U.S was far more isolationist in both its trade policy and foreign policy, but the 20th century had its plans for America and the rest of the world, and events that transpired shifted the American approach to trade to a far more open policy. 

It Begins with a Little Act Called Smoot-Hawley

The U.S was in dire straits in an attempt to fix the domestic economic situation, so Congress had to make moves to remedy this by finding ways to grow the economy and get things moving again. The tariff act raised duties on over 20,000 imported goods and may not have had the effect desired. This led many U.S trading partners to step back and cause a reduction in total U.S trade volumes. Many historians argue that the Smoot-Hawley act deepened the Great Depression. 

Not long after, President Franklin Roosevelt signed into law the Reciprocal Tariff Act, which gave the President authority to negotiate reciprocal trade agreements. Around this time tariffs were reduced with 21 countries, which helped spur economic growth. Of course, it wasn’t until WWII, that U.S production and manufacturing boomed. After the war, GATT was signed. This was the General Agreement on Tariffs and Trade. 

The Trade Act of 1974, addressed many concerns for U.S trading companies that were seeing themselves as unable to complete with unjust import competition. This law imposed adequate procedures to help protect the American industry amidst a growing and exponentially more complex international market. 

In 1995, the World Trade Organization replaced GATT and helped a surge of free trade agreements after the Cold War. In this era, the percentage that was subject to tariffs dropped from 65% in 1990 to about 30% in 2017. 

President Reagan’s Impact on Trade in the Late 20th Century 

President Ronald Reagan helped continue to push the move towards more free trade. As a stalwart proponent of conservative policies, Reagan understood that opening up trade for America meant increasing opportunities. In 1988, Reagan gave a radio address about the virtues of having a free trade society and the economic and social benefits that this provided a society. He pointed to the pattern of free nations and their prosperity after imposing free trade laws and allowing for more freedom in the import and export realm.

Reagan declared “We should beware of the demagogues who are ready to declare a trade war against our friends, weakening our economy, our national security, and the entire free world all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion. It is an American triumph.” 

It was this mode of thinking that continued a trend towards a trade policy that made the international exchange of goods more accessible. 

The Complexities of the Ever-Changing Trade Industry 

Developing a product to ship to international markets is a long and hard journey with plenty of steps and hurdles to overcome. It’s not always easy, as there are competing interests, politics, changing regulations from every angle. It’s a fast-moving industry that must adapt to the conditions and regulations of other countries, as well as changing economic and cultural trends.

As international markets and nations see ups and downs and changes in their administrations and leaderships, those changes are reflected in the policies and regulations imposed on importers and exporters. A customs broker is a middleman that does the heavy lifting when it comes to researching and following these changing rules. 

Stay on Top of The Changing Trends in Trade Policy with a Trusted Customs Broker

As a customs broker, Cordova Brokerage takes care of doing the leg work in ensuring you are in compliance with your import or exports to and from the U.S. We are here to provide accurate service and facilitate the difficulty in maneuvering U.S trade restrictions and law. 

Contact a reliable customs broker at Cordova today for questions regarding imports and exports. 

 

The Many Roles of a Customs Brokerage: Importing, Paperwork, & Clearance

A businessman selecting a Customs Concept button on a clear screen.

A customs broker is a type of middleman. They are facilitators. Experts on laws and regulations that are ever-changing and shifting. A customs broker represents the interests of the United States as it relates to the importation and exportation of goods across international waters and borders. Here at Cordova Customs Brokers, we thought we’d take a moment to explain the day in the life of a customs broker, what we do, what we’re responsible for, and why it’s important to go with the one you trust. 

To put it simply, a customs broker works with importers and exporters of goods. Everything that comes in through this country’s borders must be documented and follow what we call compliance. We get shipments cleared through customs and other agencies that might need to get involved with shipments. There are thousands of shipments that come in each day, as the relative size of imports has grown from 10% of GDP in the early 1990s to 15% in 2017. 

Why Do Importers Need a Customs Broker?

Bringing goods into the United States, or any other country might seem simple on its face. In reality, each country has its own set of rules and regulations when it comes to bringing in goods from other countries. As it is stated by Customs, “When a normal ‘entry of merchandise’ is made under the provisions of 19 U.S.C the required information and documentation is required to be filled or electronically transmitted by the “importer of record.”

As customs brokers, we work for the ‘importer of record.’ They are our clients and we represent their interests in successfully getting their goods into the United States in order to do business. The United States has regulations as well and it can make importing goods a little more complicated. A customs broker navigates the complicated process for you, getting through the paperwork, compliance, and dealing with various agencies on your behalf. 

These shipments include everything from crabmeat to squeaky toys for dogs, children’s toys, shrimp, and more. 

The process of customs brokerage existed as early as the 1850s when an importer or consignee endorsed the bill of lading over to a tradesman. These tradesmen were called ‘customhouse brokers.’ In the beginning, these brokers would sign the merchandise with their name instead of the original consignee but it led to many problems. This issue was resolved with the Customs Regulations of 1857 and the beginning of what were to be many new changes to the way we do imports. 

What is the Process of Importation like? 

It depends on whether shipments are coming through by air, water, or land. As a general overview, however, the process is relatively similar. When we work with an importer, we get the information we need and input it into specialized software that will sort through the information and send it to Customs and Border Protection. So, for example, if there is a shipment coming in, we do the paperwork and preliminary clearance before they get to the designated terminal. If the product needs to be approved by another agency like the FDA, this needs to be done as well. When the shipment comes in, it will be cleared in their computer system and the goods will be good to enter and be released to whoever is going to pick them up from there. 

Today, it is all done electrically. Technology has certainly given our job a major advantage and speeded up the process of importation in the last couple of decades. 

On any given day, a customs broker that works with importers will see any number of different types of goods. Shipments will come in carrying food like shrimp, crabmeat, and other delicacies, toys from cheap toys to more commercially popular ones, clothes, and more. Many shipments come in from China, as one of our biggest importers. One interesting tidbit here is that shrimp is actually a big import. Thousands of people in the United States consume a lot of shrimp each day. 

What is the advantage of working with a customs broker? 

As we mentioned earlier, we act as a kind of middleman that facilitates the process between various entities and agencies. Most importers are business people who want to keep to the business they are in and are not interested in being backlogged with a bunch of paperwork and confusing regulations. This is where we come in. We take care of all the legal stuff so their shipments will have no problems at the border, so they will be cleared, and ready to continue with the business of making money. 

We take care of:

  • Clearing goods through customs 
  • Making sure those goods reach their destinations
  • Calculate duty or tariff payments owed
  • Compile and fill out necessary documentation like invoices, certificates, and cargo-control documents
  • Keep on top of changes in export or import laws and regulations

Are You an Importer Looking to Bring Goods Into the U.S? Call a Trusted Customs Broker

Here at Cordova Customs Brokerage, we have been helping importers do business in the United States for many years. Our brokers are always up to speed with new regulations and changes—as they happen often—and abreast of all necessary compliance guidelines. Call us today for more information. 

An Overview of America’s Imports and Exports

two businessmen shaking hands with a shipping yard in the backgroundSince the beginning of the country, the trajectory and nature of imports and exports have changed dramatically in the United States. The U.S went from being quite protective and isolationist in its approach to favoring a more open and free-flowing market that led the way to modern foreign relations many today would term globalization. Each has accompanied the very different cultures and customs of the time. The change was, in large part, brought about by global conflicts that changed the way nations exchanged goods with one another. Post-war America began to see open trade as a way to open up countless possibilities to advance the country’s economic interests, as well as establishing strong ties with foreign nations. 

Some of the country’s founders had differing ideas about the ideal trade policy. Alexander Hamilton, for example, was far less of a protectionist that he is often made out to be. He knew the importance of the import market and how that could help fund the public debt. He had much milder tariff policies that found the support of traders and merchants of the time. Others, like Thomas Jefferson and James Madison,  considered much more draconian trade policies and seemed to purport a more domestically focused economy. Interestingly enough, when he became president, Jefferson imposed an unusual trade policy, which had a nearly complete embargo on international commerce from December 1807 to March 1809. This was a short-lived experiment that showed what it would look like to have an almost complete stop to international trade. This embargo, along with effects on trade from the War of 1812, is often said to have further sparked the rapid industrialization of the country and encouraged domestic manufacturing. 

The Early American Isolationism 

In the early days of American history, Americans seemed to have a ‘leave me alone,’ attitude. In large part, Americans still hold this attitude, as it is greatly inculcated in our nature and our country’s culture. Even after World War I, America slowly returned to a more isolationist foreign policy. The war, after all, had brought with it a very large unpaid debt, as well as a generation of men scarred by the war. And by the mid to late 20s, foreign policy was not something on most people’s minds.   The Hoover Administration set forth the Hawley-Smoot Tariff. Because trade was a large arbiter of foreign relations, the tariff was a way to cut off the discussion altogether. This caused a lot of foreign retaliation that contributed, at least in some part, to the economic downturn that gripped the U.S and the world in the late 1920s. 

At the London conference of 1933, Rosevelt refused to tie the American dollar to a gold standard. This upset many European leaders. At the same time, Roosevelt realized that the Hawley Smoot Tariff was crippling American economic growth and the U.S made the policy more flexible. 

Trade Policy After World War II

The breakout of World War II was of course another cataclysmic change to the world and the global markets. The United States, unlike Britain and other Ally countries, did not have their industrial centers and cities bombed and therefore did not suffer the kinds of losses to their manufacturing that other nations did. This opened the way for the United States to manufacture a lot of necessary parts and materials for the war effort and otherwise. The U.S dominated many export markets after the war because the manufacturing centers were intact, this allowed for innovation and technological advancements, and due to inherent strengths in numbers of workers and the growth of several industries. All of this set the United States up for success in a global market by the time the war was over and countries were trying to rebuild their cities and lives. U.S aid was important to this recovery and these nations also needed export markets in order to return to economic independence. The U.S helped create the General Agreement on Tariffs and Trade, which consisted of an international code of tariff and trade rules that was signed by 23 countries in 1947. 

In the 70s, the U.S trade balance was hurt due to some externalities like the oil price shocks, global recession, and increases in the foreign exchange value of the dollar. The American demand for foreign goods meant that America demanded a lot of imports. 

Still in the 1990s the nation remained committed to free trade and pursued to establish new multilateral trade negotiations, worked on new trade negotiations that involved Europe and Latin America and worked to solve other trade disputes. For a large number of people in the U.S, the idea of free trade means the liberal movement of goods across nations and the world. This opens up opportunities and markets and allows for better relations among nations. 

The nature of the current trade agreements and trade policies might be called into question after the world fully recovers from the 2020 coronavirus pandemic. This might return some manufacturing and production to the United States, or perhaps curb China imports some.  

The history of the United States trade policy shows how the country began and how it grew slowly as the world grew with it. Because of some of the global conflicts that gripped the 20th century, the U.S benefited and was able to build a great production machine with a lot of trade potential. 

Get With A Brokerage You Trust

Here at Cordova Brokerage, we are on top of all the changes and nuances of the U.S import and export business. It can get complicated following the many restrictions and compliance requirements. If you are looking to get into exporting goods or need brokerage services, we are here to help. Call us today.